UP A STEEP flight of stairs just off Fifth Avenue, in New York City, a dozen people trickle into an early evening gathering. The furniture is soft and Scandinavian, the group mostly female. Acoustic background music is occasionally drowned out by a car honking. The only giveaway to why people are here—to attend one of 31,000 weekly Weight Watchers meetings that are held globally—is hidden behind a curtain in another room: the scales.
Scales used to be central to Weight Watchers meetings, or “WW” as the weight-management company has just renamed itself. People would come in and be weighed; there would be clapping (or tears), notes taken and “points” calculated. “It used to be very prescriptive, with flip charts telling people what to do and eat,” remembers Aransas Savas, a former member who now leads “wellness workshops”. Attending her session feels more like group therapy than a weight-loss club.
That’s because diets and calorie-counting are out, and wellness and health are in. After decades of deprivation and cabbage soup, the very word “diet” has become taboo. Millennials in particular aspire to being strong and lean more than skinny, says Julie Cottineau, from BrandTwist, a brand consultancy. The “body-positivity movement”, which encourages people to accept their body whatever its size, is pushing brands to accept this, too.
WW is trying to catch up with the shift. After a near-death experience in 2014-15, largely because it ignored the rise of (free) calorie-counting apps and wearable fitness trackers, the company has staged a comeback. At the heart of this renaissance are Oprah Winfrey, a shareholder and board member, and Mindy Grossman, chief executive since July 2017.
WW’s shares have rocketed from $6 to $68 since Ms Winfrey joined in 2015; a tweet about losing weight while eating bread caused a 20% spike in a day. Under Ms Grossman, who previously resuscitated the Home Shopping Network, the number of subscribers has increased from 3.5m to 4.5m and retention is at an all-time high.
A few months into her job Ms Grossman sparked a public-relations crisis after a plan for a free trial for teenagers led to the hashtag #wakeupweightwatchers and the accusation that it encouraged eating disorders. But Ms Grossman is optimistic about WW’s ability to reinvent itself. By increasing the number of members and retaining them longer she has vowed to reach $2bn in revenue by 2020 (up from $1.3bn in 2017).
To get there the company has done three things. First, it has rebranded and adopted the tagline “Wellness that works”. It has stopped promoting before and after pictures, announced a partnership with Headspace, a meditation app, and encourages “beyond the scale” goals. Much of this is to show that the programme is not just meant for your mum.
Second, the firm is becoming less rigid about its system of points. Previously, members were given a strict daily allowance for anything they put in their mouths. In the early days avocados, yogurt and peanut butter were “illegal” and the banana-allowance was one a week. The new “Freestyle programme” is more flexible. “FitPoints” can be earned for exercise.
Third, the firm is at last investing properly in technology. This month it opens a new office in Silicon Valley. It is also rolling out partnerships with the tech behemoths, from a trial with Amazon’s Alexa to programmes with the major fitness trackers. As many as 1.3m members already use these to sync with its app, which keeps track of people’s health and progress, gives access to a member forum, recipes and coaching, and includes a (much-used) barcode scanner.
It all seems to be paying off. The majority of growth in 2018 has come from digital-only subscriptions, which are twice as profitable (with an 80% margin) as full memberships. Because the digital infrastructure exists, incremental margins will expand as membership swells, says Nick Hotchkin, the chief financial officer. It should also help international expansion, particularly to Latin America and Asia.
But experts disagree over whether the cake is big enough for everyone. “Wellness” may be ballooning but so are the number of firms in the market. Boundaries are blurring too; gyms offer nutrition advice, tech companies (such as Apple) put coaching apps on smart watches. And the sector is cyclical, seasonal and volatile, as WW’s own shares show. After more than doubling in the first half of 2018 the price has since fallen by a third, following news that subscriptions dropped from 4.6m to 4.5m in the second quarter. Both the up and down were probably an overreaction, say analysts.
The big question is whether WW can compete head-on with the tech giants. “Within five years Amazon will probably have a health platform,” says R.J. Hottovy of Morningstar, a data-tracking firm. Ms Grossman is confident about WW’s big asset: community. “Even in a tech-driven world people crave community,” she says. That may be so, but for a firm that nearly got obliterated by ignoring fitbits and apps, a pinch of paranoia might be healthy.