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  • 1. Int. J. Sport Management and Marketing, Vol. 5, No. 4, 2009 417 The industry of wellness: the improvement of well-being António Sacavém* Solinca Health & Fitness Clubs – SONAE Rua Viriato, nº13 – 1º 1069–315 Lisbon, Portugal E-mail: antonio.sacavem@solinca.pt *Corresponding author Abel Correia Faculty of Human Movements Technical University of Lisbon Estrada da Costa – Cruz Quebrada 1495–688 Cruz Quebrada, Portugal Fax: (+351) 214 144 712 E-mail: acorreia@fmh.utl.pt Abstract: The purpose of this article is to analyse the dynamics of the well-being market. We also intend to describe the main tendencies of this industry and the need to develop a healthy lifestyle, in order to inspire all those who are interested in turning a good opportunity into an excellent business. In this context, health plagues such as sedentary habits, obesity and tobacco smoke will be referred to as well. Keywords: industry of wellness; fitness; lifestyle; health and fitness club. Reference to this paper should be made as follows: Sacavém, A. and Correia, A. (2009) ‘The industry of wellness: the improvement of well-being’, Int. J. Sport Management and Marketing, Vol. 5, No. 4, pp.417–425. Biographical notes: António Sacavém completed his Masters in Organisational Behaviour at the Superior Institute of Applied Psychology (ISPA), Lisbon, and has a degree in Sport Sciences from the Human Kinetics Faculty of the Technical University of Lisbon (FMH-UTL). Recently, he finished the International Executive Education – IHRSA University Programme, at the IESE Business School, the University of Navarra, Barcelona. As Business Director of Solinca, a large chain of health clubs (Iberia), he directs the operation in Portugal and Spain. He is also a member of the social organs of the Portuguese Health Club Association (AGAP). Nowadays, he is attending an Executive MBA in ISCTE Business Scholl, Lisbon. Abel Correia has a PhD in Human Kinetics and is specialising in Sport Sciences at the Human Kinetics Faculty of the Technical University of Lisbon (FMH-UTL), Portugal. As an Associate Professor working in the Sport Sciences Department, he teaches Sports Organisation and Sports Marketing in the FMH-UTL’s degree course in Sports Management. His interests include sports organisational strategy and sports marketing management. He has published in the European Sports Management Quarterly and in the International Journal of Sport Management and Marketing. Copyright © 2009 Inderscience Enterprises Ltd.
  • 2. 418 A. Sacavém and A. Correia 1 Introduction The wellness market consists of delivering services or selling products in a proactive way to healthy people (without any diagnosed pathology), which would encourage the reduction of the ageing effect, prevent the occurrence of diseases and add to the improvement of one’s self-esteem and body image. The wellness desire has started to influence the buying decisions of most well-informed consumers. For this very reason, supermarket shelves tend to have more and more space to receive the so-called light products. Some of the biggest ones (superstores) even have genuine shops containing health products within their own facilities. Besides this, the spreading of health and fitness clubs is also a meaningful sign of the emergence of certain worries concerning health, which are intimately related to the perspective of a strong and powerful body and mind. Despite the appearance and increase of these concerns, we can infer, for instance, that the burden of the obesity plague on the public expenditure of the European Union (EU) has assumed worrying proportions, which can be translatable into economic problems, measured in euros. There is plenty to do in order to give people the wellness they are entitled to. In this context, the article is divided into a set of parts. First, we will debate the plagues of sedentary habits, obesity and tobacco smoke, discussing also their economic impact. We will give elements about the dynamics of this market, giving leads that we consider to be real business opportunities. Finally, we will approach the main tendencies of the wellness market. 2 Lifestyles and the importance of wellness In November 2006, health ministers and other high dignitaries of the health department of 48 European countries studied the increase of the obesity problem in the continent, at a conference of the World Health Organization (WHO) in Istanbul. According to WHO, in Europe, one in two adults and one in five children suffered from overweight. The information presented in Istanbul about the advance of the disease alarmed the European authorities. “In the countries where studies took place, the predominance of overweight cases goes from 32 per cent to 79 per cent, among the male population, and from 28 per cent to 78 per cent in what concerns the female population”, according to the synthesis prepared for this meeting. The most obese are the inhabitants of Tirana (Albany), followed by those of Bosnia and Scotland. The thinnest Europeans are the Norwegians. Portugal and Malta are the two EU countries with the highest rate of obesity among children less than 11 years old, which anticipates the increase, in the medium term, of the global numbers of people with obesity; this will turn the disease into one of the most serious public health problems in the country. The importance of the obesity plague on EU public expenditure has taken on large proportions. In 2002, the annual total costs (directly and indirectly connected to the obesity issue in the EU-15) exceeded 32,8 thousand million euros each year. In 2005, the costs related to the obesity were estimated in 0,3% of the Gross Domestic Product (GDP) of the EU-15. If we extend these numbers to the 25 EU countries, the direct and indirect
  • 3. The industry of wellness: the improvement of well-being 419 costs related to obesity can be estimated in 40,5 thousand million euros and the combined costs (obesity/overweight) can reach the sum of 81 thousand million euros (Livro Branco da Comissão ao Parlamento Europeu e ao Conselho, 2007). In Portugal, according to the ADEXO, the obese population and the number of overweight people continue to rise. The numbers are enlightening: 58% of the Portuguese population suffer from overweight; 15% are obese; 3,5% have morbid obesity; 31,6% of Portuguese children are obese. In fact, we are witnessing the rising of the first generation of children who might actually die before their own parents. For a better understanding of the extent of this problem, in Portugal, the direct and indirect costs associated with the plague of obesity will exceed 570 million euros (ADEXO, 2007). So, we can clearly distinguish two socioeconomic groups: those who are anxious to adopt an active and healthy lifestyle, and all the others who have decided to follow a life of sedentary habits, ruled by defective and poorly nourishing food (example: junk food). Besides, the junk food industry is ruled by what specialists on this type of business have named the ‘chips marketing equation’, which means that 90% of the sales of this type of product are produced by 10% of its consumers. In the USA, consumers belonging to these 10% are usually obese people of low social class. The target population of obese people is especially profitable, since each of these individuals eat, on average, two times more than a person considered to have an ordinary weight. We fear that in Europe and in Portugal the situation will follow the same path, considering the already mentioned statistics. According to Pilzer (2007), a vast majority of junk food producers are studying the target population, the same way mice are studied in laboratories. Consumer studies reveal their tastes, hopes, dreams, desires, etc. Obese individuals are invited to take part in focus groups, where they are asked to try new products, to analyse marketing messages and to give suggestions. If this segment of the population shows a particular interest in a certain celebrity, that person, eventually, will show up on the radio or on TV, encouraging consumption of the new junk food product that is about to be released. A defective nutrition and sedentary habits are responsible for the increase of the obese population and for the increase of overweight people. Obesity is considered to be, among others, a factor of risk, namely concerning the development of cardiovascular diseases, according to the Portuguese Cardiology Foundation. However, obesity is not the only risk factor. In fact, every year, more than half a million people die in the EU, as a direct or indirect result of tobacco smoke. The impact of passive tobacco smoke on the health of nonsmoker Europeans has increased. It has been estimated that 25% of the total deaths caused by cancer and 15% of all the deaths in the EU are caused by tobacco smoke (Special Eurobarometer Report, 2007). Smoking also constitutes an important risk factor for arterial vascular diseases. It is known that 20% of the mortality from coronary diseases has its cause in tobacco smoke (according to the Portuguese Cardiology Foundation). It has been estimated that 32% of the EU-25 are smokers and that 21% have stopped smoking. Based upon a study that took place country by country, the results showed that Portugal has the best performance among the member states, considering that 64% of the population never smoked. Portugal is followed by Slovakia (with 59% nonsmokers) and Malta (with 57% nonsmokers). On the other hand, Denmark shows the smallest percentage regarding nonsmokers in all of the EU (with 39% of nonsmokers), followed by the Netherlands (with 40% of nonsmokers) and by Greece (with 41% of nonsmokers) (Special Eurobarometer Report, 2007).
  • 4. 420 A. Sacavém and A. Correia Attempting to face the tobacco plague, the EU started over two years ago a campaign against smoking called ‘HELP: for a life without tobacco’, addressed to young nonsmokers, to passive smokers and to those who smoked but intended to leave the habit behind. The EU nowadays is fully encouraging a policy of nonsmoking among the member states, through publicity on the media, on TV and on the internet (Special Eurobarometer Report, 2007). Sedentary habits or physical inactivity, typical of an unhealthy lifestyle, has proved to be another risk element that can cause several diseases. Sedentary habits are associated with a low quality of life, with high risk of hospitalisation and with the increase of obesity, diabetes, high blood pressure, osteoporosis, fractures, colon cancer, breast cancer, prostate gland cancer and psychiatric diseases, according to Varo et al. (2003). Also based on the same authors, the rate of sedentary lifestyle in Europe fluctuates between 43.3% (in Sweden) and 87.8% (in Portugal). Countries such as the Scandinavian ones, when compared to the ones in the Mediterranean, have a low rate of sedentary lifestyle. The senior population, the obese, the smokers, the divorced, the widow/widower and the less educated strata of society present higher rates of sedentary habits in Europe. Portugal has an inactivity rate of 87.8%; only 4,8% of the Portuguese work out in health and fitness clubs (IHRSA, 2005). The extent of the challenges reported above justifies the need for the development of the wellness industry. The services delivered by the wellness industry, as well as the products, are an evident solution to preventing the problems we have just referred to. Services provided by health and fitness clubs, the selling of natural supplements, cosmetic and plastic surgery services, preventive medicine and health nutrition products will be the main resources of this industry for the coming years. In the next section, we are going to analyse the dynamics of the wellness market. 3 The dynamics of the wellness industry The wellness industry, generally speaking, is progressing. In the USA, in 2002, this industry was worth 200 billion US dollars and now, five years later, is estimated to be worth more than 500 billion US dollars. Renowned economists, such as Pilzer (2007) – author of the book New Wellness Revolution – estimate that the wellness industry in the USA, in 2012, might be worth 1 trillion US dollars (an amount that rises above the UK gross domestic product). The niches related to health nutrition, natural supplements and fitness workouts in health and fitness clubs present themselves as the main devices to obtain the estimated increase. In Europe, the health and fitness industry (health and fitness clubs) is worth nearly 13 billion euros and it presents a potential increase (comparative to the European medium penetration rate – 5,5%) of 1,7 billion euros (IHRSA, 2005). In Portugal, the prediction is 288 million euros (penetration rate of 4,8%) as to what the fitness industry might be worth; the Portuguese market presents a potential increase estimated at 42 million euros. The Portuguese fitness market is expected to increase strongly, considering that the penetration rate is below the European average (–0,7%) (IHRSA, 2005). Following there is a comparative study (USA, Europe and Portugal) of the main contents to be considered is this business.
  • 5. The industry of wellness: the improvement of well-being 421 More recent elements, still under study, suggest that among the European countries, the Netherlands is the leader when we talk about the fitness penetration rate (17%), followed by Spain (with 15,3%) and then Sweden (with 14,3%). On the other side, countries like Slovenia (0,4% penetration rate), Slovakia (0,4% penetration rate) and Lithuania (0,6% penetration rate) present the lowest levels of fitness penetration. In Portugal we figure that the penetration rate has increased by 0,5% between 2005 and 2007, which means it increased from 4,8% to 5,3%. The same source shows us that in the EU-25, the business amount is 18 billion euros, with the UK and Germany being the leaders of this race, with 4,2 billion and 3,5 billion, respectively. Portugal shows an amount of business roughly estimated at 288 millions (The IHRSA Global Report, 2007). When we focus upon the people who are not overweight, we can notice that an increasing number of individuals are adopting a healthier lifestyle everyday, especially through balanced diets and workouts. This group of people who have decided to invest in their wellness includes opinion makers and celebrities, such as famous athletes and artists whose professional lives literally depend on their wellness level and on their looks. This group of people have embraced, quietly, a new way of being, centred on a healthy diet, physical exercise, natural supplements, prophylactic medicine and the evolution of their emotional intelligence. In ancient Greece, physical force, health and beauty were just as important elements to obtain excellence as creative talents, the intellect or moral character. Indeed, the outer beauty was seen as a reflection of the inner beauty. In a certain way, history repeats itself and the growing group of people who invest in their own wellness have three main goals: to improve their looks/image and their energy levels, to retard the ageing process and to prevent the occurrence of diseases. However, only in the last few years have we seen the emergence of efficient wellness products and services available to the general population. Before that, only the wealthy were able to have access to wellness services and products. Nowadays it is possible to practise a physical activity at health and fitness clubs for a reasonable price and we can find healthy food as well as natural supplements in the ordinary supermarkets, available to all consumers. A rising number of daring people are investing in the wellness industry and by doing so, they are creating a solution for what is mainly an economic and social problem (please consult the above costs of obesity in Portugal). Baby boomers, people whose ages now are situated between 43 and 61 years old, will be the socioeconomic group that will invest more, when we talk about the developed countries in what concerns wellness services and products. Actually, this target has started to be more and more attractive to the health and fitness clubs. There are at least two considerable reasons for the main health and fitness operators to consider this target so desirable: 1 economic power 2 fidelity to the brands. About the first item, we have to emphasise that, in the USA, baby boomers represent 28% of the population and 50% of the gross domestic product. In other words, boomers represent 7 trillion US dollars, looking at an economy that is worth 14 trillion (Pilzer, 2007). Referring to the second topic, it is important to start by mentioning the fact that
  • 6. 422 A. Sacavém and A. Correia the health and fitness industry suffers from what is called Churn Rate, commonly named in this market Attrition Rate, around 40% (McCarthy, 2004). The decrease of the churn rate or, in other words, the rise of the retention rate, will be the main challenge for this industry in the years to come. This being the case, it is crucial to win a certain target that by nature shows better numbers in matters of fidelity. 4 Main tendencies within the wellness market 4.1 Customer relationship management When referring to the retention of clients, it is important to mention that one of the main tendencies of the health and fitness industry is the development and the massive implementation of advanced Customer Relationship Management (CRM) systems – with a strong focus on technological novelty. Using sophisticated hardware and software, health and fitness clubs will be able to know, in detail, the preferences of their members and that will also allow them to develop creative relationship marketing actions (Peppers and Rogers, 2004). Once we are referring to a market which is getting more and more competitive, the focus on the CRM is of extreme importance for the health and fitness organisations, if they want to reach the desirable profitability levels, as well as long-term success. Even more, the leaders of these corporations will realise, in the medium term, the importance of relationship marketing in order to build profitable relationships with each client and to increase the global value of operators of this market. Investing in relationship marketing will promote, on the one hand, the decrease of the churn rate and, on the other hand, the increase of the medium gain per member, these being achieved by stimulating the added-value consumer services (such as personal training, day SPA, special programmes, outdoor activities, etc.). For instance, members who would participate more often in body/mind/spirit activities would receive a special card of the yoga club and discount offers for massage sessions. Moreover, regular clients at cycling classes would be invited to join the BTT club, which would promote bicycle walks during weekends. Health and fitness clubs will know which clients are better consumers of extra services and will be able to predict future investment. Probably there will be micro-targets (Loveman, 2003) – for example, the gold clients (who would wait less in the queue), the platinum clients (who would not wait too much) and the diamond clients (who would never have to wait) – and incentive systems will be developed to reward those members who would make extra investments at the club (for example, offering the locker for a period of time, giving them some privileges regarding the acquisition of tickets for the most wanted classes, clearing up sessions for the VIP clients). Finally, the impact from the implementation of the CRM system is, apparently, unlimited and could produce a remarkable outcome. 4.2 Global wellness services In the 1980s, people went to the butcher to buy meat, to the supermarket to buy vegetables and fish, to the ready-made store to buy clothes, to the bank to manage their account and to the travel agency to book their holidays. All these products/services
  • 7. The industry of wellness: the improvement of well-being 423 were bought in different places, which required a considerable waste of time. Today, consumers go to a shopping centre and find all these products/services together at the same place; most of the time, they pay less than they used to and they do it in a faster way. It is predictable that the same will happen at the health and fitness clubs. Clients will tend to desire to take care of their wellness as a whole, without leaving the facilities of their own favourite club. So, it is of importance that operators make a strong bet on providing global wellness services. Thus, in the future, health and fitness clubs will be adapted management centres concerning wellness and the personal look, where clients will find a wide offering of wellness products and services. For example, it is usual that a weight control programme will come to include the following products and services: • personal training or group personal training sessions • cellulites treatment sessions • external nutrition products (skin treatment) • natural supplement products • nutritional counselling sessions • time management sessions and wellness coaching • personal development sessions • activity and ancestral massage sessions of body/mind/heart/spirit, within the context of the day spa • personal finance management sessions • personal image management sessions. The wide offering of products and services will allow the clients to enjoy an unforgettable experience of complete wellness. Consequently, health and fitness operators will have the chance to increase the medium profit per member and of reducing the churn rate. 4.3 Focus on the extremes: ‘no frills’ versus ‘high end’ Markets situated at the extremes of a continuum seem to have the best increase potential for the coming years. According to this, we predict that success will be obtained by those who will decide to choose the ‘no frills’ market (low cost, simplicity, style) and the ‘high-end’ market (quality, fineness, distinction). In Portugal there is plenty of room for the health and fitness operators to invest under the ‘no frills’ concept. To reach this market segment, it is predictable that brands come to make the access to the health and fitness clubs easier, namely by decreasing the prices of the basic services (monthly fees) and by removing the entrance fees (or by charging a mere symbolic value).
  • 8. 424 A. Sacavém and A. Correia There will appear more flat organisational structures and the services offered together with the monthly fee will be restricted. There will be only services which consumers consider to be indispensable (simplifying). Operators should keep in mind that, when reducing unnecessary expenses, they should do it without putting at risk the reputation of a style image. 4.4 Franchising small dimension places for the female population Over the past few years we have seen the emergence of a quiet and significant number of neighbourhood health and fitness clubs, not too big, exclusively created for the female public. Under the concept of mantra – a complete workout in scarcely 30 min – these health and fitness clubs have managed to conquer a critical mass of the population who was not identified with the idea of fitness at large spaces or even at the traditional neighbourhood health and fitness clubs. They are addressed to a target that has not been exploited yet by the big fitness industry companies, meaning overweight women, unhappy with their bodies and who usually do not work out. This kind of health and fitness club is the answer, in a simple way, for one of the goals of those women: to lose weight through a fast workout programme, at a welcoming environment where they can feel fully integrated. The fact that usually such facilities are not far from home or from work and the specificness of the workout are the strongest points attached to the concept. One of the most well-known brands in this segment exists in 50 countries, serves four million women and makes an invoice of roughly 725 million euros every year. Their aim is to go from 10 000 units to 30 000, in only ten years. This goal shows exactly the increasing potential of the concept, which predictably will represent a considerable share of the business volume of the fitness area in Europe during the next few years. 5 Conclusion Most obese people do not possess the indispensable energy levels to make the best of their own lives, their work and their family in a complete kind of way. They lose a significant part of their lives by needing medical care. When they seek answers, what they often hear is that all they have are ‘the signs of the times’, until one of these persons makes the happy decision to invest in his/her own wellness. What starts them off are three main goals: to improve their image and their energy levels; to retard the ageing process and to prevent the appearance of diseases. More than half a million people die in the USA as a direct or nondirect consequence of tobacco smoke. The impact of passive tobacco smoke on the health of nonsmoker Europeans has increased. It has been estimated that 25% of the total deaths caused by cancer and 15% of all the deaths taking place in the EU are caused by tobacco smoke. Furthermore, the rate of sedentary lifestyle in Europe fluctuates between 43.3% (in Sweden) and 87.8% (in Portugal). The extent of the challenges reported above justifies the need for the development of the wellness industry. The services delivered by the wellness industry, as well as the products, are an evident solution to preventing the problems we have just referred to.
  • 9. The industry of wellness: the improvement of well-being 425 Services provided by health and fitness clubs, the selling of natural supplements, cosmetic and plastic surgery services, preventive medicine and health nutrition products will be the main resources of this industry for the coming years. Given this scenario, the more adventurous have found the right moment to turn a big opportunity into an excellent business. As far as the wellness business will progress, something very significant will happen to the general society: people will start to live their lives in a healthier way. Stronger will become the idea of an absolute wellness: physical, psychological, emotional and spiritual. References ADEXO (2007) ‘Os Custos da Obesidade em Portugal’, www.adexo.pt – consultado a 1 de Maio. Fundação Portuguesa de Cardiologia (2007) http://cardiologia.browser.pt/PrimeiraPagina.aspx – consultado a 1 de Maio. Goleman, D. (2006) Emotional Intelligence: 10th Anniversary Edition; Why It Can Matter More Than IQ, Bantam. International Health, Racquet & Sportsclub Association (IHRSA) (2005) European Market Report. Livro Branco da Comissão ao Parlamento Europeu e ao Conselho (2007) ‘Uma estratégia para a Europa em matéria de problemas de saúde ligados à nutrição, ao excesso de peso e à obesidade’, Documento de trabalho dos serviços da comissão das comunidades europeias. Loehr, J. and Schwartz, T. (2003) On Form, Nicholas Brealey Publishing. Loveman, G. (2003) ‘Diamonds in the data mine’, Harvard Business Review, May. McCarthy, J. (2004) IHRSA’s Guide to Membership Retention. Industry Lessons on What and What Not to Do, International Health & Racquet Sports Association (IHRSA). Peppers, D. and Rogers, M. (2004) Managing Customer Relationships: A Strategic Framework, Wiley. Pilzer, P. (2007) The New Wellness Revolution, 2nd ed., John Wiley & Sons, Inc. Powter, S. (1993) Stop the Insanity: Change the Way You Look and Feel – Forever, Simon&Schuster. Special Eurobarometer Report (2007) Attitudes of Europeans Towards Tobacco, European Commission. The IHRSA Global Report (2007) The State of the Health Club Industry. Varo, J., Martinez-González, M., Irala-Estévez, J., Kearney, J., Gibney, M. and Martínez, J. (2003) ‘Distribution and determinants of sedentary lifestyles in the European Union’, International Journal of Epidemiology, Vol. 32, pp.138–146.