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Health & Wellness Consumer AnalysisExecutive Insights
The 2016 Health & Wellness Study was conducted by Alex Evans and Chris Randall, Managing Directors in L.E.K. Consulting’s Retail & Consumer practice. Alex is based in Los Angeles and Chris is based in Boston.
For more information, contact [email protected].
2016 Health & Wellness Study
The 2016 Health & Wellness Study examines consumer spending preferences for nutritional supplements, personal care and healthy grocery products among Millennials, Gen X and Boomers.
The study looks at category engagement, drivers of channel selection and, the potential for subscription services, as well as the success factors for private-label products.
Health & Wellness Consumer AnalysisExecutive Insights
We investigate three major categories of health & wellness consumables:
• Functional food & beverage
• Nutritional supplements
• Skin care
Three categories of consumables
Functional food & beverage
• Healthier-for-you snacks
• Functional beverages
Nutrition supplements
• Vitamins, minerals and specialty supplements (VMS)
• Sports nutrition
Skin care
• Facial cream
• Hand cream/body cream
2016 Health & Wellness Study
Health & Wellness Consumer AnalysisExecutive Insights
While some H&W categories are more “mature” in terms of generational penetration (e.g., healthier-for-you snacks and personal care), there appears to be significant opportunity to bring Gen Xers and Boomers into more complex categories such as functional beverages and sports nutrition.
Underpenetrated opportunities
Consumables engagement by category and segment (2016) Percentage of segment who have purchased in the past 12 months (N=1,934)
Note: Q6. Have you purchased any of the following goods/services within the past 12 months? Source: L.E.K. Health & Wellness Consumer Study (February 2016)
2016 Health & Wellness Study
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Functionalbeverages
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Health & Wellness Consumer AnalysisExecutive Insights
With the exception of VMS and facial care, at present, reported Boomer spending is roughly half the per capita rate of Millennials and Gen Xers, once again suggesting additional opportunity to drive growth within this segment.
More room for Boomers
Average spend per customer* in the past month (2016)
Note: Q8. In the past month, approximately how much did you spend on the following goods and services? *Among customers who have spent more than $0 in the past month in the broader category (nutritional supplements, functional F&B or skin care). Source: L.E.K. Health & Wellness Consumer Study (February 2016)
2016 Health & Wellness Study
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Functional F&BDollars (N=1,751)
Personal careDollars (N=1,364)
Nutritional supplementsDollars (N=1,434)
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Healthier-for-you snacks
Functional beverages
VMS
Sports nutrition
Body care
Facial care
Hand care
51 5544
62 53
34
0
20
40
60
80
100
120
140
160
78
Gen X Millennials
113
Boomers
108
74 70
36
68 67
37
0
20
40
60
80
100
120
140
160
137
Millennials
142
Boomers
73
Gen X
49 4937
42 44
20
42 44
20
0
20
40
60
80
100
120
140
160
Gen X
138
Boomers
77
Millennials
133
Health & Wellness Consumer AnalysisExecutive Insights
While online purchases continue to make gains (currently ranked second for VMS and third for personal care) and healthy grocery has become a core channel for functional F&B, the FDMC channels remain critical across all H&W consumable categories (at around 60%-75% of total sales).
*Food, drug, mass merchant and warehouse club
Conventional channels are still king…
Share of consumer spend by channel and category*Percentage of total spend
2016 Health & Wellness Study
Notes: Q53. How did your spend on nutritional supplements in the past month break down across each of the following types of retailers? Q63. How did your spend on facial skin care, personal hand care or body care in the past month break down across each of the following types of retailers? Your best estimates are okay. If you have not purchased through a particular type of retailer, leave blank or enter “0”- Percent of total spend? Q76. How did your spend on functional beverages and healthier-for-you snacks in the past month break down across each of the following types of retailers?; 1 Responses are not weighted by total level of food & beverage or nutraceutical spending; **Other includes multilevel distributors, workout facilities, subscription services and other. Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
41 39 35 40
25 24
98
1413
8
6 7
179
7
16
18
9
6
6 9
66
7
60
80
40
20
0
100
Personal care(N=701)
3
Functionalbeverages(N=409)
3
Healthier-for-yousnacks
(N=651)
3
1
3
Nutritionalsupplements
(N=690)
73% 69% 59% 66% % FDMC
Department store
Specialty store
Other**
Convenience store
Online
Drugstore
Traditional grocery
Mass merchant/warehouse
Healthy grocery
Health & Wellness Consumer AnalysisExecutive Insights
Though they utilize more diverse channels than their Gen X or Boomer counterparts, Millennials still rely heavily on conventional FDMC channels (68%, compared with roughly 75% of older consumers) when shopping for H&W consumables.
… even among Millennials
Share of foodspend and beverage consumer spend by channel and customer typePercentage of total
2016 Health & Wellness Study
Notes: Q76. How did your spend on functional beverages and healthier-for-you snack in the past month break down across each of the following types of retailers? **Other includes multilevel distributors, workout facilities, subscription services and other. Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Drugstore
Convenience store
Other**
Healthy grocery
Traditional grocery
Online
Mass merchant/ warehouse
4247 47
20
22 20
1513
11
6
87
6 7
5
6
100
40
60
20
80
0
3 4
Generation X(N=98)
4
Boomers(N=101)
4
3
Millennials(N=189)
68% 75% 74% % FDMC
Health & Wellness Consumer AnalysisExecutive Insights
For many health & wellness categories, consumers are unwilling to take a separate shopping trip and prefer to make the most convenient use of channels where they already shop. This means that FDMC channels have the potential to capture the most share as long as they catch up and provide the right assortment.
Price, convenience inform channel choices
2016 Health & Wellness Study
Reasons for shopping channels, by categoryPercentage of responses
Note: Q54. What are the top reasons that you choose to purchase vitamins, minerals, herbals and specialty supplements through these retailers? Q64. What are the top reasons that you choose to purchase facial skin care, personal hand care or body care through these types of retailers? Q77. What are the top reasons that you choose to purchase functional beverages and healthier-for-you snacks through these retailers? Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Nutritional supplements (N=690)
Personal care (N=701)
Food and beverage (N=689)
0 5 10 15 20 25 30 35 40 45
Best fits my lifestyle
It’s the go-to store for this type of product
Broadest selection
Convenient: close to my home/office
Highest-quality products
Easy to browse
Helpful customer service
I can’t find the brands I like anywhere else
Lowest prices
Convenient: I already shop there for other things
5
7
7
9
9
14
21
24
36
41
5
7
10
13
26
42
5
8
9
11
11
10
14
19
25
37
5
8
14
23
Health & Wellness Consumer AnalysisExecutive Insights
When it comes to channel selection criteria, L.E.K. Consulting’s findings reveal clear generational distinctions, with Boomers/Gen X consumers preferring value (including high quality/a go-to destination at the lowest possible price), compared with Millennials, who seek channels that best match their lifestyle (both philosophically and in terms of proximity to home/work).
Channel drivers by age
Reasons for shopping channels, by categoryPercentage of responses
Note: Q54. What are the top reasons that you choose to purchase vitamins, minerals, herbals and specialty supplements through these retailers? Q64. What are the top reasons that you choose to purchase facial skin care, personal hand care or body care through these types of retailers? Q77. What are the top reasons that you choose to purchase functional beverages and healthier-for-you snack foods through these retailers? Source: L.E.K. Health & Wellness Consumer Study (February 2016)
2016 Health & Wellness Study
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Nutritional supplements Personal care Food and beverage
19
13
41
45
33
46
25
29
12
36
32
51
38
22
14
19
31
47
0 10 20 30 40 50 60
Lowest prices
Convenient: I alreadyshop there for
other things
It’s the go-to storefor this typeof product
Convenient: closeto my home/office
I trust the products sold at this retailer
Highest-qualityproducts
4
20
3
12
1
(4)
4
(3)
2
0
(7)
(13)
0
0
0
(3)
(8)
(4)
(20) 0 20
(3)
1
1
(5)
(5)
10
0
0
1
(8)
(6)
3
(4)
(1)
3
(2)
1
0
(20) 0 20
(3)
(2)
(23)
(11)
2
(2)
2
(2)
0
2
9
8
7
2
1
(2)
4
4
(40) (20) 0 20 40
Average of generations Millennials Generation X Boomers
Health & Wellness Consumer AnalysisExecutive Insights
Supplements notwithstanding, L.E.K. notes increased interest in subscription services across H&W categories. This excludes Boomers, however, who generally continue to focus on traditional retail models.
Increased interest in subscription services
Likelihood to purchase a health & wellness product subscriptionPercentage
2016 Health & Wellness Study
Note: Q80. If this subscription box service were available with items and products that you would be interested in and was priced at a cost that you found reasonable, how likely would you be to subscribe to a monthly membership program? Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Definitely would not
Probably would
Probably would not
Definitely would
No interest
Might or might not
Personal care products Nutritional supplements
1524 23 28 27 30 25 28
1712
3324
13
3029
15
33 26
14
32 24
12
19
24
7
1414
17 13
20 14
8
1113 11
14
7
1816
6
1314
8 769961
2 1
70
0
80
10
50
20
60
30
40
90
100
GenX
GenX
Boom.
4
Mill.GenX
Boom. GenX
GenX
Mill. Boom. Boom.
4
Boom. Mill. Mill. Boom.Mill.GenX
5
Mill.
Functionalbeverages
Healthier-for-yousnacks
Hand andbody wash
Facial cream VMS Sports nutrition
Functional food & beverage
Health & Wellness Consumer AnalysisExecutive Insights
Generally speaking, H&W consumers are amenable to private- label versions of personal care and nutritional supplement products (more than 80% have already purchased or would consider purchasing such alternatives in the future).
Once again, however, Boomers remain skeptical, and instead continue to favor trusted brands over private-label substitutes.
Private-label preferences
Willingness to purchase private-label brands, by product segmentPercentage (N=749)
2016 Health & Wellness Study
Note: Q65. Have you ever purchased any store-brand or private-label facial skin care, personal hand care or body care products? (e.g., Everyday 365, Sephora, CVS-branded products)? If not, would you consider purchasing store-branded facial skin care, personal hand care or body care? Q55. Have you ever purchased any store-brand or private-label nutritional supplements (e.g., Everyday 365, Kirkland, The Vitamin Shoppe or branded products)? If not, would you consider purchasing store-branded nutritional supplements? Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Generation X (1967-1981) Boomers (1947-1966)Millennials (1982-2016)
Have not purchased but would consider purchasing Have purchasedWould not consider purchasing
Skin care products Nutritional supplements
29
19
40
54636564
4247
54
414148
364448
47
5236
2630
4137
35
4141
41
39
3739
34
8111156
171610
181911
2519
14
10
0
100
50
30
20
40
60
70
80
90
Mill.Mill. Boom. Boom.Boom.GenX
GenX
GenX
GenX
GenX
Mill. Boom. Mill. Mill. Boom.
Facial skin care Personal hand care Body care VMS Sports nutrition
Health & Wellness Consumer AnalysisExecutive Insights
While value may be key to sales of private-label nutritional supplements and personal care products, many H&W consumers believe that the quality of these alternatives matches or exceeds their branded equivalents.
To date, the majority of non-branded purchases have been limited to basic/staple offering. However, there appears to be a broader opportunity for value-added, higher-price-point private-label products in health & wellness.
Price, quality fuel non-branded sales
2016 Health & Wellness Study
Overall: Perspectives on private label, by categoryPercentage of responses*
Note: Q56. Do you agree or disagree with each of the following statements as they relate to nutritional supplements? Q66. Do you agree or disagree with each of the following statements as they relate to facial skin care, personal hand care or body care? *Percentage of responses based on respondents who answered they would at least consider purchasing private labels in Q55/65. **Percentage of responses that disagreed with the following statement: “Name-brand vitamins, minerals, herbal supplements and sports nutrition products have higher safety and regulatory standards.” Source: L.E.K. Health & Wellness Consumer Study (February 2016)
Overall 53% 84% 72% 41% 84%
87
57
72
90
76
87
48
73
85
65
81
28
70
81
32
0
20
40
60
80
100
Healthier-foryou snacks
VMS Sports nutrition Personal care
Personal care
Boomers (1947-1966)
Nutritional supplements
27
59
69
69
71
20
62
64
61
72
0 20 40 60 80
Higher safetyand regulatorystandards thanname brand**
Good valuefor money
Same orbetter quality
as name brand
Cheaper thanname brand
Buy only forbasic/staple
products
Overall
(9)
9
4
(3)
(1)
(2)
3
5
3
(2)
(10) 10 0
6
0
3
4
(4)
(5)
(4)
(3)
0
(20) (10) 0 10
(12)
0
8
(5)
(7)
3
(6)
(10) (20) 100
(18)
(19)
(11)
(10)
Millennials Generation X Boomers
Health & Wellness Consumer AnalysisExecutive Insights
About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help business leaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently make better decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global companies that are leaders in their industries — including the largest private and public sector organizations, private equity firms and emerging entrepreneurial businesses. Founded more than 30 years ago, L.E.K. employs more than 1,200 professionals across the Americas, Asia-Pacific and Europe. For more information, go to www.lek.com.
L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2017 L.E.K. Consulting LLC
About the AuthorsAlex Evans, CFA, is a Managing Director in L.E.K. Consulting’s Los Angeles office. He focuses on consumer-facing sectors encompassing both retail and media. He specializes in a diverse set of verticals, including Health & Wellness, Food & Beverage, Specialty Retail, Sports/Live Entertainment, Television and OTT/Digital Media.
Chris Randall is a Managing Director and Partner in L.E.K. Consulting’s Boston office. He is focused on the Retail & Consumer Products sectors, advising clients on a range of critical strategic issues, including growth strategy, retail format and network strategy, brand and marketing strategy, e-commerce strategy, international expansion, and mergers & acquisitions.