20 Oct 2018 Spa Business Handbook
 

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Spa Business Handbook - Selling Well

North America Research

Selling Well


Nancy Griffin outlines findings from Contento Marketing’s second study on spa retail

Spas should hire people with strong sales skills, and give them effective incentives to sell shutterstock
Merchandising and display flaws were cited as the biggest problem for spa retail shutterstock
Spa products should be able to be purchased over multiple platforms such as Apple Pay shutterstock

This year’s retail therapy research continues on the insights gained from Contento Marketing’s first retail study, published in the 2017/2018 Spa Business Handbook. This year’s survey focused on both sides of the spa/supplier relationship, to uncover challenges and best practices while digging deeper into specific issues such as inventory, space utilisation and product mix. The candid dialogue underscored that there needs to be an open dialogue between buyer and seller. Sixty-five percent of suppliers said their accounts do not share their professional sell-through percentages. Yet suppliers need information to help spas improve service to retail sales ratios, which have remained flat for decades. The majority (67 per cent) of spa directors report retail revenues as a percentage of gross revenues of under 20 percent.

Top 5 spa retail flaws
When analysing the responses to the question “What is the biggest flaw you see in a spa retail setting?”, it was evident that most spas lack a cohesive plan for spa retail. Many spa directors find themselves without the proper resources, or work with corporate buyers who are not always on the same page. Spa retail often takes a backseat to services.

The top 5 flaws cited were:
1. Merchandising & display
2. Staff training & incentives
3. Lack of space or prime real estate
4. Inventory control
5. Wrong product mix/saturation of products

Merchandising & display
Merchandising — defined as the activity of promoting the sale of goods at retail — and display were cited as the number-one flaws. Respondents reported a range of merchandising and display flaws, from improper lighting and fixtures, to lack of sales support tools such as shelf-talkers, displays, samples and testers.

Lack of signage and collateral for consumer education was chosen as the biggest flaw by several suppliers. Yet surprisingly, more than half of buyers (54 per cent) responded that only a quarter of their guests engage with retail collateral. This suggests that current collateral is failing to reach the target market — either because of the wrong messaging or wrong delivery.

Staff training & incentives
Staff training and incentives was a close second in this year’s survey as the biggest flaw in spa retail. There are a number of staffing issues to manage, including selection, training and incentives. Spa operators and technical staff aren't hired for sales skills and are not properly trained. (Suppliers noted frustration in this area, as they spend a significant amount of time visiting accounts for product knowledge and treatment trainings.)

“Spas need to hire people with strong sales profiles, then develop their employees. Very often the least paid people are selling retail. This needs to shift,” says Ann Patton, principal of Savvy Spas and instructor at the University of California Irvine Spa & Hospitality Management programme.

Creating the right incentives for staff to sell is also paramount, regardless of how dedicated and talented your sales people are. Effective incentives develop the right amount of competitiveness while promoting teamwork. “To encourage our desk staff to sell retail, we let them wear all of the products,” says Wendy Bosalavage, President of LIVunLTD. “Whoever sells the most gets to keep the item. Sales increased by 35 percent in the first week.”

Lack of space or prime real estate
Several of the spa directors responded that the biggest flaw in spa retail is either lack of space, or not having prime real estate for merchandising and display. As respondents are directors of spas within resort and hotels spas, it is not surprising that they have no control over allotted space for retail or back stock. This issue is difficult to overcome without buy-in from the top. A proactive way to overcome this challenge is to rethink existing space. Consider limiting inventory and displaying a carefully curated group of products to free-up valuable space. Envision multiple retail touchpoints throughout the spa:
• Interactive-iPads in lounges for shopping
• Impulse-buy stations at the cash-wrap area
• Beauty bars for product demos and mini-services
• Self-guided shopping experiences with digital interactive touch screens

Inventory control
Several suppliers responded that the biggest flaw was that the spas do not have ample inventory on hand to adequately retail their products. Survey results indicate that only a quarter of spas are carrying excess back-stock levels over 20 per cent.

In contrast to complaints about spas not carrying enough inventory, Michael Tompkins, partner at Hutchinson Consulting, noted excess back stock to be a burden in nearly all his consulting projects. “General managers and CFOs do not want to bring in new lines because the spa is carrying too much inventory,” he says. “Inventory grows like a huge monster. If you are carrying more than three months of inventory, get rid of what you can’t sell. Too much inventory will not allow for the level of personalisation necessary in the future.”

Product mix
Suppliers pointed to saturation of the same products in many of their accounts. This can be a handicap, as products that are not readily available cause a feeling of scarcity that encourages buying.
A possible explanation of why spas carry limited product line is because many “out-of-the-spa-box” items are not carried by distributors and independent reps. Without representation, most manufacturers cannot afford to directly support the spa channel.

The future of spa retail
In the future, spa retail will be interactive and experiential. Store environments and displays will be clean and minimal. Product will be easy to access. Combining the best of high-tech and high-touch, spa retail will evolve with the contemporary consumer shopping experience.

Successful spas will build on skincare sales, focusing on targeted, unique items indigenous to the local area, or that contribute to a healthy lifestyle. Knowledgeable sales consultants will evaluate each guest’s individual needs and goals, then suggest products that can be purchased seamlessly over multiple platforms (room charge/digital phone via Apple Pay). Products can be delivered to the guest’s home, dropping directly from the resource partner, if they don’t want to take it with them. Tomorrow’s spas will meet the customer wherever they are, and wow them!

Graph 1:

Percentage of annual gross revenues from retail sales

 



* Source: Contento Marketing 2018 Spa Retail Study
Graph 2:

What percentage of your spa
guests engage with retail collateral?

 



Source: Contento Marketing Spa Retail Study
Staff & Training Tips

• Hire designated sales people—products do not sell behind locked cabinets!

• Retail sales are 15 per cent higher per therapist if a professional license is displayed: the ‘credible authority’ syndrome

• Employees need to be able to buy at a deep discount.

Merchandising Tips

• Shelf talkers are a must (especially when you do not have a retail associate present)

• Keep testers clean (86 per cent of spa retail shoppers would not by anything in the store if the testers are dirty.)

• Present product at eye level whenever possible. 85 per cent of people see products at the eye marker of 5’6” from the ground.

10 Ideas for spa retail

1. Grab-and-go items such as travel sizes

2. Travel apparel and athleisure wear

3. Items that address common concerns (ex. patches to reduce puffy eyes)

4. Jewellery, hats, sunglasses (and of course sunscreen!)

5. Sandals, slippers, pyjamas, sarongs, bathing suits, coverups

6. Locally made jewellery

7. Seasonal and holiday gifts

8. Artisan products that contribute to a charitable cause

9. Household items and fun novelty gifts

10. Wellness-focused products like acupressure mats and self-massage tools


Methodology
Contento conducted a survey emailed to attendees of the Global Beauty & Wellness Exchange – 55 US-based hotel and resort spa directors and 55 product suppliers. Nancy Griffin’s interview with Ann Patton and Michael Tompkins: Spa Realities: A Spa Conversation, provided useful takeaways for buyers and vendors.

About the author:

 

Nancy Griffin
 

Nancy Griffin is principal of Contento Marketing, a leading business development and PR firm for spas and wellness brands. She is also managing director of Bespoke – retail display solutions for spas and resorts. She has a master’s degree from Cornell University School of Hospitality Management, and 25 years of spa industry experience.



Originally published in Spa Business Handbook 2018 issue 1

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