Weight Watchers goes digital as apps eat profits
WEIGHT Watchers is going digital in an effort to appeal to new customers and fight back against the rise of wellness apps that have contributed to four years of sliding profits.
The US company has launched an app and online tools to help customers eat more healthily, set fitness goals and lower their stress levels.
The group described the new “holistic approach” as “the biggest innovation in Weight Watchers’ 50-year history”, and a response to the shift by consumers who are more interested in good health than dieting deprivation.
The launch comes shortly after Oprah Winfrey paid $43.2m to take a 10% stake in the company and a seat on its board.
Weight Watchers CE James Chambers says the number of visitors to its website has increased significantly since Winfrey’s investment in October.
He hopes that her participation and the launch will help reverse the group’s falling membership as it prepares to enter the peak post-Christmas dieting period next month.
The group’s active membership of 2.6-million subscribers was 13% down yearon-year at the end of its third quarter on October 3, despite growing numbers of overweight and obese people.
Its share price is 70% lower than in 2011, despite trebling in value since Winfrey took her stake. Earnings per share are at their lowest point since the company went public in 2001.
Weight Watchers, which relies on the US and the UK for 70% of its revenues, has struggled to reshape itself in the wake of two broad shifts in consumer behaviour. First was a move from dieting towards healthy and natural foods.
Nestlé sold its Jenny Craig weight-loss business, although the Swiss food group is still grappling with its Lean Cuisine packaged food unit in the US.
Unilever, the consumer goods group, last year sold its Slim-Fast meals business.
“Diet is becoming a dirty word,” says Emma Gubisch, strategic insight manager at Leatherhead Food Research, a UK-based market research group. “Companies are moving from diet products to more mainstream ‘healthy products’. They are seeking to reposition ‘healthy’ in a more positive framework, as something to be enjoyed rather than dreaded.”
Second, Weight Watchers has been slow to adapt to the rise of internet and fitness and weightloss apps, such as My Fitness Pal and Lose It.
“At the heart of Weight Watchers’s problem is the drop in attendance at its meetings, as consumers switch to smartphone apps for weight control,” according to Euromonitor.
“These may not be as effective, but they are more convenient, and above all, free.”
Since becoming CEO in 2013, Chambers has put updating the group’s technology at the top of his list of priorities. He has also cut costs, shut down operations in China and accelerated the shift from a narrow focus on weight loss to a broader remit in health and wellbeing.
Nevertheless, the turnaround has been slower than expected with the continued fall in the number of people signing up to its weight-management programme.
“I’m very disappointed with our financial results this year,” Nicholas Hotchkin, finance director, told a Morgan Stanley investor conference last month.
After bringing in Winfrey and launching the new technologies, it expects membership numbers to rise next year for the first time in four years. © The Financial Times Limited 2015
Companies are seeking to reposition ‘healthy’ as something to be enjoyed rather than dreaded