After increasing in the fourth quarter of 2013, the Professional Beauty Association's (PBA) Salon/Spa Performance Index (SSPI) declined slightly 0.8% in the first quarter of 2014, declining to its lowest level in a year. Softer sales and customer traffic contributed to the decrease. Furthermore, the Current Situation Index fell by 1.4% to 100.3, while the Expectations Index decreased by 0.3% to 104.6.
The SSPI is a quarterly composite index that tracks the health and outlook of the United States salon/spa industry. 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 to measure the health of the salon/spa industry 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 professional salon/spa industry remains resilient despite this first quarter decline. Overall indicators and feedback from beauty professionals across the country continue to be positive, and we hope to see additional growth in the near future," said executive director of PBA, Steve Sleeper.
The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours and capital expenditures), stood at 100.3%, down 1.4% from the fourth quarter. Despite the decline, the Current Situation Index has remained above 100 for the sixth consecutive quarter, which marks expansion in the industry indicators.
Service sales, customer traffic levels, and capital spending in the first quarter of 2014 were slightly weaker than last quarter. Only 50% of salon/spa owners reported an increase in same-store service sales between the first quarters of 2013 and 2014. Similarly, only 31% of spa and salon owners reported an increase in retail sales, below the 52% reported in the fourth quarter of 2013. In contrast, spa and salon owners reported a slight increase in staffing levels in the first quarter. While this area did not post concerning results, it countered the decreased indicators.
The Expectations Index, which measures salon/spa owners' six-month outlook on five industry indicators (service sales, retail sales, employees and hours, capital expenditures and business conditions) slightly decreased as well in the first quarter of 2014 to 104.6, down 0.3%. However, like the Current Situation Index, the Expectations Index continues to remain above 100, which indicates that salon/spa owners are optimistic about growth in the coming months.
Salon/spa owners were most positive on growth relating to service sales, retail sales and the general direction of the economy. Sixty-seven percent of spa and salon owners expect to have higher service sales within the next six months. Similarly, 56% of spa and salon owners plan to make a capital expenditure for equipment, expansion or remodeling in the next six months, up from 54% last quarter and the highest level in 13 quarters.
The full SSPI report and the "Salon & Spa Tracking Survey," along with other helpful research on the professional beauty industry, can be found at www.probeauty.org/research.