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Salon & Spa Industry Rebounds in Fourth Quarter 2011

Posted: February 7, 2012

Driven by stronger sales and traffic levels and a more optimistic outlook for sales growth and the economy, the Professional Beauty Association's (PBA) three main tracking indices for the salon/spa industry, which include the Salon & Spa Performance Index (SSPI), Current Situation Index and Expectations Index, rose in the fourth quarter of 2011. Following three straight quarters of decline and having hit their lowest levels in two years in the third quarter of 2011, the positive results for fourth quarter 2011 are a welcome relief to the professional salon and spa industry.

The SSPI, which is the main index of the three, is a quarterly composite index that tracks the health and outlook of the U.S. salon/spa industry. The SSPI rose 1% from the third quarter of 2011 to stand at 102.9 in the fourth quarter. A base level measurement of 100 is used, with values above considered positive.

"The salon and spa industry remains resilient. As with the broader economy, it is encouraging to see positive growth and expansion as indicated by the Salon & Spa Performance Index," said Steve Sleeper, executive director of the PBA.

The SSPI is based on responses to PBA's "Salon & Spa Industry Tracking Survey," which is fielded quarterly among salon/spa owners nationwide on a variety of indicators. It is constructed so that the health of the salon/spa industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction. The Index consists of two components—the Current Situation Index and the Expectations Index.

The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours, and capital expenditures), rose 1.3% to a level of 101.6. Four out of five indicators were positive in the fourth quarter. Most notably, 59% of salon/spa owners reported an increase in same-store service sales between the fourth quarters of 2010 and 2011, up from 50% who reported higher service sales in the third quarter. Fifty-four percent of salon/spa owners also reported higher retail sales. Employee hours were only slightly down and were the one negative in the report.