SPAS LEADING OUTLETS FOR PROFESSIONAL SKIN CARE BRANDS

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Research form Kline's new study, THE U.S. PROFESSIONAL SKIN CARE MARKET 2003, reports that spas are the leading outlet for professional skin care brands, followed by medical offices, department store, and specialty stores. According to the report, spas have expanded the number of doors in the U.S. by more than 18% per year over the last five years.

Kline's study reports that the spa and salon channel accounts for nearly 65% of the total market for professional products, but that retail stores have actually taken about 8% of these sales from spas since 1998. "Marketers of spa products have largely ridden the wave of new spa openings rather than actively pursuing strategies to grow their brands," says Contreras. "Considering that sales growth of their products has lagged behind growth of spa locations, there are definitely more possibilities for growth to exploit here."

Bolstered by the booming spa business and a growing distribution in retail outlets, the U.S. market for professional skin care products has outperformed the market for standard retail skin care products to a significant degree. "The segment has been booming but still has plenty of room for growth," said Kline's Lenka Contreras says. "There are low barriers to entry, high consumer demand, and big potential for profit."

This first-edition report builds on Kline's annual report of the traditional retail market for cosmetics and toiletries in the United States. This new report covers consumable skin care products sold to professional channels for back-bar and take home use in the United States in 2003. The market is estimated at more than $0.5 billion at the manufacturer level, have grown nearly 10% per year over the last five years. The traditional market for facial treatments has expanded by just 5.4% during the same period.

Other significant insights include:

- Because of the popularity of spas, several cosmetic and toiletry retails chains are considering or testing out day spas near or next to their existing locations.

- Marketers -- large and small, and traditional and professional — are concerned about the threats that the new brands from dermatologists like Fredric Brandt and N.V. Perricone bring to the industry.

- Ironically, the physician-endorsed skin care products have not seen as brisk a business through dermatologists' offices or cosmetic surgery centers.

- Retail sales of men's skin care products alone have nearly tripled in the last ten years and show no sign of slowing.

The Section on Spas includes an overview of the spa channel with information on number of outlets, historical sales growth, facilities and services provided, competitive landscape, dollar and unit sales of skin care products, customer profile, and outlook to 2008.

The 25 Profiled Brands included: Avance, Aveda, Cellex-C, DDF, Decleor, Dermalogica, Dr. Hauschka, Elemis, Epicuren Discovery, Jurlique, La-Roche-Posay/BioMedic (L'Oreal), MD Forte, MD Formulations, Murad, NV Perricone MD, Naturpathica, NeoStrata Exuviance, Obaji Medical Products, Peter Thomas Roth, Repechage, Skinceuticals, Sothys, Sundari, and Yon-Ka.

For information on how to subscribe to THE U.S. PROFESSIONAL SKIN CARE MARKET 2003, go to www.klinegroup.com/y562.htm, or contact Lenka Contreras at (973) 435-3407 or Lenka_contreras@klinegroup.com. The full study is available for $13,500, which includes one day of strategic planning. Portions of the study can be purchased separately.

Established in 1959, Kline & Company (www.klinegroup.com) is a business consulting and market research firm serving clients worldwide in the cosmetics and toiletries, household cleaning products, and other consumer products sectors.