Over five decades, Weight Watchers has become synonymous with weight loss. But for a new generation of smartphone-toting, gadget-loving dieters, the process of shedding pounds doesn’t come through in-person meetings and weekly weigh-ins, it comes from an app.
The company has made efforts to keep up with the times — through a digital subscription service that lets people look up calories, search for recipes and track their progress on the web and mobile devices and with its own activity tracking gadget. But, by its own admission, it hasn’t been able to stem the tide of dieters who’d rather use free mobile apps than Weight Watchers’ premium services.
Commenting on the company’s declining earnings, the company’s CFO Nicholas Hotchkin said earlier this month, “We feel that some of that is driven by the continued sudden explosion of interest in free apps and activity monitors.” The company declined to comment for this story.
New competition for weight loss industry stalwarts
In the past few months, it’s become especially clear that new apps and gadgets are indeed taking off as traditional weight loss companies like Weight Watchers and Jenny Craig struggle to reach new customers. Just this month, calorie- and exercise-tracking app MyFitnessPal and activity-monitoring startup Fitbit (see disclosure) both raised significant funding rounds from investors and released new milestones. Meanwhile, Weight Watchers replaced its CEO amid declining profits and Jenny Craig announced a new marketing strategy after disclosing underwhelming financial results.
Part of the problem, as some industry watchers see it, is a familiar story: Weight Watchers, which celebrated its 50th year in March, has gotten a little too comfortable as the “800-pound gorilla” in its field.
“I think they rested on their laurels a bit,” said Morningstar analyst Pete Wahlstrom.
Its online business, which charges users $19 a month after a $30 sign-up fee, had been doing well for several years, he said, but instead of investing in it and innovating, they used it as a cash cow. Over the years, the growth of free apps with similar services, like those from Noom, Azumio and Lose It!, has made it increasingly difficult for the company to differentiate and compete.
Free isn’t enough
Some argue that the company’s best chance at survival is offering a product that’s free. And while that might help bring in new users, its real shot at beating the free competition seems to be in finding ways to update its entire time-tested behavior change model for a new era of connectedness.
What Weight Watchers is known for is its ability to get people to change their habits — not just to lose those last 10 pounds, but to keep weight off long-term. In moving its services online, the company has found ways to help build good habits through recipe recommendations, food trackers and planning tools. But it has yet to move one of its most valuable components — its weekly meetings — into the digital age.
Online customers can get social support through Weight Watchers’ message boards. But, by and large, the company doesn’t take advantage of video conferencing software, remote monitoring technology or other new technology that could provide dieters with social support that’s personalized and private, but still allows for community and accountability.
And if it wants some clues on how to do that, it might want to pay attention to a smaller startup in Chicago.
Not your mother’s Weight Watchers
Almost like a modern foil to Weight Watchers’ decades-old model, Retrofit launched about two years ago with a service that combines regular online meetings with dieticians, exercise physiologists and behavior coaches in addition to sensor-based devices. The regular check-ins with coaches keep dieters accountable much like Weight Watchers’ weekly meetings, said founder and CEO Jeff Hyman, but they give people more convenience and privacy. And it relies on the technology people are already comfortable with, like Skype and Fitbits — not outdated web software and utilitarian-looking, custom-built activity trackers.
It’s more expensive: its cheapest plan starts at $128 a month (compared with Weight Watchers’ price of $42.95 for a monthly pass to weekly meetings) but it includes more ongoing support and analysis, as well as personalization. And early data suggests that it’s working. The company said that clients who completed 12 months in its weight loss program lost an average of 19.1 pounds, or 8.3 percent of their starting body weight.
An interesting approach for Weight Watchers could be to apply the same kinds of technologies to its own model of in-person group meetings — weekly meetings could take place via Skype or Google Hangout (incidentally, Weight Watchers is an early tester of Google’s new Helpouts) or dieters could get on-demand text support from peers and meeting leaders.
“The advent of technology gives you the opportunity to completely re-imagine the entire experience for the customer,” said Hyman.
And, if Weight Watchers doesn’t want to build that experience itself, there’s always a Chicago startup it could buy.
Disclosure: Fitbit is backed by True Ventures a venture capital firm that is an investor in the parent company of GigaOM. Om Malik, founder of GigaOM, is also a venture partner at True.