Is Wellness K-Shaped? Not Quite. It’s the Middle That’s Being Squeezed

Oct 15, 2026 | Uncategorised

Small sage green stone pressed between a large dark stone and a pale stone, symbolising the squeezed middle of the wellness market | Is wellness K-shaped

Budget is booming. Premium is booming. The wellness businesses in between are feeling the pinch. Here’s what the data says, sector by sector.

You may have heard the term “K-shaped economy”. It describes a split in which one group pulls ahead (the upward arm of the K) while another falls behind (the downward arm). In wellness, the idea has a ring of truth. Think $150-a-week longevity clubs and $10-a-week gyms both opening at speed, while plenty of familiar businesses struggle to fill their books.

But is it true? And does it apply to every part of our industry?

We looked at the latest global and Australian data across all seven sectors of the wellness ecosystem. The short answer is that the pattern is real, but “K-shaped” isn’t quite the right description. What we’re seeing is a squeezed middle. And the businesses winning aren’t necessarily the cheapest or the most expensive. They’re the ones with the clearest reason to exist.

The big picture

First, a reality check on the “K” itself. Economists are divided on whether consumer spending is really K-shaped. In March 2026, the US Federal Reserve Bank of Minneapolis reviewed the data and found the evidence for a clear split was weak. The top 10% of earners have accounted for roughly the same share of spending for decades. But it noted that wealth, more than income, may be what separates people today.

In wellness, though, the split is easier to see. The Global Wellness Institute (GWI) values the global wellness economy at US$6.8 trillion in 2024, but growth is very uneven between sectors. GWI describes a “barbell effect” in fitness, with growth at the budget and premium ends. It also observes that as the wealth gap widens, wellness offerings are becoming “ever more luxurious, exclusive, personalized, and expensive.”

The same pattern shows up in other markets. A 2026 analysis of the UK spa and beauty market found that only 17% of consumers feel able to “spend freely”, and that the undifferentiated mid-range is being hollowed out.

Here at home, the pressure on household budgets is clear. NAB’s consumer stress index hit its highest level since 2014 in the September 2026 quarter, with people cutting back on personal care, recreation and health. CommBank data shows spending on essentials is now growing faster than discretionary spending, at 4.8% a year versus 3.3%.

When money is tight, people don’t stop spending on wellness. They get choosier. They either trade down to great value, or save up for something that feels worth it. The business that is neither tends to lose out.

Sector by sector

The squeeze isn’t hitting every part of wellness equally. Here’s how it plays out across the seven sectors of the wellness ecosystem.

SectorWhat’s happeningSqueeze on the middle
MovementBudget gyms expanding fast, boutique studios under pressureStrong
AestheticDay spas flat, results-led and premium growingStrong
Functional and OptimisationPremium growing fast, but under scrutinyModerate, with high risk at the top
ComplementaryInsurance rebates back for some therapiesPossibly easing
EmotionalStrong growth, shifting from apps to peopleBucking the trend
CommunityFastest growth in wellness, except workplace programsBucking the trend

Movement: the clearest squeeze

Fitness shows the pattern most plainly. Budget operators are growing fast: Revo Fitness has 75 gyms at $9.69 a week and is aiming for 100 by 2027. And budget gyms are adding the features boutique studios once owned. Revo offers reformer Pilates, recovery and body scans for $3 more a week. In September 2026, Planet Fitness Australia announced reformer Pilates across its network, to make it affordable “for the everyday Australian.”

The result? Even in the middle of a Pilates boom, IBISWorld estimates revenue for Australian Pilates and yoga studios fell 3.9% a year between 2021 and 2026. The trend is booming. The standalone studio is not necessarily sharing in it.

Aesthetic: pressure on the mid-range day spa

IBISWorld estimates Australian health and wellness spa revenue dipped 0.6% in 2025–26, after barely growing over five years, and business numbers are slowly shrinking. In the UK, the winners are premium experiences and quick, results-focused treatments, while vague mid-range offers lose ground.

Regulation is also reshaping medical aesthetics. Since September 2025, new national guidelines for cosmetic injectables ban influencer testimonials and require proper consultations before prescribing. That raises the cost of doing business, which tends to favour larger, well-run operators.

Functional and Optimisation: booming at the top, but fragile

This is where the upward arm of the K is most visible. Melbourne’s STILLE longevity club, opening in late 2026, starts at $150 a week and is capped at 1,000 members. NAD+ IV infusions sell for $500 or more.

But rapid growth brings risk. In July 2026, ABC’s Four Corners investigated around 100 Australian longevity and biohacking clinics, raising concerns about unproven claims and poor-quality products. For this sector, the biggest threat isn’t the squeeze. It’s trust.

Complementary: a policy tailwind

In 2025, the Australian Government announced it would reinstate private health insurance rebates for seven therapies, including naturopathy, Western herbal medicine, yoga and Pilates, after they were removed in 2019. For insured clients, that makes these services cheaper again, which could help mid-priced practitioners hold their ground. It’s too early for data to confirm it.

Emotional: growing, but moving from apps to people

Mental wellness is one of the fastest-growing sectors worldwide, at 12.4% a year from 2019 to 2024, according to GWI. But demand for do-it-yourself tools has dropped sharply: downloads of Calm and Headspace fell 61% and 74% between 2018 and 2024. People still want support. They increasingly want it from other people.

Community: bucking the trend

This is where wellness is growing fastest. GWI ranks wellness real estate as the fastest-growing sector in the world, at 19.5% a year. Wellness tourism is forecast to grow 9.1% a year to 2029, with travellers “budgeting for it even when they cut back elsewhere” (Phocuswright).

Social bathing is the standout. Alchemy Saunas runs nine Perth sites at about $50 a session and plans 30 within two years. That price point matters: bathhouses aren’t winning as luxury. They’re winning as an affordable night out and a place to connect.

The exception is workplace wellness, which has barely grown globally since 2019 (0.7% a year).

What the winners have in common

Look across the sectors and three patterns stand out.

1. Price isn’t the dividing line. Clarity is. A $50 sauna session is thriving while a standard $150 massage can struggle. The winners give customers an obvious reason to choose them: unbeatable value, real results, or an experience they can’t get elsewhere. The businesses in trouble are the ones that are simply “nice”.

2. The middle is being squeezed from both sides. Budget players are moving up, adding features that used to be premium. Premium players are moving to memberships and community, locking in loyal customers. The mid-priced, one-off, transactional business gets hit from above and below.

3. Belonging is the trend that cuts across every sector. The growth areas (social bathing, wellness travel, wellness real estate, people-led mental wellness) all sell connection, not just a service. In a lonely, stretched world, people will pay for a place to belong.

What to do if you’re in the middle

Being mid-priced isn’t a death sentence. Being unclear is. Here’s where we’d start.

  • Finish this sentence: “Clients choose us over everyone else because…” If the answer is “great service” or “a lovely space”, that’s not enough. Everyone says that.
  • Pick a lane and own it. Be the best value in your area, the most results-focused, or the most special experience. Trying to be all three usually means being none.
  • Turn one-off visits into belonging. Memberships, small-group sessions, regular events and member-only perks give people a reason to return and a sense of being part of something.
  • Watch the budget players. If a $10-a-week gym can offer your signature service, what will you offer that they can’t?
  • Prove your results. Clients with less to spend want evidence their money works. Track outcomes and share them honestly.
  • Don’t discount your way out. Constant discounting teaches clients to wait for a deal and erodes the margin you need to invest in standing out.

The missing piece: our own data

Here’s the honest truth. Most of the evidence in this article is global, or from the US and UK. Good data on how each part of the Australian and New Zealand wellness industry is really performing is thin, scattered and often locked behind paywalls.

That’s a problem. Businesses can’t plan well, investors can’t see the opportunity, and governments can’t see our industry’s true size and value.

It’s one of the reasons ASWELL exists. Through ASWELL Vitals, our regular member survey, and our upcoming State of Integrative Wellness Report, we’re building a cross-sector picture of how Australasian wellness is really tracking. The more businesses that take part, the clearer that picture becomes for everyone.

Over to you. Is your business feeling the squeeze, or riding one of the growth waves? Join ASWELL and add your voice to the data. [Join link] [Vitals link]

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