Well-being in an Anxious World

It is not surprising that a ‘kids’ film (Inside Out 2) featuring Anxiety as the main character was the most popular film of the year (breaking box office records) and that the non-fiction book The Anxious Generation is required back to school reading for a stressed out generation of parents. (See the recent Surgeon General Advisory about stressed out parents - Parents Under Pressure if you want more on this topic)

Gruesome wars, structural economic change and inflation, social media and AI madness, volatile global elections, poor nutrition and obesity, and extreme weather leave a feeling of chaos (anxiety) as we race into an unwell future.?

Along with all of the fear and anxiety, a myriad of well-being products and services have been created; from smart devices and ice baths to clean foods and calm inducing edibles.

Recent earnings and news from leading well-being companies taken in tandem with major trends provides some insights into what the end of 2024 and early 2025 might offer.?

While the overall marketplace for wellness is growing, it is fragmented and fluid and inhabited by a range of different customers. This makes it challenging for everyone from Nike (NKE), Life Time Group (LTG) and Ulta (ULTA) to Peloton (PTON), AirBnB (ABNB) and Planet Fitness (PLNT). Massive social, political, economic, and technological change make it very challenging trying to figure out what exactly to offer and how to market, price and sell it.

Strength and Performance During Challenging Times

The need for comfort and safety and stimulus the pandemic required has been replaced by the demand for strength, vitality, and efficiency in a troubled economy and world. Strength training products and services and the continuing "protein wars" support my “strength in a scary world” thesis.?

The more challenging economic times demand more focused products and services; the free for all to try to everything and experiment no longer remains.?

Global players such as Nike, Lululemon (LULU), and Starbucks (SBUX) are trying to find focus and discipline after years of going mass market and pushing international expansion. This left the giant pioneers softer and exposed in some areas. Hungrier upstarts such as Hoka (DECK), Vuori,? and Alo are grabbing market share and mindshare with their nimble, focused approach to customer needs.

Good and Bad Leaders

In times of change and opportunity, having a strong core leadership and business model is crucial to survival and growth. Peloton, Planet Fitness, and Xponential Fitness (XPOF) are all in the midst of dramatic leadership changes.?

Planet unexpectedly fired Chris Rondeau and brought in home rental queen Colleen Keating, XPOF’s leader was tainted by ethics scandals and has been replaced with Mark King, most recently of Taco Bell, but with experience at Adidas and Party City. Peloton, btw, has yet to find its next leader after the two year failed experiment with a silicon valley tech bro at the helm - the company is supposedly being run by two members of its board of directors.

Even Starbucks (SBUX), with its nearly 40,000 stores delivering social, emotional and workplace well-being and as the inventor of the ‘third place’ as a well-being haven, had to steal Chipotle’s (CMG) star CEO Brian Niccols to convince the markets it was relevant in a fast changing world (more on this a bit later).?

Alternatively, Life Time and DICK’S Sporting Goods (DKS) have strong, established leaders that are following clear strategies; allowing them to bend and not break while expanding into new formats, hitting record customer counts, and kicking ass in just about everything they do - well done Bahram Akradi of Life Time and Lauren Hobart of DICK’S.

Simply reading the earnings releases and reviewing the calls of some of the top brands in well-being, including Peloton, Nike, Planet Fitness, Xponential Fitness, Restoration Hardware (RH) and Life Time make it obvious that corporate culture and leadership matter in times of rising costs and competition.?

The Best Customers

With tighter budgets and clouds dotting the horizon, customer understanding and engagement is more important that ever. Knowing your best customers and delivering to them is the key to not only surviving, but thriving during these challenging times.?

The aforementioned, ULTA and AirBnB do a great job through extensive loyalty programs and continually delivering innovations to ensure their current customers are profitable, even in slower growth periods.?

Presenting generic, one sizes for all offerings and not segmenting and servicing your best customers is a recipe for disaster in this anxious, inflationary era of tightening budgets.??

The boom in niche roasteries across America is the result of Starbucks chasing non-core coffee drinkers with sugared frozen ‘cinnos, pumpkin’ spice, vegan breakfast sandwiches and supercharged fruit tea drinks.?

New CEO Niccols recently announced that one of his first target areas would be re-emphasize cafe quality and to narrow down the menu. In a letter to employees he said the company had drifted from its core mission of serving high quality coffee in welcoming spaces.

Expending resources on the wrong customers while ignoring your most loyal cohorts is a recipe for failure in an economy full of anxious days and nights and mornings.? Shareholder activists realized this reality as well in recent months in order to pressure leadership at a variety of firms in the well-being market - such as Tractor Supply Company (TSCO) and Harley Davidson (HOG).

The strongest players in well-being, whether physical, social or place based, are working hard to make sure their core services and products tale the lead and deliver results as expected.?

Towards the New Year

As we speed through what will be a hectic Fall and into 2025, we can only expect instability to continue and the demand for well-being products and services to grow.?

That said, the market will only respond to companies and leaders with vision and the ability to offer goods and services meeting the needs their core customers. For some reason, this is easier said than done. Stability and consistency are required, but panic and reactivity are more often the response.

Leaders and companies that head in directions not supported by their core customers or their core competencies (earned after years of delivering value), will find themselves shrinking in size and relevancy, no matter how big the demand for well-being becomes.