Certain market segments ripe with growth and potential bubble away amongst China’s stellar retail growth rate. The fitness and health category is one in particular, reports Mark Tanner.
The latest consumer confidence index shows a Chinese consumer who is more upbeat and optimistic about the future than any other time in the last two decades. Yet with an already enormous base of goods and a maturing market, such a positive outlook is unlikely to bring back the mouth-watering consumer product growth rates of yesteryear.
Nevertheless, certain segments ripe with growth and potential bubble away amongst China’s overall 10-11% retail growth rate. The fitness and health category is one in particular. We only need to look to gym memberships which are expected to almost triple in the next five years, the number of marathons which grew from 22 to more than 400 in six years, or Lululemon's 350% year-on-year growth.
Many of the most impressive achievements fly under the radar such as Les Mills which now has 1,000 Chinese gyms paying for their programmes and thousands of influencers attending their events and passionately filling their WeChat feeds about them.
Many trends in China start with the most affluent demographics. A Hurun survey found wealthy families spend about a quarter of their household budgets on health and well-being - boding well for the future of the industry. Interestingly, the young, single, male millionaires are paying the least attention to their health, while their more mature, married female peers are the most committed.
With so much potential, there has been a significant uptick in brands across the spectrum of fitness, health and nutrition-related categories. Many are becoming more sophisticated in how they appeal to Chinese consumers, following some of the successful strategies from other segments in China and abroad - such as fitness personalization and technology integration.
Like most countries, the fitness movement still has a long way to go before it will woo everyone. In recent weeks in an unnamed city in Hubei province, more than 55% of the 1,233 youngsters who tried out for the army failed. One 20-year veteran of the tests noted a significant decline in fitness levels during his tenure.
The problem has become so widespread that the PLA Daily posted on social media last month saying too many video games, not enough exercise and excessive masturbation were among the 10 reasons so many failed. With the current focus on expanding the Chinese military, this is likely to provide further impetus for Beijing's push to get the nation exercising, reinforcing its inclusion in the 13th Five Year Plan and 22 other related documents to support the cause.
The beneficiaries of a more fitness-focused China won't just be the obvious categories. Brands involved in tourism, food and beverage, entertainment, clothing, accessories and others should explore if and how they can tap into the trend.
It will only get bigger, particularly among the affluent segments.
Mark Tanner is managing director of China Skinny - a full-service marketing, research and online agency based in Shanghai (www.chinaskinny.com).
This review was originally published in the weekly China Skinny newsletter.