Issue No. 156: The Gen Z Playbook

Illustration: Courtney Powell

Born in the mid-1990s, Gen Z is now the largest generation in America.

But for many brands, their habits and preferences can be mystifying.

From wellness to mental health and sustainability, today we’re exploring Gen Z’s perspective and influence on the future of well-being.

The Zoomer Effect

As Gen Z (sometimes referred to as Zoomers) comes of age amidst a global pandemic, health and wellness are unsurprisingly top of mind.

  • 91% of Gen Z report physical or psychological problems due to stress, and they are more likely than any other cohort to have gone to therapy.
  • 72% say they view healthy eating as an integral part of both their physical and mental health.
  • 60% believe that the pandemic’s single most important effect on society will be taking care of one’s health.

But “health and wellness” means something different to this generation than it did to others.

Previously, health was dominated by clinical science, a “white coat era” deemed necessary to establish credibility and trust for consumers. Millennials then ushered in a “natural era,” an expansion of wellness into alternative care options beyond primary care.

Now, Gen Z is changing the game once again.

While they piggyback on millennials’ views of holistic health, Gen Z was raised under political and economic turmoil, meaning they’re more pragmatic than their idealistic elders. That is, they integrate health and wellness into their day-to-day life but, as digital natives, will heavily vet the brands they select into their routines.

Further, they are happy to leverage the latest tech to support their health, instinctively adopting everything from connected fitness to wearables. And unlike their privacy-protecting predecessors, Gen Z grew up with apps and are more willing to trade data for convenience.

Reaching Gen Z

Notoriously ad-averse, Gen Z are quick to dismiss dated marketing attempts as “cheugy” or insincere. Beyond getting their attention, brands must work to establish trust and credibility with a consumer that is both savvy and skeptical.

So, what actually works?

Stoke the digital campfire. Gen Z has flocked en masse to “digital campfires” like TikTok, Discord, and Slack, online micro-communities where experiences are shared and discussed.

Tapping TikTok. 49% of users purchase a product after seeing it on TikTok. Notably, ads here feel more organic, and Gen Z appears to welcome even sponsored content within the platform:

  • Facing competition from DTC brands, mattress manufacturer Simmons teamed up with TikTok creators to launch a hashtag, #snoozzzapalooza, amassing 6B views and a 107% boost in traffic to its site.
  • Mental health app Breathwrk has capitalized on TikTok’s “Jump” feature, which allows content creators to link to third-party content like the platform’s breathing exercises.
  • Activewear brands like Fabletics drove down VIP member acquisition costs by 15x, while Australian-based The Athlete’s Foot generated 8.5M impressions for its shoe launch.

Welcome to the club. Taking it a step further, brands have found success creating private group chats to dialogue with customers.

  • For its virtual summit, Goop used Slack to provide product recommendations, send exclusive discount codes, and facilitate questions.
  • Sunscreen startup Everyday Humans uses a Slack-like app called Geneva to discuss skincare advice with consumers and provide behind-the-scenes brand info.
  • On the hiring side, Chipotle hosted a “virtual job fair” on Discord over the summer, attracting 4,000 attendees and receiving over 24,000 applications.

Dig into DIY. Gen Z is one of the most creative and entrepreneurial generations ever, and brands that promote participation, personalization, and even co-creation are striking a chord.

In particular, beauty brands have leaned into digital campfires that double as focus groups. Viewing health as both looking good and feeling good, Gen Z is all-in.

  • Glossier credits its Slack group with helping co-create one of its top-selling products.
  • Kinship taps a group of Gen Zers for input on things like logo, typography, and beta product testing.
  • Glow Recipe hosts a private “Glow Gang” Instagram account, which it uses for sampling and product feedback.

Other campfires to consider: Snapchat (the platform reaches over 90% of 13–24-year-old Americans), Clubhouse, Pinterest, VSCO, and IMVU.

Keep it real. Gen Z craves honesty, and they’re also more open to discussing difficult topics. Putting an ironic, aesthetic spin on what was previously taboo, this attitude has driven a “Great Destigmatization” of sorts:

  • Sexual wellness is seeing a renaissance, with Maude, Cake, and Dame all cashing in.
  • Not one to shy away from blood, Gen Z is reimagining menstrual care with brands like Aavia and TOP.
  • On the beauty side, acne brands like Starface and squish. are Gen Z mainstays.

The Principled Consumer

For Gen Z, authenticity doubles as a filter. This generation encounters more brands than ever before, says Sonia Nigam, CEO of Change:

“With plug-and-play platforms like Shopify and organic marketing tools like TikTok, it’s never been easier to jumpstart an online brand… that means consumers have the luxury of choice.” 

Rich with options, Gen Z buys based on principles rather than price, picking products that are ethical, sustainable, and authentic.

They eat clean foods, tend to their mental health, and seek brands that resonate with their principles. Health and wellness brands are taking note:

  • Championing mental health and the “Power of She,” Athleta’s partnerships with Simone Biles and Allyson Felix have drawn widespread Gen Z support.
  • From fish to dairy to chicken, 62% of Gen Zers are willing to spend more money on more sustainable food. Brands like Nuggs and allplants are digging in.
  • 73% of Gen Z are willing to pay more for sustainable products. This year, lululemon debuted plant-based leggings, while adidas and On Running have carved out large Gen Z followings with their eco-forward offerings.

One caveat. Brands must put their money where their mouths are when preaching authenticity — Gen Z are digitally fluent and are quick to uncover brands that miss the mark.

Looking Ahead

As Gen Z matures into mainstream buyers, some predict they will be the “most disruptive generation ever.”

Despite having some members still in grade school, Gen Z already commands an impressive $143B in purchasing power. Wielding significant sway over family purchases, their indirect influence is even larger. Over 93% of parents say their kids affect household spend.

Punchline: Across the health and wellness landscape, brands are already feeling the Gen Z impact. More than any other generation before them, this cohort is all-in on health, authenticity, and sustainability, rewarding brands that can speak their language and leaving the rest in the dust.

💪 An AARMY of Athletes

Backed by celebrity investors like Jay-Z and Karlie Kloss, AARMY is building an omnichannel fitness experience centered around high performance.

On the Fitt Insider Podcast: AARMY co-founders Akin Akman and Angela Manuel-Davis join us to discuss the brand’s digital transformation.

We also cover: the importance of building community in a virtual environment. And learn more about the company’s hybrid offering, including studios, pop-ups, digital content, and (potentially) hardware.

Listen to today’s episode here

📈 Market Watch

Last week, Peloton’s pandemic bubble popped. Meanwhile, Planet Fitness surged. Hardly an apples-to-apples comparison, exercise seekers are proving hard to pin down.

Miss. Since reporting its Q1 2022 earnings last week, Peloton has shed more than $10B in market cap.

  • The connected fitness company missed earnings estimates of $810.7M, reporting $805.5M, as losses widened.
  • A red flag, Peloton scaled back its FY2022 revenue forecast by up to $1B.
  • As demand for its connected equipment softens, existing members are less engaged, with average monthly workouts reportedly sinking to 16.6 from a high of 26.

As the stock cratered, on Friday, Peloton instituted a hiring freeze across all departments. Year to date, the stock is down more than 63% with a market cap of ~$15.5B, down from $44B in January.

Beat. On the flip side, Planet Fitness beat earnings and revenue estimates, as memberships approach pre-pandemic levels.

  • Membership topped 15M, representing 97% of its pre-COVID peak.
  • Total revenue was up 46% YoY to $154.3M.
  • Net income reached $18.6M versus a loss of $3.3M in the prior-year period.

Looking ahead, Planet Fitness raised its full-year outlook, forecasting $570–580M in revenue with 110–120 new locations. The gym chain’s stock is up more than 23% year to date.

The big picture: While the Pelotons of the world downplay recent developments, brick-and-mortar operators like Planet Fitness are taking a victory lap.

There’s no denying that the gym is being unbundled. But it’s also true that Peloton and digital/at-home fitness companies have had their growth juiced for nearly 24 months. Now, as the playing field levels, every move and every metric will be scrutinized.

Punchline: No one actually knows where consumer preferences will land. Sure, omnichannel offerings will be a piece of the puzzle. But, between at-home and in-person fitness, neither camp is in the clear. Best case, exercise seekers are the real winners, as increased access, convenience, and personalization lead to meaningful health outcomes.

👀 Across the Industry

It has been a busy few weeks for product announcements and partnerships in the world of fitness.

Camera-ready. Peloton officially entered connected strength training, unveiling Peloton Guide. The motion-tracking camera hooks to a television, delivering live and on-demand workouts. Of note, the $495 bundle includes a heart rate monitoring armband.

As we detailed in Issue No. 125, the smart strength category is heating up. Tonal holds a commanding lead in the space, but Peloton promised to compete. At last year’s Goldman Sachs Technology & Internet Conference, CEO John Foley said:

“We say we’re going to win strength. And we’re going to win strength… whether hardware is required or not.”

For now, Peloton’s strength offering is light on hardware, opting for a camera over equipment like connected dumbbells. Keep in mind, this news follows Tempo’s camera-based product launch, Tempo Studio, and MIRROR’s forthcoming smart dumbbells and ankle weights.

Game-based strength. AI-powered app maker Freeletics launched at-home equipment with STÆDIUM — a connected strength training platform. Like Peloton and Tempo, a movement-tracking camera plays a central role. But the company also offers adjustable dumbbells and a bench/plyo box that doubles as storage.

Freeletics is also leaning into game-based content with performance tracking and challenges to create what the company refers to as “strength gaming.”

Studios, streaming, open seas. F45 Training acquired Vive Active, a Sydney, Australia-based Pilates studio. Part of the deal, F45 takes ownership of Vive’s digital fitness platform. This move accelerates F45’s at-home tech while boosting the brand’s efforts to expand beyond HIIT training. Earlier this year, it unveiled FS8, a yoga- and Pilates-based studio concept.

F45 Training will also open studios aboard Celebrity cruise ships, adding to unique partnerships with US military bases and college campuses.

And more… Xponential Fitness is set to open boutique studios inside LA Fitness and City Sports Club locations. Liteboxer unveiled a space-saving, wall-mounted boxing unit. TrainerRoad introduced a machine learning-driven training platform for cyclists. And Boxx launched its smart punching bag on Kickstarter.

📰 News & Notes

💰 Money Moves

  • Biolinq, creators of a continuous-glucose-monitoring skin patch, closed a $100M Series B round led by RiverVest Venture Partners.
  • Kitman Labs, a sports tech and analytics company leveraging data to inform elite sports performance, raised $52M in a funding round.
    More from Fitt Insider: The Sports Tech Report 
  • Recovery tech company Hyperice received undisclosed investments from various athlete-investors, such as golfer Rory McIlroy and the NBA’s Jayson Tatum and Klay Thompson.
    More from Fitt Insider: The Athlete VC
  • Vagaro, a booking and club management platform for salon and fitness boutiques, added new funding in a round led by FTV Capital, valuing the company at $1B.
    More from Fitt Insider: wellnessOS
  • Talent Hack, a platform for fitness creators, raised $17M in Series A funding led by Emergence Capital.
    More from Fitt Insider: Rise of the Fitness Creator
  • Personalized nutrition startup Vivoo, makers of subscription-based at-home urine test kits, landed $6M in Series A funding led by Tim Draper of Draper Associates.
    More from Fitt Insider: High-Performance Health
  • Golf footwear brand TRUE linkswear raised $11.25M in funding from KarpReilly.
    More from Fitt Insider: Recreation’s Renaissance 
  • Future Farm, a Brazilian alt-meat company, raised $58M in a Series C round.
  • Digital prayer and spirituality app Hallow secured $40M in Series B funding from General CatalystPeter ThielDrive Capital, and others.
    More from Fitt Insider: Something to Believe In
  • Fleet Feet, the largest US franchisor of running stores, acquired its competitor JackRabbit in an undisclosed deal.
  • Subscription grocer MilkRun, a service connecting small farms to consumers, secured $6M in Series A funding led by Spark Capital.
  • Gym equipment manufacturer/retailer Johnson Fitness and Wellness, parent of Matrix, Vision, and Horizon brands, acquired commercial fitness equipment retailer Gym Source.

Today’s newsletter was brought to you by Anthony and Joe Vennare, Melody Song, Wesley Yen, and Ryan Deer. 

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