The latest Spa Exec event was held in conjunction with IECSC and IBS, and featured a keynote presentation from Sara Boumphrey of Euromonitor International. Euromonitor uses 800 people in 80 countries to collect and analyze data for business and industry. Boumphrey, Head of Countries & Consumers, gave an insightful keynote presentation on her findings and forecasts for 2010. Details from the presentation follow, and for commentary please see my blog.
According to Boumphrey's data, in 2007, there were 5 countries with negative income growth; in 2010, there will be 22 countries with shrinking income. However, it was reassuring to hear Sara’s forecast that North America will have 0-4.9% per capita income growth in 2010.
The top 15 countries in terms of amount of consumer debt also account for 47% of global spending, so if those citizens can get their spending and savings in balance, it will be good for the global economy. Since the recession, US households have begun saving more, as much as 4% of income. This still pales in comparison to the Chinese, who save as much as 30% of their income!
The data analysis reveals 4 post-recession consumer trends, identified below:
1) Value – while consumers are looking for bargains, they don't want cheap. Consumers are delighting in finding bargains (giving rise to a new psychographic profile, the 'Frugalista'), and are also making eco-consciousness part of everyday living. Before the recession, consumers were willing to conserve only energy, but now it’s politically correct, and even fun, to participate in conservation efforts where possible. Consumers feel good when they find a bargain; what this means for the spa industry is that price and value continue to be a factor for our clientele, and that needs to be considered in marketing efforts.
2) Leisure and Escapism – consumers are using leisure time differently. Internet use continues to rise, as we find more things to do there, and more households have high-speed connections. The trend of escapism away from home finds many people seeking inexpensive ways to travel--camping or staying with friends rather than in hotels. Escapism at home is the trend that has the most implications for the spa industry. Consumers are more likely to purchase retail products that help them to recreate the spa experience at home, whether it is candles, music, or quality skin and body care. Said Boumphrey, 'Spa is the ultimate escape from the daily grind, so we can benefit from the trend of people searching for a treat, a small indulgence, a way to avoid the doom & gloom.'
3) Health & Wellness – Consumers are clearer on the empowering link between health & wellness and a fuller, happier, lifestyle. Boumphrey stated that 'Baby Boomers are the richest consumer group of all time. As they continue to reach retirement age, they'll want to remain youthful, active and young-looking.' We'll be embracing 'middle youth', not middle age. This trend is a great opportunity for the spa industry to provide products and services connected with overall well-being.
4) Home as Entertainment Hub - Staying in is the new going out, by watching films, conversing online, and recreating restaurant-type experiences at home. Electronic gaming manufacturers have scored with products like WiiFit, targeting the aging world and obesity, and non-gym goers who don't want to exercise in public. Instead of traveling, consumers are enjoying 'staycations,' and visiting amusement parks and museums closer to home. Perhaps a good opportunity for spas to cultivate walking or hiking groups, or offering classes on stress management, meditation, or just slowing down.
Overall, it appears there are potential bright spots for the spa industry in the upcoming year. Boumphrey cautioned against aggressive discounting as a dangerous game which consumers get used to. 'If you don’t discount you might lose customers; but if you do they will expect it to continue.' she remarked. Sales are rising, but will plateau at levels below pre-recession rates. Regarding travel, inbound traffic to the US is not expected to regain 2008 levels until 2013.
After the keynote, Nancy Griffin presented an all-star panel to discuss and interpret the keynote information. Panelists were Susie Ellis, President of SpaFinder; Denise Vitiello, Spa Director, Mandarin Oriental NYC; Mia Kyricos, VP of Spa Development, Starwood; and Peggy Borgman, CEO of Preston Wynne Spa & Wynne Business Consulting. Nancy started things off by asking the panelists to share what they were seeing in the spa industry during this fragile economic recovery.
Ellis remarked that the recovery really still differs by country. Vitiello felt that in New York, they were feeling the recovery already, because the recessionary effects had started as soon as summer of 2008. Kyricos stated that Starwood would open its 1000th hotel this year, and they were seeing a return of both leisure and group business. However, in the day spa sector, Borgman felt that demand was still erratic and difficult to forecast, and that unemployment remains a huge factor, producing uncertainty and hampering discretionary spending. She suggested that, following the trend of luxury retailers, spas begin to gently ease clients back toward full price, while still offering bargains for Frugalistas to seek out.
Ellis added that of the trends mentioned by Boumphrey, Health & Wellness and Value will have the most relevance. She felt that the fact that spas have been talking about wellness for a few years now really positioned us well now. SpaFinder tracks the terms consumers enter to search for spas, and Ellis reported that the word 'deals' was up 50%, but the word “wellness” was up 300%. Vitiello added that the trend of home as entertainment hub should be considered in spa retailing; we should be thinking of ways to help our clients extend the spa experience at home.
Spas are still trying to define their orientation: is it wellness or pampering? Generally, the panel felt that we can be both. While wellness is certainly a growing trend, Kyricos shared that Starwood research shows that pampering is one of the top 3 things consumers are still seeking, 'me time.' Ellis remarked that the 'P' word can equal prevention as well as pampering, and this is elaborated on in Ellis’ trend report for 2010. She also said that when you think of pampering, you think of nurturing and relaxing, both of which are stress-reducing. Vitiello broke the spa approach down into 4 areas; look well, feel well, perform well, stay well. Both pampering and prevention are comprised in those 4 areas. Borgman feels that any given client can be more than one 'type,' choosing to use spas in different ways on different visits. They seek both stress-reduction and nurturing. She shared a brand pillar from Auberge Resorts, 'pleasure is healing,' which embraces the seeming dichotomy of wellness and pampering.
The discussion then turned to developing ideas about how to attract the new generation of spa-goer. Ellis shared that she was recently at a medical conference in Washington D.C., and was intrigued to hear the doctors talking about high costs of heath care, and how they don’t have time to work with patients and be their coaches, but they all agreed that people could be healthier with lifestyle changes and lower healthcare costs. However, the word 'spa' never came up. Ellis said there are 20,000 spas in the United States, if every one hosted a doctor for a service and showed them what we can do, perhaps we can make inroads into the medical field and be another resource in their eyes.
Borgman said that spas should provide more education such as classes and evening seminars on wellness and related topics, invite clients and ask them to bring a friend. Kyricos advised making sure that the clients you have already know all of their options in your facility and aren't missing out on what could be valuable experiences for them, even if it’s just a place to sit down and have a cup of tea. Vitiello remarked that we have to change the tone of the conversation; consumers should not feel guilty about coming to spa, and should understand they are playing a part in preventing future problems and prescriptions for themselves. As Ellis said, the 'P' word can be prevention as well as pampering.