After 34 years in our industry, I’ve heard several truisms. One of my favorites comes from the Data & Marketing Association (formerly the Direct Marketing Association). When I was in the catalog publishing business, I often attended the association’s conferences, and the mantra that was repeated over and over was “test, test, test again.” Let’s apply this to a spa or wellness facility.
When building your treatment menu, we all understand the value of adding or subtracting treatments as the season changes, because it helps to keep the services offered exciting and interesting. Generally, the back of the house is responsible for profit margins in the 25 to 40 percent range. The retail area, or the front of the house, is another not-to-be-denied area of revenue and profit with typically much better margins. Through careful planning and buying, a spa owner can expect 50 to 100 percent gross margins, and oftentimes, way more.
Retail is not just for the immediate area surrounding the front desk. While traditional, the world of retail in the spa industry has changed dramatically over the years. Everything from shelving, racking, displays, and lighting, to trial products and inventory, all have a new purpose.
Here’s a quick overview on ways to generate revenue from these areas. Step back and take a hard look at your display shelves/racks. New, old, dusty, cracked, needs painting? Just like the front desk, you get one shot at making the right first impression. Do your display holders portray the image you want for your facility? Sometimes, a coat of paint is enough to brighten and clean up the look. Additionally, be sure to include a point-of-sale card explaining what, why, pricing, and more about your retail items. Given the lack of labor and a shortage of retail specialists, a properly organized and informative shelf can do the selling alone. What about lighting? Take several pictures of the display area and look at them. Do you see dark spots or black corners? If so, it’s time for an upgrade or change. Proper lighting is always on the top of my list because light sells products. How do you utilize trial product? Did you notice I didn’t say “sample”? Personally, I prefer “trial” product in this context. It simply sounds more refined and appropriate for your spa business.
Let’s talk about inventory on the shelves. The habit is to put everything that comes in from the manufacturer on the shelf. It’s time to break that habit. Tradition says to keep three of an item on the shelf. That’s enough to show inventory, have some space, and not look like you’re having a clearance sale. Backstock of inventory should be close enough to refill the shelves upon sale of an item. When selecting which products to carry, like all things, to do it properly requires planning. View inventory sales, do forecasting, be conservative. I’m a big fan of (another pithy expression) “crawl, walk, run.” Of course, you can’t run inventory to zero and then reorder. This is an important and integral part of your business and your bottom line.
Lastly, my advice is to be strategic. Attend as many trade shows as possible, take classes, look for trends and be ahead of them, hire a consultant (they’re experts and we’re not), and go slow. Don’t be afraid to buy and test small quantities of new items. They don’t always have to be spa-related either. Go outside the box, try new items, and test, test, and test again!
Since 2010, Allan Share has been the president of the Spa Industry Association (SIA) and an acknowledged leader in the spa industry. He has been a manufacturer, distributor, and consultant in the spa channel for 34 years and currently is the unofficial (and unpaid) mayor of the spa channel. You can reach him at [email protected].