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Best Practices for High-performing Spa Partnerships

By: JuE Wong
Posted: March 30, 2012, from the April 2012 issue of Skin Inc. magazine.

With 2012 in full swing and with a more optimistic economic outlook still on the horizon, now is the time for every member of the skin care industry to work together to make sure that the field is indeed poised for growth.

In recent years, both niche skin care brands and spas have been hit hard. Product development costs have increased, brand competition has led to market bloating and skin care facilities have been challenged by reduced consumer spending. To combat these challenges, one solution is channel exclusivity.

Exclusivity is difficult for a skin care brand. If a publicly listed professional brand commands $120 million wholesale in total revenue a year while another top public beauty brand brings in $3 billion, then the earnings gap between the spa industry and other channels of distribution becomes grossly apparent. When the industry does not command top dollar, it becomes difficult for the professional skin care field to reach the next level.

Nowhere is this more apparent than in the pattern of emerging brands initially professing exclusivity before branching into other channels of distribution. As these brands expand, spa professionals routinely drop them for other professionally exclusive lines. Without adequate growth support from the professional community, the cycle continues, much to the frustration of both spa professionals and the industry at large.

Considering that retail and direct media sales are projected to grow substantially as consumers look for total wellness programs, growth projections for the spa sector and its counterparts lag behind. Both retail and direct channels have embraced each other to their mutual benefit. Yet, the professional channel has been slow to partner with other channels and, consequently, has not benefited from such distribution synergies. Just compare the dollars spent on development by business sector: $12.8 billion in spa, $20 billion in cosmetics and $31 billion in skin care.