US Spa Market
Economic downturn hit spas – accustomed to years of double digit growth - hard.
Spas now enter a more mature growth phase
Science" and "organic" brands have displaced "beauty" brands in the spa channel
and account for most sales
Maintenance beauty replaces luxury treatments. Compact spa services attract the
more convenience-oriented clients.
The recession hit spas hard. Spas describe 2009 as a "disaster". Revenues fell 15%
on the previous year. Such a drop shocked spas which had become accustomed to
continuous expansion. A decade of double digit growth
had led to oversupply of spas
(saturation noted by Diagonal Reports in 2007
has made the problem worse. In addition, costs had spiraled out of control during the boom. Initially, spas delayed their response
to falling revenues and did not react – by reducing prices - until late 2009.
A spa marries beauty and wellness therapies so, unsurprisingly, “beauty maintenance”
and “quality of life”
services still account for most spa business in the US.
The top spa categories are massage and facials
. Combined these
account for more than half
of revenues in spas.
The best performing spas have always maintained that it is the basic services which generate the
most money. As one manager noted, “Media-hyped, exotic sounding services may attract attention,
but in the end people buy the basics: massages, and facials” The recession has only highlighted their importance.
Changes in people's lifestyles
(such as prolonged computer use) and their
desire to improve their wellbeing have driven demand for massages. It augurs well for the future of spas that these massage
therapies attract the widest range
of consumer segments in terms of age and gender.
is also one of the most recession resistant spa treatments.
Consumers are willing to continue spending and even to pay premium prices
for quality professional services to maintain the face, which is their most visible body part.
An unusual situation has emerged as regards brand share
in the spa market.
Long established companies in the personal care market failed to develop suitable spa lines, leaving
a gap in the market which has been filled by mainly new start-ups. Spas served as the
launchpad for the development of an entirely new category of beauty care products.
“Organic” and “science” brands
– somewhat strange bedfellows - have taken over
this market, accounting for nearly all sales and have squeezed out “beauty” brands in the
brands are the traditional beauty products made by
cosmetics companies. “Science” describes products marketed as having effective outcomes
and proven results backed by trials. “Organics” are green or natural product lines.
This shift towards cosmeceuticals (pharma) and botanicals (plant) to the detriment of "beauty" was identified
by Diagonal Reports back in 2006
Looking ahead, spas hope to maintain sales for the near future as
current consumer behaviour
remains unpredictable and erratic.
In 2008 demand collapsed for expensive services
across all categories
(even massage and facials) and the spa reaction was to eliminate all of the high
priced luxury offerings. As one manager noted, “Even high end clients are conserving their
wealth and spending it differently.” Spas worry that the economic downturn could be shaping
a new type of consumer behaviour, one that will outlive the economic recession that prompted it.
There is concern that the budget-minded consumer
is here to stay and the free spending levels of 2007 and before will not return any time soon. No significant upturn is expected in spa spending until 2011 or 2012
In the meantime, spas are concentrating on the opportunities
. After such
explosive growth, this shakeout was overdue and will benefit the sector according to seasoned observers.
Spas must now move into a more mature phase of their market development. They can no longer
be viewed as a license to print money
but businesses which must control costs and offer services which clients want.
Spas - once synonymous with luxury and pampering
- are no longer the
preserve of a small and elite consumer segment.
Spa usage has been democratised as the technical revolution
in spa equipment and facilities has
brought wellbeing services (especially massages) to the masses.
Spas have gone mainstream. The consumer switch from luxury to maintenance
treatments benefits a
certain (leaner) type of spa operators. Convenience is the key word. Compact
services are now in demand and spas which
offer “smaller price and smaller time packages” to their clients are now expanding in the US.
This new report
determines the value of
the US spa market in US$ billions. It segments spas operating in the US
into luxury, mid-market and budget categories and estimates their share of this USbn$ market.
It identifies the companies and brands used in spas. It also determines the value of the main spa therapy or treatment categories, the value of in-spa retail sales.
It identifies current and expected sales trends and changes in consumer behaviour as a result of the economic recession
and the developing spa sector. It lists the top spas in the US as identified by their peers.
Table of Contents
Beauty Report Series