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How to Manage a Spa in Turbulent Times

By: Ada S. Polla
Posted: April 28, 2009, from the May 2009 issue of Skin Inc. magazine.

The saying, “May you live in interesting times,” has been interpreted as both a curse and a blessing, but no matter how it is intended, it has never been more applicable. These are indeed interesting, turbulent and economically challenging times. During the past months, the nation has been tried and tested, the economy is suffering, consumers aren’t spending and corporations are cutting costs. In such times, you may wonder how can a spa survive, let alone grow and thrive?

Hope for the beauty industry

Among the dismal news, however, there is a ray of hope for the personal care industry. Recently, research firm Mintel reiterated its belief that the personal care industry—in particular, anti-aging skin care sales—will continue to grow, even in the current economic climate. Anti-aging skin care sales in the United States rose 13% to $1.6 billion between 2006 and 2008, outpacing general facial skin care, which was up 11% during the same period. This trend is expected to remain on track even as the economy struggles.

“Anti-aging won’t fall to the recession,” says Kat Fay, senior beauty and personal care product analyst at Mintel. “Looking young is extremely important to many women, especially baby boomers, and it’s not an issue they’re willing to compromise on because of tightened budgets. Many women see anti-aging skin care as a reasonably priced investment in their appearance and well-being.” So even as income levels recede, Mintel expects the anti-aging skin care market to grow approximately 20% at inflation-adjusted prices during the next five years.

Not all good news

Despite the potential resilience of the beauty industry as a whole to a recession, the day-to-day reality in spas is challenging. During the keynote panel at SPATEC in February 2009, it was stated that there is an overall 20–30% decrease in all comparables across spas, and January 2009 looked worse than many expected. Spas are servicing fewer clients and experiencing longer appointment cycles. The West Coast seems to be hit harder than the East Coast and no region of the country has been spared. Most spa experts expect this to continue throughout 2009, with stabilization—not growth—in 2010. Taking this into consideration, how can spas ensure readiness when consumers decide to spend again?

Strategies to succeed

No graduate degree in business is necessary to know that in order to be profitable, only two strategies are possible: increase revenues and decrease costs.