Brand of Gold
Private-label skincare has come a long way through the years. Gone are the days of a plain white label with a generic logo. Today, it is sometimes difficult to differentiate between a mass-marketed brand and a private-label brand. What’s more, what is inside the private-label bottle is often the same or even better than what’s in the branded bottle. “Educated consumers now know that they can find high-quality beauty products without having to visit the cosmetics counter,” says Lynn Warren, sales and marketing director at Hale Cosmeceuticals. “Instead, they are choosing to visit the skincare professionals they receive spa services from—the same people who have taught them what ingredients to look for and perhaps what to avoid in products.”
All spas can benefit from offering a private-label line, as it creates brand awareness and keeps the spa in the mind of clients long after they’ve left the spa. Clients trust spas to pamper and treat their skin, so it makes sense that they trust that same spa to develop high-quality skincare products. “Over the last 12 months, we’ve seen an increase of 20 percent in private-label and custom-manufacturing clients,” says Liz Beresford, CEO of Vitelle Dermatology Laboratories. “Owners of both small and large businesses are recognizing the value of the greater private-label profit margin and brand equity. There also seems to be more awareness that having one’s own brand is not expensive or unattainable, so many clients who would have naturally gravitated toward national brands are now creating their own lines.”
Many private-label companies offer three levels of service. Spas can opt to choose ready-made formulas and place their spa label on the packaging; they can semi-customize the formulas; or they can work with the manufacturer to completely develop their own products based on special research and development needs. Regardless of how involved a spa owner chooses to be, a private-label line can help increase a spa’s sales margins and profits. “Private labeling allows spa owners to buy at a low cost then set their own suggested retail price,” says Karen Bock, president of Brushes by Karen. “This allows for plenty of room to extend commission to their staff and will help motivate employees to endorse the line. On a branded line, spas are spending more and making less. They are promoting someone else’s name and doing so at a low profit margin. It’s easy to lose sales to competitors offering those very same branded products at lower prices. A private-label line ensures a spa will not lose a customer to a discount e-commerce site.” Private labeling can also help increase sales margins, because products go from manufacturer to spa, as opposed to manufacturer to brand to spa, thus eliminating the middleman.
Spas can introduce their private-label lines to clients directly by using the products during treatments and as locker-room amenities. Massage therapists and estheticians have the full attention of clients during and after treatments to discuss the products and the benefits. If a client likes any of the products used, they then have the opportunity to purchase the product immediately in the retail area. Lapis, the Spa at Fontainebleau (Miami Beach, FL) has made its private-label products available for use both as amenities in the locker room and in its services. The line features a shampoo, a conditioner, a body lotion, a body wash, and a body scrub. “Our guests’ demand for logo products is quite strong. It allows them to take the Lapis experience home with them,” says Josie Feria, director of spa operations. “Also, many corporate groups are seeking to provide Lapis amenities as gifts for their guests on arrival to Fontainebleau. Our products also make a memorable turndown amenity for meeting attendees.”
According to Bock, spas should not limit their private-label line to skincare only. They should also consider offering a line of cosmetics. “Makeup is a repeat seller and has the bonus of being a portable item,” she says. “Women use their makeup in public places, such as gyms and restrooms, which is free advertising for the line.” Similar to private-label skincare, cosmetics lines can also be incorporated into services. Bock suggests offering clients a free makeup application after each facial.
While private-label companies allow clients to customize their own lines, it is important for spa owners to do research before choosing a manufacturer. According to Beresford, spas should discuss the following issues with potential manufacturers: What is the minimum order and minimum per SKU? What is the setup fee, if any? What is the typical turnaround time? What packaging options and labels are available? Is there a color limitation to the printing of labels? What is the minimum order for onsite training? Does the supplier offer the type of product desired, and can the lab make custom products?
Another question spa owners should be sure to ask is, What sort of education and training accompanies the partnership. From Skype training, hands-on classes, and business mentoring to printed support materials that feature product ingredient benefits, suggested protocols and at-home use, and sales information for all product lines, many companies work closely to ensure the line is successful even after development. Many also provide marketing support to help promote the line. “Dermastart offers programs from inception to implementation,” says founder and president Cherie Dobbs. “We develop cutting-edge products with medical-grade ingredients, review marketing possibilities, evaluate demographics, develop menus and training manuals, design graphic logos, offer design ideas for marketing materials, provide theory and demonstration training for the entire staff, and offer certification for many professional treatments.”
Having the marketing support from the manufacturer can be a very important component to the success of a private-label line, as it can provide ideas and insight into the spa’s demographics and how to successfully sell to them. The ability to create a custom product or line that directly aligns with the business’ location or philosophy helps set the line apart. For example, a spa located near an ocean might consider a product that features a beachy scent, or a spa located in Vermont might consider a line or product that contains maple syrup. Spa Ojai at Ojai Valley Inn & Spa (CA) offers Essence of Ojai, its own private line of products in four seasonally inspired scents that celebrate the fresh harvest bounty of Ojai Valley and is used in special seasonal body treatments and nail services. The offerings include Cocoa and Pomegranate for winter, Ojai Pixie Tangerine for spring, Lemon Verbena and Avocado for summer, and Pumpkin Spice for fall. Each fragrance is available in a body lotion, a body butter, and a sugar body polish. “Our seasonal offerings have been very popular over the years, and guests who receive them want to take the memory of their experience home with them and extend the benefits of the products after their professional services,” says spa director Gloria Ah Sam. “It promotes unique and memorable experiences for our guests.”
While some spas sell a private-label line exclusively, others offer it in conjunction with national brands. Because clients need to return to the spa to purchase a private-label product, it offers additional opportunities for them to browse the range of national brand products, as well. Also, private-label lines can enhance other national brands’ professional treatments through value-added promotions. For example, according to Beresford, a spa that uses a national brand as back-bar for its professional services and treatments can offer one of its private-label products as a promotional item. “It is better for your bottom line to give away one private-label product than it would be to discount a treatment where labor and cost of materials is high,” she says. “As well, this puts your brand into the hands of your customers opening the door to further private-label product sales. We have many clients selling varying amounts of national brands alongside private label, as their clients recognize the national brands and the value statement those brands market.”
As private labeling continues to grow and more spas are opting to create their own line of products, manufacturers are seeing an increase in requests for offerings that reflect today’s skincare trends, including the addition of results-oriented and natural products. “Spas are putting an emphasis on results, and they are using their lines as a means to educate their clients on proper care of their skin by offering more than basic products,” says Suzie Sommer, senior vice president of marketing of Ready Care. “Now, it’s typical to have a candle, a sugar scrub, and a salt scrub, as well.” Dobbs has noticed a trend in requests for after-suncare, anti-aging, acne, and travel kits. Lapis recently started selling salt shots, which are one-ounce cylinders filled with the same mineral salts used in pedicure services, and a three-ounce travel pack of the spa’s shower amenities in a convenient see-through bag. These are just some of the ways spas are being creative to promote their line of products to increase client loyalty and sales. “A softer economy challenges business owners to find new sources of revenue, which aligns perfectly with the business message of private label,” says Beresford. “Global acceptance of private label is hitting an all-time high. Research indicates consumers will continue to buy private label when the economy picks up, so there has never been a better time to start your own brand.”