Spa Marketing

What’s New: “Hot” Ingredients

Can all so-called high tech skincare products really be true to their PR-issued claims? In the March issue of DAYSPA, writer Monica Schuloff-Smith helps to separate fact from fuss, sharing straightforward information about the action and ineffectiveness of some of todays most-talked-about ingredient powerhouses, from antioxidants and botanicals to peptides and hormones. Here, we continue the discussion with some very frank opinions from the industry’s top skincare experts, along with their favorite picks from todays ingredient choices.

Chandra Bredel, national educator for SAMPAR

Day spa owners really need to understand that though an ingredient may be hot in New York or L.A., or even in another country, it may not translate to their local area. Also, they must insist that the vendor supplying the service or products provide clinical data that supports their claims. In-the-know day spa owners do a little research before they add a high-tech treatment because they know that a little pain before the purchase will save them.

Bredel’s ingredient(s) of choice: There are some interesting ingredients from seaweeds such as Sphaceloria scoparia and sea vegetables, sea cucumber and sea whip. Sphaceloria scoparia is a brown algae that has been clinically proven to prevent the formation of new cellulite. Sea cucumber is wonderful for lifting and firming, as well as acting as a high level anti-inflammatory. Sea whip has been shown to strengthen the skin’s ability to repair damage from UV exposure

Sam Dhatt, cosmeceutical chemist, founder of DermaQuest Skin Therapy

“A day spa owner should look f0or supporting documents that prove the ingredient can perform as it claims. The science behind the product is important in today?s skincare market,” he says.

Dhatt?s ingredient(s) of choice: I think peptides are still the hottest ingredients in the market at this time. Science and research has determined that biochemical functions in our skin can be replaced by very specific amino acid sequences to create certain peptides, which has lead to research in how we can use peptides to manipulate certain functions in the skin. One new and ‘hot’ ingredient that will hit the skincare market soon is a skin-lightening peptide that can replace a 4% hydroquinone.”

Mark Dillon, biomedical engineer, owner of Bio Med Sciences

“This is an exciting time, but its very confusing as well because skincare products are largely unregulated. I think without FDA regulation, its too easy for fly-by-night companies to claim anything they want. The old saying applies: If it’s too good to be true it probably isnt. Spa owners have to be their own allies because the FDA doesnt step in until a company claims to treat a medical condition. A legitimate company is very careful to not cross that line unless they are prepared to back it up.

“Consider the company. Ask questions like, ‘Is this a new company? Are they a trusted name? Do they have a medical/scientific background? How long have they been in business?’”

Dillons ingredient(s) of choice: “Botanical ingredients from the sea are hot. The problem is that putting them into any old lotion or potion doesn’t make them any more effective. The best new products will offer new ways of delivering sea-based ingredients to the skin, thereby offering improved effectiveness.”

Karoline Kanani, product manager for G.M. Collin Skin Care

Hotingredients are always appealing to everyone, but it is wiser to make sure that they come with some data to authenticate them. Many formulations on the market, don’t come with any proof they work.

Kananis ingredient(s) of choice: There are several hot ingredients. Most of them work through protecting, soothing skin and restoring skin homeostasis and, more recently, through acting on cutaneous functional recovery. Peptides are still very big and there are always new ones coming out on the market. We are working a lot on extending cellular longevity through different strategies.”

The Spa gets its day

Conde Nast Traveler recognizes the Williamsburg facility in the May issue.

The Spa of Colonial Williamsburg is named in the May issue of Condé Nast Traveler as one of nine spas in the United States to make the magazine’s annual list of the hottest new hotels, restaurants, spas and clubs in the world.

To develop the list, the magazine’s editors anonymously visited hundreds of new properties, evaluating each one on a standard set of criteria.

In addition to The Spa of Colonial Williamsburg, the eight other American spas named to the list are Spa Solage, Calistoga, Calif.; Voda Spa, Los Angeles, Calif.; Spa Desert Springs, Palm Desert, Calif.; Spa at Grand Del Mar, San Diego, Calif.; Drift Spa, Las Vegas, Nev.; Spa at Four Seasons, Austin, Texas; Ritz-Carlton, Dallas, Texas; and Solitude Spa, Jackson Hole, Wyo.

The Spa of Colonial Williamsburg opened in the spring of 2007 in the Georgian Revival building that formerly housed the Abby Aldrich Rockefeller Folk Art Museum, which moved to new and expanded exhibit space in the DeWitt Wallace Decorative Arts Museum in early 2007.

Treatments in the 20,000-square-foot spa provide a 21st-century interpretation of relaxation and wellness practices from European, African and American Indian cultures. The spa’s signature scent of lavender lemongrass greets visitors to the three-story former museum filled with natural light from the large mullioned windows overlooking formal gardens.

Kate Mearns, spa director and former chairman of the International Spa Association (ISPA) says, “The Spa of Colonial Williamsburg is the result of the passion and creativity of some phenomenal people, including the architects, historians, craftsmen, internationally known spa professionals and Colonial Williamsburg leadership…After 16 years of working in the spa industry, I am well aware that accolades such as this are not easily earned.”

The Spa of Colonial Williamsburg includes men’s and women’s changing rooms with lockers and private showers, steam room and whirlpool baths; an indoor lap pool, 12 treatment rooms, including one for couples, three relaxation lounges, a full fitness center, conservatory salon and retail sales of spa products. A fully trained staff is on the premises daily. Prices range from $110 for a one-hour massage to $245 for a two-hour full-body spa treatment.

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New legislation puts teeth into beauty salon regulation

MEG CAREK of Bowling Green, Ohio, isn’t one to spend her mornings with her feet submerged in churning water.

“I have a nursing background, so I’m very squeamish about salons,” said Carek, who found herself last week seated in a pedicure foot spa chair at Ross Nail Salon at 32 Ross Common.

What brought her in and what keeps her daughter-in-law coming back is the salon’s meticulous condition and customer service.

“They are incredibly sanitary and they do a very nice job,” said Susanne Carek of San Anselmo, a regular every two to three weeks.

Nail Manicures and pedicures are considered a necessity to some, an occasional indulgence to others. Either way, the soothing beauty regiment has its risks. From skin boils caused by mycobacterium fortuitum, a bacteria commonly found in water and soil, to hepatitis, disease risk is high enough to prompt heavy regulation of the Spa nail salon industry.

The California State Board of Barbering and Cosmetology, a division of the state Department of Consumer Affairs, requires the industry adhere to strict cleaning, sanitizing and disposal practices. Now, spawned by a series of outbreaks, a powerful new piece of legislation that took effect Jan. 1 has put some teeth into enforcement, targeting a common disease-spreading culprit - the pedicure foot spa.

Since Assembly Bill 409, introduced by state Sen. Leland Yee, D-San Francisco, took effect, at least a dozen salons have been cited, including one in San Rafael in January.

The law allows the board to put a salon on probation without a hearing if sanitary conditions are not met. Nail salons put on probation are revisited several times to ensure they’re complying with the law. They must submit monthly cleaning reports to the board take remedial training and are fined at least $500.

Previously, operators were entitled to a hearing before being placed on probation. Fines also have risen sharply - salon operators can now be fined $500 per foot spa chair and pay a per-station rate for each reinspection.

Workers at Nail Trix at 4700 Northgate mall, the first salon in the state cited under AB 409, have since discontinued use of the foot spas, owner Lisa Pham said.

“Because of the new law, we’ve hit the foot spas pretty hard,” said Jim Jacobs, the state Board of Barbering and Cosmetology’s supervising inspector for Northern California. “It puts them on notice - you either clean it up or we’ll end up shutting you down.”

The new regulations have drawn some criticism. Salon workers are eager to comply with all the rules, but some say they were caught unaware because information about the new regulations was distributed in English only.

Approximately 80 percent of nail salon workers in California are of Vietnamese descent, said Tina Ling, an Asian Law Caucus policy advocate who works with the California Healthy Nail Salon Collaborative.

The cosmetology board sent postcard notices in Spanish, Tagalog, Vietnamese and Chinese to the state’s approximately 40,000 salon shops reminding them of new penalties, but only after salons were cited.

“It places a sort of undue burden on the nail salon workers,” Ling said. “We’ve done a lot of outreach. Almost all said they would follow all the rules and regulations if they were told what the rules and regulations were.”

Used as a relaxing ritual to soften skin and soothe customers getting their toes done, the state requires the pedicure foot spa’s whirlpool basin be meticulously cleaned and sanitized to prevent dangerous bacteria growth.

Failure to do so has had serious consequences.

In 2000, more than 100 pedicure customers were infected with skin boils linked to foot spas at a Watsonville salon. In 2004, foot spa sanitation problems caused an outbreak of skin infections that afflicted 143 people in Santa Clara County. In Contra Costa County, an additional 17 people were infected after using foot spas.

Regulators said three people - two in California and one in Texas - have died from infections linked to foot spas.

To ward off illness, inspectors use the element of surprise, arriving unannounced at a salon. In some areas, inspections are conducted annually. In highly concentrated areas such as Los Angeles and San Francisco, where many violations are found, inspectors must return more frequently. As a result, many shops go ignored. In their travels, inspectors statewide discover about 50 unlicensed facilities a month.

Upon entering, an inspector will look to see that the establishment license and the department’s health and safety poster are posted prominently in the reception area. Licenses for each nail technician also must be posted at each work station.

Inspectors then begin looking for violations. Most are related to improper disinfection of instruments or equipment, regulators said. The establishment is checked for illegal chemicals, clean restrooms and other elements that might pose a danger to consumers.

Violations are common, officials said.

“Very rarely do we find nothing,” the state’s Jacobs said.

All metal tools and foot spas must be washed with soap, water and disinfecting liquid and soaked in Environmental Protection Agency-approved disinfectant and water for at least 10 minutes after each customer. At the end of the day, foot spa jet covers must be removed and thoroughly scrubbed.

Nippers, clippers, hair brushes and other reusable tools must come out of a drawer labeled “clean,” and after treatment, be stowed in a separate drawer marked “soiled.”

Buffers, nail files and any other nonmetal tools must be thrown away after one use. Logs must be kept detailing each foot spa cleaning.

At Blooming Nail & Spa at 1106 Grant Ave. in Novato, manager Jenny Nguyen, a native of Saigon (now Ho Chi Minh City), said her customers are happy to wait for a pedicure foot spa station to complete the sanitizing and drying process.

“It’s very hard work but you have to protect customers,” said Nguyen of the endless scrubbing, washing, sanitizing and drying. “You have to do everything.

“They feel safe,” she said of customers. “They like it that way.”

At Ross Nail Spa, manager Long Ho, also from Saigon, said the state surprised her staff last year and went so far as to stick a camera inside the foot spa jets’ piping.

For added safety, customers are invited to purchase their own complete nail tool sets. The tools, along with the customer’s preferred polish, is stored at the shop in plastic boxes labeled with the client’s last name, a customer number and telephone number.

San Anselmo resident Lili Fader owns box No. 190. The 19-year-old College of Marin student said owning the tools is crucial.

“You own your own filing board and cuticle cutter, so you don’t share tools with other customers,” she said. “If someone else is sick or has some weird foot thing, I don’t want that.”

Customers can protect themselves simply by being observant, state officials said. Upon entering a shop, take a good long look around, regulators advised.

How to Stay Safe at the Nail Spa

“If the shop looks dirty or cluttered, they should just turn around and walk away,” the state’s Jacobs said. “That’s usually an indication the rest of the shop is dirty.”

WHAT CUSTOMERS SHOULD LOOK OUT FOR

When visiting a salon, customers should be aware of the following:

- The salon’s license and state board’s health and safety poster should be posted in the reception area and the nail technician’s license should be posted at the work station.

- The salon should be adequately ventilated.

- All tools should be thoroughly washed and disinfected after every use.

- Soiled instruments must be stored separately from clean instruments.

- Instruments and supplies that cannot be disinfected should be thrown away.

- Drill bits should be cleaned after each use.

- Foot spas must be cleaned and disinfected after each use.

- When getting a pedicure, don’t shave or wax legs 24 hours beforehand.

- Don’t get a pedicure if you have broken skin or lesions.

- Consult a doctor before getting a pedicure if you have a weakened immune system.

(State Board of Barbering and Cosmetology)

NAIL SALONS BY THE NUMBERS

Nail salons by the numbers, 2006-2007:

Number of licensed salons in Marin: 376

Number of licensed salons in California: 37,000

Total number of inspectors statewide: 17

Total number of inspections in Marin: 106

Number of citations issued in Marin: 65

Number of licensed manicurists and cosmetologists statewide: 290,000

Sources: California State Board of Barbering and Cosmetology; office of state Sen. Leland Yee.

CITATION STANDARDS AT A GLANCE

Nail salons may be cited under AB 409 if certain sanitary conditions are not met, such as if the shop’s pedicure foot spas, basins or tubs are not clean or if debris is found upon the removal of screens. Officials also must determine if the cleaning material for disinfecting manicure/pedicure equipment is adequate; if there are pedicure cleaning logs; if there is a history of health violations; and if equipment is clean, according to the state Department of Consumer Affairs.

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Recession? Relax: Spas build sales through corporate clients

The consuming masses may be worried about making ends meet, but the luxury hotel spa industry is finding new ways to attract business. They’re reaching out to corporations.

“Companies are looking for the perfect outing to entertain their best clients or reward their best employees,” said Pamela Margolis, co-owner and president of the Hotel Ivy Spa Club in downtown Minneapolis. “You don’t have to be good at spa-ing — there’s nothing to practice. It’s more flexible than organizing a round of golf … and it doesn’t take six hours out of your day.”

The club, which opened in February at the upscale hotel, is part of a national trend to help build sales by working the corporate angle. The aim is to grab a bigger slice of the smorgasbord of company perks. So in lieu of a coupon for a fancy steak dinner, theater tickets or day on the links, spas want businesses to think about a pedicure with a serving of strawberries and champagne on the side.

Spas are a $9.4 billion business in the United States, employing more than 234,000 workers, according to the International Spa Association. But traffic has been flat or declining in recent years, even as the number of spas has tripled since 1999.

A host of local companies already has taken up Ivy’s invitation to indulge. General Mills recently offered up the spa as one of several “recreation day” options for employees attending a two-day company meeting. TPG Credit Management sent seven administrative staffers there as a reward for their hard work. A dozen members of the Minnesota Electrical Contractors Association scheduled a half-day retreat at Ivy’s.

Most events appeal to women, though growing numbers of men are forsaking their machismo and settling in for the perks of a good pamper.

A networking event at the Ivy with appetizers and a handful of short spa services for about 30 people might cost around $3,300, including tax and tips.

An express pedicure for half a dozen people would be about $350.

Minneapolis corporate law firm Lindquist & Vennum was one of Ivy’s first corporate clients. The firm held a networking event at the 17,000-square-foot spa and fitness center in late February for about 40 of its female clients.

The hotel, which has separate ownership, catered the drinks and appetizers. An assortment of mini-services — a chair massage, reflexology foot rub, and an exfoliating hand and arm rub — were there for the taking. The event ran from 4:30 to 7:30 p.m.

“A lot of our clients are working moms and they’re juggling lots of responsibilities,” said Barbara Wood, an attorney at Lindquist & Vennum who helped set up the event. “People liked the idea they could swing by at the end of the day and not have to rearrange their schedules.”

The spa outing wasn’t meant to replace the law firm’s popular golfing event or its annual evening at Orchestra Hall, Wood said. But it was such an across-the-board hit that a meet-and-greet at the spa may become a regular offering.

“It’s a challenge to find something that is unique and doesn’t sound like a cliché,” said Shelly Gertgen, the firm’s communications manager. “This offered a top-notch experience that was self-nurturing and healthy, and at the same time allowed people to network and maintain those professional relationships. We had people writing to us and to their attorneys saying, ‘I never get asked to do something like this.’”

In the Twin Cities, few spas have the space — or the central locations — to cater to corporate groups. Some that do include the Marsh in Minnetonka; Solimar Wellness Spa in Eagan; Spalon Montage and the Day Spa, both in Edina; Just For Me in Stillwater, and Aveda’s Majestic Falls Day Retreat and Spa in St. Croix Falls, Wis.

But in an economy where retailers from Tiffany’s to Starbucks are faltering, peddling the pampered lifestyle remains a hard sell.

That’s why fitness memberships — not corporate networking events — are expected to make up the bread-and-butter of Ivy’s business. Memberships are less labor intensive and provide steady and predictable income .

The fitness center has all the latest cardio machines — including treadmills, bikes and step machines with individual cable television screens — plus free weights, yoga classes and personal trainers. Memberships run $79 to $199 a month, with the high end offering valet parking and discounts on spa services.

Urban hotel spas, such as the Ivy, typically benefit from convention visitors and business travelers staying downtown, according to a study from PKF Hospitality Research. Right now, about 75 percent of the Ivy Spa visitors are split between day guests and corporate events, said Breanna Wagner, Ivy Spa Club’s sales and marketing director.

Wagner said even as the Ivy Spa focuses on increasing membership, she’ll continue to pitch spa services to managers in human resources, health and wellness or marketing and events planning.

“It’s all about convenience,” she said. “We can bring a chair massage to the workplace, set up corporate day retreats, and pretty much anything in between.”

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Find A Spa or Search the right Wisconsin spa just for you

Are appraisals hurting you?

Doing one’s homework and being fair can ease the stress of this essential task

Appraisals are not only about the head, but about the heart as well.

March comes in like a lion and goes out like a lamb,” is an expression that some of us are familiar with. While that expression is a reference to the weather, in my life, at least, March has generally been a month which does not go away quietly like a lamb and has been quite stormy and has left a few casualties in its wake. Let me explain. I went to college in the late 1960s and early 1970s when March was the time when one’s university exams were held. They wer e awaited , if at all, with a sense of foreboding and were usually sent off with a huge sigh of relief. Those unfortunate enough to have done badly in them always had the month of September to try and solve the problem the second time around. Of course Rock Hudson and Gina Lollobrigida had legitimized the concept with the endearing film Come September.

In the corporate world though, one does not seem to have a second chance if one does not get one’s appraisal act right in the month of March, never mind whether one is running an organization, unit or even a small team. Yes, in the corporate world March is the month of reviews, appraisals, raises, promotions and often enough heartburn.

Having spent 35 years as an employee, manager, unit head and company head I have still not cracked the March crisis that strikes us with depressing regularity every year. Employees continue to be disgruntled today as they have been ever since I can remember. Is there a method to this madness? Are there any learnings that we can take out? Can the upheavals of March be handled better? I speak with particular reference to the advertising business and its related sectors as most of my productive years have been spent there. But I daresay there are learnings for all of us in industry from what follows.

It’s not about you silly

One of the things we are taught as professional counselors, who talk to people in distress, is that the focus is always on the caller who comes to see us and never on ourselves. “Empathy! That’s the key word,” my trainer would say time and again to us. And that is the key message I have for all of us who have to review subordinates and offer them raises and give news that may be either good or bad for the recipient. Very often, we are too full of ourselves in appraisal meetings and go on and on about our past and often exhibit our own biases, which, of course, we are sure do not cloud our judgment!

“In those days I got a small raise and was so happy.” I hope you are not guilty of waxing eloquently like this! Remember this is not about you and you are not writing your memoirs, for posterity, here, but just doing an appraisal today for your subordinate. The operative word is ‘today’.

A quick guideline is perhaps in order here. Listen more than talk during these meeting and carefully observe the signals of body language from your colleague as he is being appraised. Body language often tells us a story, but only if we are willing to listen. Are you ready to listen?

Give feedback on actual incidents

All of us are clouded by impressions and perceptions and often build strong likes and dislikes about individuals who work for us. We like people who talk well or inquire about our children, even if they perform sub-optimally in their jobs. We dislike people who question what we say.

The best appraisals are those that are based on incidents and instances of performance or non-performance. Talk actual details here, not impressions. A thing that I have not done enough of is giving people feedback on a regular, continuous basis. Build up a roster of feedback on every employee who reports to you. This will ensure that the employee knows how she is performing on an on-going basis and does not have to wait till March to know how she is doing. This is a problem in some organizations and with some individuals as they wait till the very last moment to appraise, give feedback, and then find that the person being appraised has a completely new perspective on her own performance or the lack of it.

Comparisons can create chaos

One of the things that bothers the human mind more than anything else is comparison with one’s peers. Let me give you a real life example, and I can assure you that the scene gets repeated each year in different organizations; only the characters are different. I give Anita (name obviously fictitious) a raise of Rs 1,000 and she goes out of my room all smiles until she meets Sunita, who has got a raise of Rs 1,050. You do not need to be a genius to know that there is chaos in Anita’s life and in the organization as well, as she goes into an emotional tizzy and may even leave.

This is not a unique situation and I am sure it must have played itself over several times in your organization too. While there is very little you can do to control human behavior, there is a lot you can do to ensure that as an organization you take precautions to reduce your employees’ heartburn.

Do appraisals carefully, meticulously even and try to reduce subjectivity. Do proper homework on the years of service, academic institution from which the person graduated in case your organization has a policy on specific institutions and delivery on key result areas before you make the final appraisal. But remember that appraisals and raises are means of rewarding the high fliers and the achievers; so do not hesitate to reward unequally should the situation demand it. In case you must bite the bullet, you must, otherwise you will find that the true steeds have bolted because of your poor policies while only the mules remain!

You keep learning on the job

Even though I have spent 35 years at work, I still believe that I am learning. Each human interaction provides us with a learning opportunity, provided we have an open mind. Try to learn from your mistakes. Try to understand how people who live in a different socio-economic classification think and feel. Be genuinely concerned about the people who work for you.

Appraisals are not only about the head, but about the heart as well. Things can and often enough do go wrong at the time of appraisals. Just ensure that you have done your homework and have been fair to the best of your ability and knowledge. Then March will not be as traumatic as it can be for a few others.

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Doctors, attorneys and dentists have largely missed the e-commerce boom. So have other service-based businesses like salons and interior design shops.

Sure, your Web site can provide information about your business. But it can’t make a sale. That’s because your clients can’t book appointments online.

Your clients still must call or e-mail to schedule an appointment. And you probably can’t handle client requests 24/7. This means wasted time calling back clients for scheduling.

New sites are offering solutions to the problem. They make it possible for clients to schedule appointments online.

Stop the phone tag

You can eliminate the back-and-forth and reduce the time spent on scheduling. And your clients will appreciate the simplicity, too.

Appointments can be scheduled day or night. This is particularly beneficial for luxury services. A customer can book a dinner reservation or spa day on an impulse.

For other businesses, online scheduling is better for repeat clients or referrals. Sure, it can draw in new clients. But potential clients will have questions for doctors, dentists and other professionals. You may prefer to speak with new clients before an appointment.

But you can make things easier for first-time clients. Your site should include answers to common questions. You should also tell people what to expect at an appointment. Let’s look at three sites that handle online scheduling.

HourTown

HourTown’s site handles your personal and work schedule. You can designate certain blocks of time as available.

Next, you place a link to your HourTown schedule on your Web site. Clients will see your available appointment slots. They can then request an appointment.

You’ll receive an e-mail notification of appointment requests. You can confirm or deny a request.

HourTown has several levels of membership. The most basic is its Freebie account. It allows two appointments per month. It also provides a customer contact book.

Business subscribers get many more features. For $20 monthly, you get unlimited appointments. You can schedule repeating appointments. And customers can leave reviews.

But the biggest draw may be the HourTown Advertising Blasts. HourTown will combine your scheduling with online advertisements. It places ads on major sites like Yahoo and Google.

If you want premium phone support, sign up for a Business Pro account ($30 monthly).

Genbook

Like HourTown, Genbook hosts your schedule on its site. A link on your site directs clients to your schedule on Genbook. Clients see your open slots. You and the client receive notifications of appointments.

Genbook’s free account offers unlimited appointments. You can also use it to manage other staff members’ appointments. Appointments can be made up to six weeks in advance.

If you want text message alerts, you need the Standard account ($40 monthly). It also provides a customer database and 12-month advance scheduling. You can also require credit card numbers to book appointments. This will help you charge for cancellations.

Booking Angel

Finally, there’s Booking Angel. It currently only serves restaurants. It plans to expand to contractors, spas, doctors and other appointment-based industries.

You can place a Booking Angel icon on your Web site. Or, Web directories can put a booking link next to your business listing.

Booking Angel notifies you of reservations via phone.

There’s no monthly subscription. Rather, charges for confirmed reservations start at $1.

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The State of the Day Spa Industry Address

As the year 2007 closed I felt it important to address the State of our Industry. It has been a tough year for Day Spas and it is critical to understand why, and how to overcome recent adversities. According to ISPA, Day Spa revenues declined 22% from $6.794 billion in 2005 to $5.294 in 2006. While at the same time the number of Spas (Day, Resort, and Medical) has grown by 6%. Many Day Spa Owners have really felt the pinch throughout the US and not fully understood why. Other Spa Owners have weathered the storm and though they have not lost ground, they have not grown at their anticipated rate. I think that it is important to understand the dynamics at play so that Spa Owners can adjust their business model and continue to grow despite this “Bear Market”.

The US economy and the devaluation of the US dollar has much to do with the situation but that does not tell the whole story, let us explore further:

1. In an economic downturn luxury items are the first thing that the consumer cuts back on, and as much as we would like to consider our services a “necessity”, not all Spa consumers agree.

2. While Day Spas have increased in number, Medical Spas have doubled in revenue and grown in number significantly faster than Day Spas in the same period. They have successfully siphoned off some of the Day Spa’s best customers, those customers for who price is not a factor.

3. There are more Day Spas sharing the diminished revenue.

Is this the end for the Day Spa business? Definitely not, but we will have to adjust our thinking, and there will probably be a big shake out within the industry. In order to adapt we must first understand the marketplace and how to make profit within our operation.

The Market has changed!

Within the last 18 months, and without many of us knowing it at the time, the market has shifted from an “excess demand” marketplace to an “excess supply” situation. That is to say we have more Spas selling to fewer Consumers today than we did in 2006.

In economics, when a marketplace shifts from excess demand to excess supply (and this happens often in many industries) the consumer looks for market differentiators. Unfortunately the biggest, easiest, and most important differentiator to the consumer is PRICE. Electronics is a good example of what I am talking about. When a new electronic gadget comes to the marketplace consumers are willing to pay top dollar to be the first to own such a device. When the several manufactures begin to catch up with this new demand prices begin to drop, and when the gadget becomes common place then the prices hit rock bottom. If a manufacturer wants to continue to charge top dollar then they must be innovative, and create some other market differentiator that sets them apart from their competitors, or continue to compete in a battle of pricing.

These principles hold true for the Spa Industry as well! We have seen the proliferation of Spas on every corner and the consumer has few ways of distinguishing the value of one from another. Further, with many competitors they expect to see more discounts and in fact can sit back and wait for offers to come to them and cherry pick the Spa or Salon that is giving the discount that week. For many Spas this “value oriented” customer is not an ideal Client for their business, but there is a silver lining: This budget shopping for services shows us that there is another whole class of Spa Goers that want to come to the Spa but cannot afford to come. In fact studies like “The Marketing Demographics of a Day Spa Goer” (available through the Day Spa Association) tell us that the reason 62.58% of respondents “never” or “rarely” go to Spas is because it is too costly; it is not that they don’t understand the importance, not that they don’t have a Spa available to them, not even that they think it is too indulgent. This is an opportunity knocking at our industry’s door if we can just get our expenses under control we can then deliver these services to these budget minded masses.

We Must Learn to Adapt!

As much as the Spa Industry has grown over the past decade (our Bull Market period) with record startups and record revenues, if we are honest with ourselves we must admit that we have never had “record profits”. Our business model has been broken for a long time and we have primarily survived by way of the “excess demand” that we have enjoyed. Well the time to pay the piper has come, and as an industry we must adapt or perish, as this is the way of the “free market economy”. The hard facts are that our compensation system has been upside down, and frankly just plain wrong for a long time, we have been chasing the high end consumer while virtually ignoring the middle class consumer, and we have done a poor job at building brands and loyalty that are results based (necessity) instead of pampering based (luxury).

The purpose of being so blunt in this message is to wake up an industry that has enjoyed a fruitful “Excess Demand Market”, but is about to pay the price of “Excess Supply”. While I remain confident that money can and will be made in the Day Spa world I know that it will become harder and harder unless we start working smarter and smarter. Just as on Wall Street, anyone can make money in a “Bull Market”, but it takes a smart business person to make money in a “Bear Market”. I know that many of you have struggled to earn profit while demand was high; you must now be even savvier if you are to turn things around during this “lower demand” period. I also know that of the thousands of full service Day Spas in the US about half of them will go out of business or change hands to new Owners within the next 24 months. Will you be one that survives or one that perishes? Do you have the cash reserves to weather the downturn economy? Can you still make money doing fewer services next year? Do you have the marketing muscle to increase your market share in a shrinking market?

It is not my intent to bring “doom and gloom” or to be pessimistic, rather exactly the opposite, to sound the alarm so that each of us can adapt our business to be recession proof. To put into place sound compensation systems that assures prosperity for your business. To allow you time to adjust your business model through market differentiators and to adapt to the new “excess supply” marketplace.

My Recommendations

First we must throw away an antiquated form of compensation that has prevented Day Spas from earning healthy margins. We need a compensation system that allows us to be more efficient and deliver services more economically and more cost effectively today than we were able to deliver them yesterday. We need to adopt a system that attracts a stable workforce that can contribute to the greater good of the company instead of only building their own personal clientele or book of business.

Second we must learn to either create a market differentiator that not only distinguishes us from our competitors but creates a “need” instead of a “want” in the consumer’s mind; or learn to make money at lower price points, and let that be your market differentiator.

Lastly we must band together as an industry and stand our ground against the Doctors and Legislators that would seek to take business away from our industry. We must band together to educate ourselves to be better business Owners, giving us greater understanding of how to compete and operate effectively and efficiently. Today’s Day Spas should belong to important Trade Organizations like The Day Spa Association to facilitate this “coming together”, “standing our ground” and “becoming better business Owners”. More will be accomplished through collaboration than through competition. Organizations like the DSA can help each of us accomplish this.

Last Thoughts

While the state of the Day Spa Industry is changing I am ever “bullish” that the strong will survive and thrive, new Spas will be built and made successful, and that there is even more opportunity in this market for those who operate intelligently and creatively. My pledge is to work more closely with Spas to overcome these obstacles and effect change throughout our industry through building better compensation programs and market differentiators. I know that it is easier to sit here and tell you what needs to be done than it is for you to implement these changes, therefore we can work together so that the load becomes lighter. I invite you to attend industry events and obtain the education, networking, and interaction that will have a profound effect on your business. Look for spa industry business workshops like those being organized by the DSA at The Day Spa Expo and the IECSC, and remember that the more we can shift the whole industry toward success the easier our personal success will manifest itself.

IMPORTANT NOTE: Let what is happening to the Day Spa Industry be an early warning and lesson to the Resort and Destination Spas as they may be affected by these same economic dynamics! As I write this message, they should be preparing for a similar downturn next year.

And if I am all wrong about the future of our industry, do these things anyway as they make good business sense and will help your business skyrocket. But if I am right then they are the things that will save your business from demise. Those who survive this economic storm will emerge as the pinnacle of success within their respective marketplaces, and be poised to take full advantage of the “Bull Market” that will come once again.