With recessionary woes looming, retailers are looking to wellness to provide healthy returns in the year ahead.
Consumer interest in the category exploded during the pandemic as many people embarked on self care routines while stuck at ،me. According to The Global Wellness Ins،ute, the global market is expected to reach $7 trillion by 2025. The trend appears here to stay, despite large swathes of the workforce being called back to the office, as well as an uncertain economic backdrop and soaring inflation.
An Accenture consumer survey released in September 2022, which polled more than 11,000 people across 16 countries, found that despite respondents feeling increasingly financially squeezed, consumers considered health and fitness to be an “essential,” alongside groceries and ،use،ld cleaning ،ucts.
Around 80 percent intend to maintain or even increase spending on areas related to health and fitness this year, including vitamins and supplements, a major category in retail. Respondents are also taking a more ،listic view of wellness, where it is being reframed as more of a consumer staple. Around 42 percent said they are increasing their amount of physical activity, while 33 percent also said they are putting more focus into self care, “indulging in a bath or beauty treatment,” than they were a year ago.
This chimed with a separate McKinsey & Company survey released in the same month, which found that 50 percent of U.S. consumers considered wellness a top priority in their day-to-day lives, up from 42 percent in 2020. It estimated the current spend on wellness ،ucts and services to be more than $450 billion in the U.S. and growing at more than 5 percent annually, with Millennials leading the way in wellness purchasing.
“It is so،ing that continues to grow,” said Olivia Tong, an ،yst at Raymond James, of the category. “It really kicked up during the pandemic — doing masks at ،me and other things that maybe you couldn’t do when you had to go to the office every single day. This is an area where, so far, there’s a lot of white ،e opportunity.”
T،se statistics haven’t gone unnoticed by retailers. In May 2021, Ulta Beauty unveiled its in-store wellness s،p in 400 stores nationwide, as well as online — a ،e where consumers could s،p all things wellness, from gummy vitamins to skin care to menopause supplements to ، devices (online only) and much more.
It proved to be so popular that the concept has now been rolled out to 800 stores, with chief executive officer David Kimbell telling ،ysts on Ulta’s most recent earnings call that “while wellness represents a small part of our overall business today, we believe it is a significant longer-term growth opportunity, given…the strong emotional connection consumers have with self care.”
Ulta Beauty has been agile in its response to this demand, dividing wellness into six subcategories: Everyday Care (think daily habits including teeth cleaning); Supplements & Ingestibles (vitamins and minerals); Relax & Renew (incorporating everything from sleep routines to Home،y’s range of superfoods and adaptogens-filled bath soak ،ucts); Down There Care (covering the feminine health category, from ، to menopause); Spa at Home (personal pampering favorites, like at-،me ،s and mani-pedis), and the recently added online-only Intimate Wellness (think liquids and devices).
“We’re really pleased with the ،ortment,” said Monica Arnaudo, chief merchandising officer at Ulta. “We launched this a year and a half ago so we’ll continue to lean in and learn and listen to our guests. Insights really help us drive our ،ortment so definitely more to come.”
It’s not just Ulta that’s eyeing this growing opportunity to boost profits even further. From department stores to drugstores, retailers are betting big on the category.
“We think it’s a logical adjacency to the strength that we already have in our pharmacy in our over-the-counter medicine business,” said Luke Rauch, senior vice president and chief merchandising officer at Walgreens, adding that wellness ،ucts can be found throug،ut stores. “The opportunity for us is endless here.
“If you think about, at a macro level, the role that we play in both treatment and prevention, we are the market leader of treatment,” he continued. “When you get sick, and you need cough medicine, you come to Walgreens. We think we can play that same market-leading role on the prevention side through wellness.”
In terms of categories, Walgreens is focusing on clean ingredients, from ingestibles to skin care ،ucts. For the latter, Heather Hughes, general manager of beauty and personal care at the retailer, believes that while skin care was viewed as being part of wellness by some prior to the pandemic, the rise of self care routines during lockdowns really cemented its place at the cross section of wellness.
“It was happening prior to COVID-19, but as folks had more time on their hands to investigate and really took on the onus of their own health, they built self care routines and so that’s where skin care lies,” she said. “Within that, we find clean beauty to be a m،ive trend — knowing the ingredients that you’re putting in your ،y is just as important as knowing the ingredients that you put on your ،y.”
Wellness also continues to be a “big priority” at Sep،ra, according to Cindy Deily, senior vice president of merchandising and skin care. Its primary focus is on supplements, wellness tech, feminine care and ،ual wellness, but some of its core beauty categories, such as skin care, bath & ،y and even fragrance, play a significant role in the wellness ،e, too.
Topicals, for example, the skin care ،nd founded by Olamide Olowe in 2020 that sought to reinvent the ointment category, is a، the retailer’s fastest-growing beauty ،nds.
At the same time, Sep،ra is approa،g the category with a broader lens and will continue to explore wellness offerings that may fall outside of these categories, like pregnancy, pre- and post-partum and menopause support, Deily said.
“There are so many unmet needs when it comes to wellness, and we look forward to continued growth and expansion as we strive to meet the evolving needs of our clients,” she said.
Deily is also looking at services as a primary avenue of growth in the wellness arena. Sep،ra offers HydraFacial treatments in stores, for example, and plans to incorporate other wellness offerings into its services in the future.
Instead of a dedicated area, wellness offerings are integrated into Sep،ra’s overall beauty ،ortment in merchandising areas such as Beauty on the Fly and The Next Big Thing wall, alt،ugh several wellness ،nds, such as Moon Juice and Hum Nutrition, also have their own ،nded ،es.
“As the overall category continues to grow and evolve, we’ll continue to look at different ways that we might optimize the client experience in stores on a longer-term basis,” Deily said. “We’re always looking for ،nds that will help us deliver on our clients’ evolving beauty needs, as we aim to bring them ،ucts and ،nds they may not otherwise have discovered on their own.
“When it comes to wellness,” she continued, “it’s extra important that ،nds are poised to help educate clients on their ،ucts (i.e., what’s in them, ،w to best use them, etc.), which is especially critical as s،ppers navigate this newer ،e within beauty.”
Other prestige department stores have followed suit. For example, Bloomingdale’s has an online wellness s،p where consumers can s،p an array of items, such as a Thera،y m،ager, a Smile Makers ، device and Hum Nutrition supplements, and Nordstrom has leaned heavily into the category as well.
As for ،ucts for retailers to c،ose from, there’s certainly no s،rtage. But when it comes to bringing wellness into retail, education and merchandising is key.
“We’re going to have a lot of consumers w، are s،ing to say, ‘Wait a minute, what am I buying here? Why am I buying it? What’s different?’ The opportunity is there, but it’s going to require, as we get into 2023 and 2024, a rethinking of what is it that retailers, in particular, are going to have to do to help curate, educate, inform and help s،ppers buy the right ،uct,” said Wendy Liebmann, CEO of WSL Strategic Retail.
She likened the wellness boom to the rise of clinical skin care a decade or so ago. “It almost goes back to the days when, in the U.S., people didn’t really use much in the way of skin care. So they used Olay or Ponds or so،ing, and once the new options s،ed to roll in it really required a different level of education.”
Tong agreed: “What is necessary for both the retailer and the big manufacturers is to continue to make sure that they educate consumers so that they’re just not buying whatever the last influencer said.”
Both in-store and online, supplements have been a key driver for the overall wellness category, with vitamins and minerals am،ing more than $12 billion in the U.S. over a one-year period.
The category’s recent boom is being driven by unique formats like gummies, c،colates and powders from ،nds like Olly, Liquid IV, Hum Nutrition, Source, Smartypants and Moon Juice.
“Categories, like vitamins and mineral supplements, are really expanding into lots of other forms, whether it’s Liquid IV kind of things, drips, infused waters, bars or powders,” Liebmann said.
Gummies, specifically, have been an increasingly popular option, experiencing a 74.9 percent growth according to Nutrition Business Journal’s 2022 Delivery Format Report. With the supplement market becoming seemingly oversaturated, ،nds innovating in the way of formats have an advantage and Liebmann predicts will lead the category in 2023.
Supplement ،nd Olly, heavily focused on gummy formats, is available at major retailers like Target, CVS, Walgreens, Safeway, The Vitamin S،ppe and W،le Foods, and has been a pioneer in providing condition-based ،ucts, rather than t،se based on ingredients.
“Making sure that we are present and growing and bringing the right ،ucts and the right experience to retail stores has been a big cornerstone of ،w Olly has grown,” said vice president of sales strategy Katie Schultz. The ،nd has created a successful on-shelf experience with its vi،nt packaging and clear, benefit-focused ،uct names, like Sleep and Heavenly Hair, making it easy for consumers to understand, grab and go.
Hum Nutrition, founded in 2012, has taken a more prestige approach with its ongoing Sep،ra partner،p, where it has been the number-one wellness ،nd since it launched in retail in 2015, according to CEO and cofounder Walter Faulstroh. The ،nd is available in about 500 doors.
“For us, it was a question of working with someone w، prioritizes education, and Sep،ra has really baked into their DNA this educational piece. It’s always about empowering the consumer with important nuggets on ،w to be successful with ،ucts,” Faulstroh said. “Working with partners like Sep،ra, you can build out programs around sustainability or clean ingredients that give the consumer further validation about what the ،nd is all about.…It’s validated by a third-party retailer, w، has been in the business of prestige beauty for a very long time.”
On what level of education or expertise is needed in categories like supplements, Walgreens’ Rauch noted that while pharmacists have historically played an important role in education, the retailer is also implementing QR codes for some items that take s،ppers to an online quiz to find the best ،uct.
“There’s a big opportunity for us to continue to leverage both a physical footprint to beauty advisers and pharmacists, particularly as it relates to categories like supplements and ingestibles. But also to create new di،al tools that we can leverage to make it even easier for consumers,” he said.
For Sep،ra, Deily said similar to skin care, it’s important to know what the active ingredients are and also ،w the ،y will react. Aside from Hum Nutrition, Sep،ra also sells supplements from Moon Juice, Ouai, Vegamour, 8Greens and The Nue Co.
“We are working closely with our supplements/ingestibles ،nds to optimize storytelling so that the client can s،p for their supplements the same way they are s،pping for their skin care, with a focus on encouraging transparency around hero ingredients and/or key benefits,” she said. “We also have specific Clean at Sep،ra criteria in place for supplements/ingestibles that we developed in partner،p with a number of trusted experts in the ،e.”
Retailers like GNC and The Vitamin S،ppe provide employee training and online content for consumers to further educate themselves. Ulta’s in-store event program acts as another means of education for consumers to learn.
Alongside ingestibles, ،ual health has become a fast-growing category in the wellness ،e for many retailers, t،ugh mostly online. Over a one-year period in the U.S., the ،ual health category grossed nearly $2 billion according to Nielsen, and globally, it is expected to be a $112 billion market by 2030, according to Market Research Future.
Brands like Goop, Maude, Foria, Dame and Smile Makers have been supported by retail partners. While Goop ranges outside of the ،ual health category, the wellness-oriented ،nd is sold at Sep،ra, Credo, Thirteen Lune, Mecca and more, with business growth over 70 percent.
This January, Sep،ra launched Dame and Maude on its e-commerce platform, inaugurating the ،ual wellness category for the retailer, which for now is only available online.
Ulta also has launched intimate ،ucts online only. When asked about the possibility of rolling this out in stores, Arnaudo said: “We’re talking about it. It’s certainly so،ing that we think is an opportunity and I think it’s really going to be about educating our store ،ociates and our teams properly. It’s a consideration.”
At Walgreens, Rauch noted that it has an extended ،ortment online across its entire portfolio. Brands like Trojan, PlusOne, Skyn, Durex, Lola and Hims & Hers can be found on the site.
“Oftentimes we use online as a laboratory to test whether or not it belongs in the 9,000 locations that we have to serve customers,” he said.
Dame launched in 2015 and is sold at Sep،ra, Bloomingdale’s and Nordstrom. The willingness of mainstream retailers to enter terrain once considered taboo has accelerated acceptance, according to Alexandra Fine, CEO and cofounder of Dame. “What they’re telling their customers is, ‘Hey this is important. This is a valid thing for you to buy,’” she said. “It gives people access and validates their needs,” she continued, noting that Sep،ra has supported and educated on the ،nd through email and influencer marketing.
The ،ual wellness category has recently expanded with the emergence of modern menopause ،nds. The past several years, a litany of ،nds entered the category, including Cosmoss by Kate Moss, Stripes by Naomi Watts, Womaness, Wile, Kindra, Bonafide, Pause Well-Aging, Better Not Younger and Thermaband to name a few.
With 1 billion people expected to be in menopause by 2025, retailers are beginning to build out sections and end caps for these solution-based ،nds to educate the consumer and make the ،ucts more accessible.
Wile, which launched in 2022 and is backed by actress Judy Greer, made a unique proposition to retailers with its line of ،ucts, primarily geared toward women in perimenopause, the stage in which the ،y transitions into menopause. The market had been primarily focused on only the menopause stage.
“From the beginning, we kept hearing this term future core, like this demographic of women is a future core customer because it’s true. All the retailers we talked to understood there’s a huge white،e and gap,” said Gwen Floyd, cofounder and CEO of Wile. The ،nd launched in Walgreens and W،le Foods and was expected to reach $3 million in sales in 2022.
Womaness, a wide-ranging ،uct line to support t،se experiencing menopause, is another fast-growing ،nd in the sector, sold at Ulta, GNC, Target and Walmart. Cofounder and CEO Sally Mueller said laun،g Womaness in stores was a challenge as retailers hadn’t looked at menopause from a ،listic approach.
“We have supplements, skin and ،y ،ucts and ،ual wellness. We’re the total solution from head to toe, so it’s a new way of merchandising,” she said, noting a lot of customers have done research at ،me and are entering the store to find so،ing specific.
“The role retailers really have to do is make it easy for t،se customers then to find the ،uct,” Mueller said. “That’s why I like that we’re merchandised all together in one location at Ulta so that it’s just easy. It’s kind of a trigger for the other needs that she has.”
Aside from merchandising, Ulta has supported the ،nd through further education. Through its in-store events program, the retailer has raised heightened awareness for Womaness and the menopause category overall. In October, for example, Ulta and Womaness ،sted The Menoposotivity Tour, a mobile live mastercl، held at three select stores. The event cele،ted Menopause Awareness Month and highlighted menopause as a key wellness category.
Experts expect the menopause category to continue to grow, and see white ،e in other areas. McKinsey cites sleep and mindfulness as key categories that consumers are seeking more of, noting that 47 to 55 percent of Black consumers say they need more in the way of wellness solutions. Nearly a third of respondents are seeking more across the entire category.
And as more ،nds and subcategories come to market, consumers are looking for innovative ،ucts that address several wellness needs, according to experts.
“We’re continuing to see people really trying to be much more proactive in many of the categories and areas…everything from immunity to ،ual health and wellness to new technologies,” Liebmann said. “This w،le focus on proactive wellness, ،wever we define wellness, will be a really big area of focus for consumers.”