19 Feb 2018 Spa Business Handbook
 

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Spa Business Handbook - Model Behaviour

Industry insights

Model Behaviour


The Futures Company’s 21st Century Business report analyses how macro trends are reshaping corporations and how they need to adapt to ensure future success. Imke Schuller explains what this means for the spa and wellness industry

Imke Schuller, The Futures Company
Business based on social values, such as Township Yogi, will thrive photo: Facebook.com/TownshipYogi
MyBeautyCompare.com creates revenue from customer data, not direct product sales
Spa London’s socially-inclusive model will help it succeed in the future
Yoga in South Africa’s townships is free to the young, old and weak photo: Facebook.com/TownshipYogi

The world around us is changing. Macro forces such as population growth, rising energy demand and climate change are permanently influencing our lives, values and attitudes. Volatility means we’re increasingly emphasising intrinsic values over extrinsic rewards. Both on a personal and a public policy level, improved wellbeing is becoming an important goal. We value a more sustainable way of living and this also applies to the way we expect companies to do business.

The 21st Century Business report by The Futures Company explains how corporations will need to redesign themselves to adapt to these shifts. The good news is that spa and wellness operations are destined to lead the way.

THE CONNECTED BUSINESS
In The Futures Company’s annual Global Monitor values and attitudes tracker – a survey with 29,500 respondents in 24 countries – 74 per cent of participants claim they use the internet several times a day or more. Consumers’ constant connectivity through mobile or internet-enabled devices impacts how they research and buy goods and services. At the same time, the constant connectivity also means that people are looking for ways to simplify their lives: they find it increasingly difficult to find space to think, reflect and switch off from everyday pressures and stresses (say 41 per cent).

Spa businesses of the future will simultaneously harness the power of networks while also allowing customers to break free from connectivity. They will empower employees, while drawing on the collective knowledge of their crowds of customers.

Interacting with and understanding both employees and customers through the use of data and technology will allow spa businesses to create more value.

Wahanda.com, the online portal for spa breaks and treatments, is an example of how a technologically-connected business can use customer data to create value. The website operates a location-based treatment booking system which matches customers with available time slots in spas in the vicinity in much the same way as many of the leading spa booking systems such as SpaBooker, Manage My Spa and ResortSuite. Instead of relying on the old paper and pencil booking model, the online marketplace enables spas to fill time slots in a more flexible way, according to demand. This allows for fluid response, while also providing a more convenient platform for customers.

MyBeautyCompare.com uses a similar model, matching thousands of beauty products to skin types, lifestyles and needs. But the website doesn’t rely on income from sales, it creates revenue with the data it holds on customer preferences, which is valuable to brand owners.

With rising concerns over data protection, customers will give preference to companies that show responsibility with regards to personal information, companies that are transparent and trustworthy. The successful spa business of the future will have to adopt a ‘circular economy’ model, returning value to customers in exchange for their data – using that information to provide a better and more personalised service, for example.

CREATING VALUE, NOT VOLUME
Consumers’ constant access to information has not only changed the way they shop. It’s also significantly changed their values and expectations. Access to the benefits products and services provide is becoming more important than their possession, partly driven by people’s rising awareness of resource constraints. There’s also an increasing desire to improve intrinsic wellbeing by doing good – as an individual, social being and citizen. Consumers expect businesses to create and not destroy value for individuals, society and the planet. In a spa, this could mean being aware of resource wastage in treatments, or a tedious and time-consuming booking process.

With the aim of providing long-term wellbeing, spa businesses should pay attention to increased social engagement and exchange, as well as a more sustainable approach to resource usage. How can spas minimise their impact on water usage and natural resource depletion? Could it be an option to source ingredients from local producers: lowering supply chain costs while supporting communities and improving livelihoods?

Spas are facing increased competition through a variety of channels, from the use of spa products at home to the rise of life coaches and mental wellbeing enablers such as Headspace, a meditation training app which can easily be used on tablets and smartphones while on the go. This trend is driven by consumers’ changing attitude to spending and growing desire for convenience. Fifty-nine per cent of consumers surveyed in Global Monitor claim that they would “buy products and services that provide extra convenience” (up 5 per cent on 2013). The time is ripe for new models of ownership in the spa industry. In the future, an Airbnb model of shared resource usage, leveraging existing, underused assets, materials or even people, could be imaginable for spas.

Alongside integrating customers in the value chain, spas could also look at setting up freelance therapist networks and sharing their own resources. They could emulate the Handy.com model – an online platform where consumers can book expert home cleaners and builders at a moments notice. Other examples include Uber for taxi/car hire and Instacart for grocery delivery within the hour. These companies are successfully using this model, leading to a leaner structure and more flexibility for their organisation, workers and customers.

BECOMING ‘OPEN’ AND SOCIAL
As we’re moving from ‘closed world’ products and services providers to more ‘open world’ relationship economies, the establishment of trust between businesses and customers will become a crucial success factor. Consumers are looking for businesses and brands that share the same values, have a shared purpose and increasingly engage and communicate horizontally.

Indeed, 76 per cent of our Global Monitor respondents say “I appreciate it when companies make it clear what they stand for and stay true to their values”.

The old model of top-down communication will not work anymore and the spa industry needs to consider embracing a more open, trust-based dialogue with its customers, accepting the fact that consumers are knowledgeable. This can already be seen in the hospitality industry, with hotel managers openly engaging in a customer dialogue on review sites such as TripAdvisor. In the future, open-sourced knowledge and ideas, as well as a more networked approach to suppliers, staff and customers will be part of the business model. This could mean embracing customers’ knowledge about beauty, wellbeing and mindfulness, and incorporating this layman expertise into the spa’s offering. It could mean having a recommendation-based approach to finding the right suppliers and staff, in an open, horizontal dialogue with current customers, staff and suppliers.

In our Global Monitor, 65 per cent of respondents agree that, at present, “most companies only make claims about their socially responsible efforts to try to sell me more of their products”. As customers become more reluctant to believe company claims, winning people’s trust and proving to be a ‘social business’ will become a competitive advantage. In the future, consumers will become ‘citizens’. There will be a growing desire to do good – 46 per cent of Global Monitor respondents claim that “buying only ethically produced goods is very important” in their lives today and this figure has grown 3 per cent over the last two years.

We see a turning away from the holy grail of consumption, towards more holistic and sustainable lives. Businesses will have to fulfil people’s needs, rather than creating new (consumption) wants. Township Yogi, a project in South Africa is an example of success in this respect. It’s delivering wellbeing to the people who need it most: citizens in townships who cannot afford spa and wellness treatments. Open to the young, old, weak and disadvantaged, the project takes yoga into the townships around KwaZulu-Natal and also aims to train participants to become instructors themselves. It was so successful that it reached its 60-people class capacity within weeks, helping the community through integration rather than the traditional outreach approach.

Spa London in the UK is public sector organisation based on social values too (see SB07/3 p64). It has six sites across the city that provide affordable thermal experience packages – a three-hour session ranges from £12.50-£25 (US$19–US$39, €17–€34) for non members, with concessions for local residents, students, old age pensioners or the unemployed. They integrate members across the community and create a socially diverse environment.

Powerful structural changes and the evolution of people’s values and attitudes mean that the spa businesses of the future will have to rethink their business model. Organisational culture and communication with customers will become more important than strategy. Intrinsic motivation of employees and customers, shared values and a shared purpose, will win in importance over extrinsic motivations such as financial rewards.

Future-proof spa businesses will have to define a sustainable model, creating value rather than destroying it in the long-term. Fulfilling the needs of consumers-turned-citizens’ will trump the creation of new wants. Only when a business has established a trusting relationship with customers will it be fit for the future.


The Futures Company
The Futures Company is an award-winning, global strategic planning consultancy with expertise in foresight and futures. Its teams in Europe, North America, Latin America and Asia aim to unlock new sources of growth through forward-looking, people-centric and outward-looking consultancy and a range of subscription solutions.

Twitter: @FuturesCo

Web: www.thefuturescompany.com


About the author:
Imke Schuller is an associate director at The Futures Company, focusing on the EMEA. She’s the health and beauty sector lead for the EMEA and helps clients anticipate change in their operating environment and to find new ways of adapting to an ever-evolving business context.

Email: imke.schuller@thefuturescompany.com

Tel: +44 20 7955 1838


Originally published in Spa Business Handbook 2015 issue 1

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