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Boost Revenue Today with Retail

By: Allan Share
Posted: October 1, 2013, from the October 2013 issue of Skin Inc. magazine.

The clarion call in the skin care industry has always been about the importance of continuing education. Retail education encompasses three levels:

  1. Those who have made retail a huge profit-generator in their facility;
  2. Those who want to make money from retail; and
  3. Those struggling to add or make retail a part of their practice.

Space allocation

Up until recently in the skin care industry, only a small amount of consideration regarding retail in the spa has occurred. However, there has been an awakening to the value of retail in the past several years and today, successful owners are sharing that their retail boutique counts for a significant amount of their skin care business. You do not have to devote a large amount of square footage to a retail display, but you do have to manage it properly, merchandise it for success and showcase the proper point-of-sale information. According to the Day Spa Association’s Second Annual Spa & Wellness Retail Survey, 71% of facilities surveyed devote under 10% of total square footage to retail. (See Retail Square Footage.)

It is interesting to note that a spa can make more gross profit selling retail than on treatments performed at the same retail price. During the past five-to-eight years, many spas were built with too many treatment rooms and not nearly enough retail space. You do have options to expand treatment services, but also to review how to turn that extra real estate into retail selling space and dollars. It’s not just the shelves up front that are used for retail; your entire operation can be a retail nirvana for clients.

Retail is not just within the four walls of your skin care facility. You need to have a well-organized website that offers the option to purchase retail online. Clients expect to be able to book treatments on your website, as well as buy products.

Compensation

Paying commission on retail is a driver that allows staff members to potentially increase their income. A question asked in the most recent Spa & Wellness Retail Survey was: “If you pay commission on retail sales, what is the percentage of commission you pay based on selling price?” The survey showed approximately 51% of facilities pay up to 15% commission on retail sales. (See Retail Commission.) It is interesting to note the percentage of respondents who said they do not pay commission—35.4%.

Finding a way to compensate your team for additional sales through retail has two major benefits: more revenue for your individual team members and more revenue for your spa as a whole—everybody wins.

Allan+ShareAllan Share has 23 years of experience in the wellness industry and is currently president of the Day Spa Association and International Medical Spa Association. He can be reached at 877-851-8998 or allan@dayspaassociation.com.