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Wellness Industry 27 Sep 2014

Wellness industry holds a promising future

For a number of wellness players, over 50 per cent of their new store additions, during FY 2013, have been beyond the top 15 cities.

The changing consumer mindset from curative to preventive healthcare has helped the wellness industry in India reach a market size of Rs 700 billion in 2012. It is among the few sectors that have bucked the economic blues and continues to hold a promising future.

 

“Earlier people used to invest in gold or property, but now they invest in themselves and that is what is making the wellness industry grow,” says Dr Mukesh Batra, Founder-Chairman, Dr Batra’s, a retail service business offering homeopathic treatment.

 

He further says, “The alternative health segment is growing at a fast pace, between 20 per cent and 30 per cent, constantly for the last five years. Wellness is often linked to pampering and that has led to the growth of spas and salons. Moreover, the ‘look good, feel good’ factor, which has become really important, is going to propel the growth in coming years.”

 

While the consumer spending grew at its slowest rate in the last eight years, the wellness sector exhibited resilience even in these tough times. Not only consumers have become more aware, but they have started accepting wellness as an integral part of their lifestyle.

Related: Why this is the right time to invest in wellness industry

 

The wellness market in India continued to tread its projected growth trajectory, to reach a market size of Rs 700 billion in 2012, states FICCI-PwC report entitled ‘Imperatives for Growth: The Wellness Industry’. It grew more than 18 per cent over previous year. The three large segments – wellness food and beverages, hair and skincare and alternate therapy services – account for more than half of the wellness market in India. The products continue to comprise a majority share of 55 to 60 per cent of the total market.

 

“Today, we sell close to 20,000 units of a wellness product called ‘karela-jamun’ juice because we clearly tell customers that India is the diabetic capital of the world, so please don’t wait for it to happen to you, instead have something preventive in nature. So that kind of mindset change has taken place among consumers,” says Atul Ahuja, Vice President – Retail, Apollo Pharmacy.

 

Hot Trends

 

For a number of wellness players, over 50 per cent of their new store additions, during FY 2013, have been beyond the top 15 cities.

 

“Increasing awareness about health and well-being and the rising cost of curative healthcare have led to people even in smaller towns and cities – as indeed in the larger cities – opting for preventive healthcare solutions in the form of wellness services,” says Sandeep Ahuja, Managing Director, VLCC Healthcare Ltd.

 

Prashant Tandon, Founder & Managing Director, HealthKart, an e-commerce company, confirms this development, “A mega trend that has caught our attention is the growth in Tier-2 or 3 cities. One-third of our sales come from Tier-4 cities of the country that has some 500-600 small towns and villages. So the Internet has levelled the field a lot and I think the next big wave will be mobile technology.”

 

Interestingly, fitness, slimming services and slimming products are among the frontrunners in the sector, growing at a rate of 18-22 per cent in 2012.

 

G Ramachandran, Director, Gold’s Gym, bets on the trend for preventive fitness as he says, “India is not a fit country because I think our eating habits are bad. The proportion of diabetic population is a very serious concern. Child and adult obesity is taking a major form. I think there is an increasing need for preventive maintenance of fitness.”

 

Wellness has now become a gender-neutral concept and the male counterparts are also not missing the wellness bandwagon.

 

Dr Mukesh Batra points out, “Male grooming industry is growing rapidly. Our products and services are hugely being bought by males, not only by females. Ninety per cent of our hair patients are men, a marked change from past.”

 

Challenges

 

Winning customer trust and improving overall quality standards in the industry are the main challenges.

 

Dr Mukesh Batra sums up, as he says, “There is only one model: develop trust and retain it. The entire health and wellness industry only runs on trust. Anything that breaks trust whether it is a brand promise that you cannot keep or you are unable to meet customer expectations, will hamper your business.”

 

High manpower costs and attrition levels continue to pose another challenge for the industry. Paucity of skilled talent has also worsened the issue.

 

“The basic challenge is that the sector is fragmented, it needs to get organised. More importantly you need to have serious players in the system who swear by the ethos of sustainability, scalability and excellence in service standards,” says G Ramachandran.

 

Route to Growth

 

According to the FICCI-Pwc Report, franchising has been a common route to achieve rapid growth in the sector. Venture capital and PE funding into the wellness sector has increased over the last few years.

 

“Franchising can play a big part in ensuring that people living in the smaller towns and cities can avail the benefits of Wellness services. A typical investment on a salon is usually in the range of Rs 20-25 lakh. The gestation period varies depending upon the location and size of the outlet, but the ROI is often around 20-30 per cent,” concludes Sandeep Ahuja.

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