Good News! Spa Biz Rebounds in Q4 of 2011

I love to be the bearer of good news, particularly when it comes to the economy and spa. So, I'm thrilled to pass along a report from the Professional Beauty Association (PBA) regarding the fourth quarter of 2011 for the spa and salon industry. Guess what? We're finally showing a rebound! Driven by stronger sales and traffic levels and a more optimistic outlook for sales growth and the economy, the PBA's three main tracking indices for the salon/spa industry, which include the Salon & Spa Performance Index (SSPI), Current Situation Index, and Expectations Index, rose in the fourth quarter of 2011, following three straight quarters of decline and having hit their lowest levels in two years in the third quarter of 2011.
 
The SSPI, which is the main index of the three, is a quarterly composite index that tracks the health and outlook of the U.S. salon/spa industry. The SSPI rose 1% from the third quarter of 2011 to stand at 102.9 in the fourth quarter. A base level measurement of 100 is used, with values above considered positive. "The salon and spa industry remains resilient. As with the broader economy, it is encouraging to see positive growth and expansion as indicated by the Salon & Spa Performance Index," syas Steve Sleeper, executive director.
 
The SSPI is based on responses to PBA's Salon & Spa Industry Tracking Survey, which is fielded quarterly among salon/spa owners nationwide on a variety of indicators. It is constructed so that the health of the salon/spa industry is measured in relation to a steady-state level of 100. Index values above 100 indicate that key industry indicators are in a period of expansion, while index values below 100 represent a period of contraction. The Index consists of two components—the Current Situation Index and the Expectations Index.
 
The Current Situation Index, which measures current trends in five industry indicators (service sales, retail sales, customer traffic, employees/hours, and capital expenditures), rose 1.3 percent to a level of 101.6. Four out of five indictors were positive in the fourth quarter. Most notably, 59 percent of salon/spa owners reported an increase in same-store service sales between the fourth quarters of 2010 and 2011, up from fifty percent who reported higher service sales in the third quarter. Fifty-four percent of salon/spa owners also reported higher retail sales. Employee hours were only slightly down and were the one negative in the report.
 
The Expectations Index, which measures salon/spa owners' six-month outlook on five industry indicators (service sales, retail sales, employees and hours, capital expenditures, and business conditions), increased 0.7% to a level of 104.2. Overall, salon/spa owners are more optimistic about industry growth in the months ahead. Service sales, the core of most salon and spa businesses, was the most encouraging with sixty-seven percent of salon/spa owners expecting to have higher service sales in the coming six months. Sixty-one percent of salon/spa owners also expect higher retails sales as compared to seven percent that expect a decline.
 
Despite the stronger outlook for sales and the economy, fewer salon/spa owners said they plan to expand staffing levels in the months ahead. Forty-three percent of salon/spa owners said they plan to have higher staffing level in six months. In comparison, only six percent of salon/spa owners expect to reduce staffing levels in six months, matching the proportion who responded similarly last quarter.
 
The full SSPI report and the "Salon & Spa Tracking Survey" can be found at www.probeauty.org/research.

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