We all are familiar with some key trends that are affecting our industry. We are in this industry because we genuinely like people and want their experiences at our spas to be memorable and enhance their lives. However, Spa’s are feeling the pressure from ownership, members and Board of Directors to become profit centers. There are costs associated for treatments with product and payout to contractors that produce small margins. Retail sales can create larger margins and can lead to residual sales in the future.
Retail sales with the right commitment can provide an opportunity to dramatically improve a spa’s profitability.
A Little Perspective
- Revenue from retail. The International SPA Association (ISPA) (the resource that provides the most comprehensive and respected research about the industry) 2010 U.S. Spa Industry Study reports that retail accounts for 12% of spa revenue.
- Profit from retail. In most spas, although retail makes up 10-15% of a spa’s total revenue, because the margins are higher, they can represent 20-25% of the profit. (ResortSuite.)
- A few exceptional examples. There are a few high end spas that we are familiar with (and there many more!) that have used retail to make a major contribution to their spa’s profit. Funding Universe reports that the Gianni Versace Spa’s signature line of retail provides 45% of their profits. A few other examples of spas with signature retail lines that make significant contributions to profit are the Boca Resort, Bliss Spa, PGA National and Hershey Spa.
- Relationship between retail and repeat clients. There appears to be a direct relationship between purchase of retail and repeat guests. Festoon Salon, www.festoonsalon.com in Berkeley, California, analyzed their spas’ data and report that when a guest buys two retails products, there is a 60% chance they will return, when they buy one a 30% chance and if they buy no retail, there is a 10% chance they will return.
So, what are these facts and figures saying to us?
We believe the data is saying:
- When looking at the whole industry, the contribution of retail based on revenue doesn’t really look that significant.
- When we look at profit instead, the role of retail begins to look more significant.
- Taken one step further, when we look at a few leaders, we see that they have found ways to develop, market and integrate signature retail lines that make an essential and driving contribution to the spa’s success and profits.
- Finally, we see a wonderful perspective that there is apparently a direct relationship between retail purchases and one thing all of us are interested in, satisfied, repeat guests.
What do we do with all this and what is recommended?
As appropriate, shifting the way we think about and how we position retail.
How should we consider shifting?
Retail is often looked at by management and critical staff, from OUR perspective. We often tend to think that if we suggest a retail product we may be doing that more for OUR benefit of making money or a commission, rather than considering how this can impact our guest’s experience.
What is behind Scott and TJ Weaver’s data about the relationship between retention and retail? Why is there a direct relationship between retail purchases and repeat clients? Maybe when we create a memorable experience and our guest wants to extend that feeling, they buy products from us. Maybe that wonderful experience is actually then further enhanced by using some of those products at home. Those guests who had such a memorable experience, return for “the real thing,” that memorable feeling that they have been visualizing and thinking about.
Can we learn something from the manifesting and abundance experts?
When we are working on manifesting something, what is one of the key things manifesting and abundance experts suggest?
They say that when you just repeat an affirmation over and over again, often it doesn’t materialize.
However, if you add other senses, if you see what you want, smell it, hear it, touch it, taste it and overall if you ATTACH A FEELING to the desired vision, especially a strong feeling, then that can be much more powerful and effective in materializing.
And, the same process happens here.
If we are just nice and technically give a really nice massage, that experience will not be experienced and memorialized as deeply as if we create a whole sensory, customized experience where we really CONNECT emotionally with our client.
Things can get hectic and resources become scarce often; but if possible, maybe consider starting with a strategic marketing plan. This plan is key to your ultimate success.
If you are able to devote the time and resources to planning, take a look at your goals, your vision and the one consolidated theme you want to have your whole spa resonate with while being sensitive to the financial impact they may have. From there, everything can be coordinated to create a harmonized, memorable experience for your guests. From their initial experience with your website to the five-sensory experience you offer when they walk into the spa you begin to create a harmonious and long lasting relationship. Isn’t business all about building relationships?
Even if you haven’t been able to do all the ideal planning, you can still impact the experience that your guests have once they walk into your spa. Consider offering a foot ritual massage to each client before starting the service or even, weather permitting, walk the client to your outside peaceful garden, slow down and take the time to look the client in the eyes and give them a chance to talk from the heart if they are so inclined, to feel a connection with you. Maybe consider offering your standard services 60 minutes rather than 50 (and adjust your pricing accordingly) to give this extra time to focus on THEM, to slow down and hear them with your heart.
As the industry often refers to as “education”, maybe really focus on THEM and customizing whatever you are doing for them personally.
- What’s going on in their life?
- How are they feeling?
- What provides them inner peace and calm?
- What makes their heart sing?
- And their eyes dance and sparkle?
- What are the unique characteristics/challenges of their body and skin?
Listen with your heart and your hands (and your products!) and customize what you provide your client.
For you to succeed, you need to shift your inner feelings and your staff’s inner feelings. Shift from feeling that retail products are a way of tapping into your client’s hard-earned money to creating a memorable and personalized experience at the spa that they can extend when they return home.
Can we learn anything from AmericanGirl®?
Now, I’m not saying that I LIKE AmericanGirl® (actually I don’t like AmericanGirl®, somehow it bothers me that a little dress for the doll costs as much as what you can spend for a pretty dress for a young girl herself, or as Caitlin Giles characterized the store in Wee Windy City on September 29, 2009, “the wildly popular and outrageously pricey AmericanGirl Stores.”) Nonetheless, I believe there is a lesson to be learned here.
The point is this. My daughter and MANY other little girls LOVE AmericanGirl®. Why? Are these dolls really just the best dolls in the world? OR, has the company done an exemplary job, actually marketed these dolls/positioned these dolls in a way that maybe can teach us something relative to how to position retail in our spa?
AmericanGirl® creates an ambiance, a story, a feeling, lots of feelings, books, groups, delicious stores (at least to many little girls) that capture little girls’ imaginations, etc., but the dolls in the little girls’ minds are not just “dolls” (or a cream that you might purchase in a spa), they are McKenna or Rebecca with personalities and stories and emotions, and that is what sets those dolls apart. Once we become attached to these we must now accessorize with ribbons, dresses, shirts and pants etc. just like when the customer brings home the experience of the treatment they had, they continue it with the purchase of accessories to continue the delight and FUN they had.