How The Recession Will Affect the Spa Industry

How A Recession Will Affect the Spa Industry

Ready or not here it comes

Covid. Inflation. Recession. Three unsettling words no one wants to hear. Uncertainty always leaves an uneasy feeling, especially when it comes to our careers. No matter where you are in your career, each one of these scenarios has or most likely will have an impact on us personally and the spa industry. Whether you are a solo esthetician working on your own or for someone else, a spa owner, a skincare retailer, or a manufacturer, the repercussions are affecting our bottom line and how we earn a living. A question worth pondering is whether or not you are ready for what is to come.

It is true we cannot predict the future but we most certainly can evaluate the present, have a clear understanding of where the economy seems to be going, and prepare ourselves. That’s why having personal and professional goals, business plans, and definitely a Plan B set in place are crucial components to success. The best way to feel more in control of the unknown is to understand exactly what these words mean and their impact on our industry. Knowledge is key. It allows us to make better decisions based on facts, not fear. So, let us delve deeper into what impact these three ominous words have on our industry and our careers.

Covid

The truth is we are still reeling from the effects of Covid. It seems everything has changed since the virus took the world by storm. Well, almost everything except the fact that skincare is still in very high demand. Not only skincare but skincare treatments. One could say this industry is booming. There are new skincare products hitting the shelves on a regular basis and advanced skincare treatments such as Botox and dermal fillers are in high demand— not to mention body treatments for cellulite, contouring, and toning.

Although women’s skincare products, facials, and body treatments dominate the market, men’s skincare and skin treatments are gradually right behind. With Covid, both men and women regained a new sense of taking better care of their health both physically and mentally. A more holistic approach to living has been adopted as each of us has become more aware of our overall health due to the negative effects Covid had on so many people’s well-being. Not only do our clients desire a better quality of life to stay healthy but they are also more eager to understand the type of products they are using on their skin beyond whether or not they deliver results.

The surge of information on ingredients and the why’s and why not behind them certainly is at the forefront of many social media posts, skincare blogs, and the marketing of hundreds of skincare brands. This awareness is a positive move in our industry but as with all things, there can be a lot of noise in between the truths. As professionals, we need to ride on the side of caution in our attempt to navigate through the economic decline that the pandemic has put on the spa industry. Fortunately, taking care of our skin and looking our best has always been a high priority for most people and this is great news for the esthetic world. However, with this optimistic view, there are still many factors that are at play to ensure our careers are successful. Being intentional in our decision-making is of utmost importance as we desperately try to bring back some of our clients, maintain the clients we have retained, and with just as much urgency continue to expand with still many obstacles in our way.

You can’t be successful if you don’t have a team

A major problem due to the pandemic has been the lack of help. This was felt strongly during COVID-19 and is still a major issue for companies. Not only finding employees to work but finding qualified employees. In the skincare world, there are many industries that play a role in our success. Not having a sufficient amount of qualified employees severely impacts us.

Estheticians with a strong understanding of skin are needed for spas to succeed. Unfortunately, esthetic schools being limited to online learning and social distancing during Covid has made finding new estheticians challenging. The bottom line is it is very difficult to learn skin if you are not hands-on. So there is a disconnect happening right now with newer estheticians finding employment. They are having to work harder to prove that they are qualified for the position employers are seeking to fill. They lack the experience that other estheticians may have received during their schooling to no fault of their own. Esthetic instructors were and continue to be in high demand and clientele for students to practice on was difficult to come by. The old saying practice makes perfect is true— especially when it comes to treating and caring for skin. Sadly, Covid made this very difficult for these future estheticians enrolled in esthetic programs in 2020.

As so many remember and perhaps try to forget, the entire spa industry was shut down several times during the pandemic. Spa owners are still trying to recover. Having a properly trained staff is essential to success. Training takes time and time is money. As employers are trying to rebuild or reestablish themselves having the right team members who are qualified is a key factor that brings us to another obstacle the spa industry faces – working remotely. Many would argue that having the flexibility to work remotely brings a lot of perks to the job. Although this may be true for many, for specific businesses such as spas and manufacturing plants, both of which require hands-on employees, working remotely is not an option. This has been debilitating to these businesses. We hear terms like the trickle-down effect. Not having enough employees to work is the perfect example of what this means and so inflation rears its ugly head.

Inflation

It may feel to many that we haven’t even gotten back on our feet yet from the Covid pandemic and now inflation is all we hear, see, and feel when we purchase food, gas, and quite honestly anything. Prices have gone up and there seems to be no end in the near future. Not to mention, a looming recession not too far off in the distance. With so many emotions that can come into play, it can be easy to be anxious or if at the least, to feel a sense of trepidation. What is Inflation and how does this affect estheticians and the spa industry? Well, here enters the trickle-down effect again. One example would be the labor shortages discussed and the wage increase both contributing dramatically to inflation. A perfect example of spa owners trying to reopen and rebuild, the demand for higher wages increased, and not enough clients coming in for spa services all contributing to instability and uncertainty. The bottom line is inflation is an overall increase in prices which in turn impacts the cost of living which then influences the buying habits of consumers.

Behind the scenes

From the perspective of someone who manufactures skincare, it has been challenging. Due to inflation the manufacturing costs, including ingredients, packaging, and shipping have gone up substantially. There are so many layers to getting the product into the treatment room and onto retail shelves. It would normally take anywhere from 4 – 6 weeks from start to finish to produce a product. During the pandemic, that time frame went to 12 – 16 weeks due to the inability to get supplies as quickly as before, costs of goods, cost of labor and not being able to fill positions due to lack of employees. As hard as we try not to push those costs onto our customers it is nearly impossible not to. Although people may become accustomed to these increases, the truth is it hurts our bank accounts and our lifestyles not only for us but for our clients. When researching inflation and projections for 2023 and 2024, the term the ‘lipstick effect’ popped up. For those that may not be familiar with this term, it is the idea that during inflationary times shoppers may cut back on luxury purchases yet still indulge in affordable splurges. ****What does this mean for our industry? It means we need to pay attention and start planning. Remember, knowledge is key. ****Understanding everyone has been affected by the substantial increase in all of the above-mentioned we must keep things simple if we want to get through this difficult phase in our economy.

A Recession is looming

What happens during a recession? Businesses struggle to make profits, leading to layoffs and job losses. Isn’t this already happening? How many people do you know that have lost their job after being with a company for years? Chain stores are closing and the housing market is taking a downward turn as interest rates increase. All of these scenarios lead to unemployment increasing and consumers being more cautious with their spending. It doesn’t take a lot of research to notice that everything around us is pointing in that direction. Will this change the spa industry? Most likely, but it does not mean that there is not a place for growth amidst this economic downturn.

Keep it simple

How do we get through these hard times and what can we do differently to retain client loyalty beyond facial treatments? Have a plan and put it into action. On a piece of paper make a list of where you are seeing a decline in certain services, clients rebooking, and a decrease in retail sales. Pay close attention to where your clientele is scaling back. It is imperative that you do this. How do you know where to go if you don’t know where you are? Taking an inventory of your business is key to putting a successful plan into action. Once you gather this information modify what you are currently doing by simplifying and being more cost-effective. Clients want to take care of their skin and they want simplicity. The stresses of life create confusion and when we can assist in simplifying skincare for them clients are more likely to stay loyal. Taking care of themselves not only makes them look more attractive but makes them emotionally feel better. All of this is part of your job. They will spend their money with you but you have to make it worthwhile for them. Remember they are cautious but willing. If you are not already offering payment plans for more expensive services perhaps consider this as an option.

Strengthen retail sales by caring a line that is affordable for the average customer while still being effective. High-end retail has its perks but it limits who your buyers are and in turn, you risk products sitting on your shelves. There are many misconceptions that the more expensive a product the better it is. This is false. Do your homework and research professional brands that offer simplicity with affordability. The bottom line is clients are looking for results and if they do not have to spend more to get them the happier and more likely they are to buy these products. Not only do your clients benefit from a more affordable skincare line but so do you as this lowers your investment. Again, we see the trickle-down effect but this time on a positive side.

Start by prescribing for your clients not selling them. Let them know the benefits of what you are recommending and remember, not all clients get facials regularly but every client washes their face and at the least uses a moisturizer. This is an area where spas have not been up to par. Yes, spas retail but it has never been the backbone of the professional industry. Rather retail has been left to over-the-counter. Of course, this does not apply to all spas but it has been a struggle for many. Retailing should be a top priority for estheticians. Who, if not licensed skin specialists, should be prescribing skincare products? Retailing allows spas to increase income substantially and keeps client loyalty. When we do not meet our client’s needs they look elsewhere. Remember, clients buy skincare. If they are not buying it from your spa then they are buying it from someone else.

Be generous

Offer special discounts on facial treatment services and include some extras in their treatments ie. Skin Resurfacing Facial with High Frequency or an added Cold Stone Massage. This will make the client feel they are being taken care of by you and getting more for their dollar. It is true, a little extra time may be added to the service but this will encourage client loyalty. If they can see and feel a difference in their skin and you make it affordable, they will come back.

Understand the motivation behind your clients wanting to do business with you. Anti-aging is the fastest-growing segment of the skincare market therefore, it is safe to assume that the majority of your clientele has an interest in preventing premature aging. Creatively meet their needs with an understanding that this is a number one concern for clients ranging from 22 years old to 80 years old. The opportunities are endless. Don’t be afraid to offer more than you have in the past but once again keep it simple, effective, and affordable.

Generosity is attractive. You want your clients to know you understand that spending money with your spa may be a sacrifice. Let them know you are willing to make it easier for them to care for the health of their skin because you have their best interest. Educate through social media, newsletters, and email, which by the way cost nothing but your time and creativity. Use these outlets to stay connected to your clients. Communication is essential to maintaining loyalty. Keep things simple amongst the hesitancy and success will follow. As it has been said many times, this too shall pass. The economy may be unstable but this is temporary. Be prepared, make a plan, and do your best to provide exceptional services and products that not only work but are worth every penny they spend with you.