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Retail to the rescue?

Posted by on December 11, 2021 in Articles

Retail to the rescue?

OTC product sales can steady your ship through rough waters.

By Vivienne O’Keeffe A.A.D., P.E.A., C.I.B.T.A.C.

The last couple of years have taken their toll on the spa business, with many slowing to a crawl or even shutting down completely. And yet others have survived or even turned a profit. What’s their secret?

 

Using insight for retail success

It’s certainly not booking more appointments. Customers understandably discouraged by warnings from government and health agencies have been slower to reengage in high-contact treatments. On the other hand, surplus stay-at-home time – and in many cases government financial support – have enabled many absentee clients to at least maintain their home care treatments, along with their consumption of health and skin care products.

It’s hard to underestimate the importance of over-the-counter (OTC) product sales during lean times. With their relatively high margins and broad appeal to many types of clients, products for skin care, hair and other areas both aesthetic and curative are for many spas a matter of survival.

In past articles I’ve discussed the challenges that spas face when trying to compete for product sales with E-tail giants like Amazon. There’s no doubt that convenience, selection and fast delivery are making these sites billions of dollars. What can you offer in return?

As it turns out, plenty.

But first let’s look at what the other guys are doing. Amazon, eBay, Zalando and others come to the battle fully armed. Amazon, the clear leader, uses what it calls “item-to-item collaborative filtering.” A virtual smorgasbord of enticements coaxes browsers through the ordering process and into the final sale. With supportive options like Recommended For You, Frequently Bought Together and Customers Who Bought This Item Also Bought – along with the usual laundry list of favourable customer reviews – it’s no wonder that Amazon commands about half of all online sales in the U.S. and Canada.

If that’s not threatening enough, Amazon’s separate site called Amazon Professional Beauty carries more products and adds links to professionals’ services and even free advice.

During the first quarter of 2021, Amazon generated net sales of approximately $US 108.52 billion, surpassing its $US 75.45 billion in the same quarter of 2020. That’s a 44% jump.

How do you fight that?

 

Hands-on and In-person

You start by drawing on your core strength, which is the fact that you are literally a hands-on business. As millions of Zoom users have been discovering in the past 20 months, there’s no substitute for face-to-face contact, and there never will be. Instead of a synthetic encounter in the vast, anonymous and impersonal abyss of cyberspace, the client gets a warm and receptive refuge in the same city or even neighbourhood they live in. Your staff are much more likely to be trusted, understood and heeded.

Which is why Amazon is so busy acquiring and opening bricks-and-mortar stores of its own – 89 as of July of last year, and many more expected – all with online data driving decisions about format, product range and location. Would they be doing that if they thought physical retail was passé?

 

Use product recommendation and prescription selling

Keep in mind that in-spa products can be recommended directly by therapists performing one-on-one treatments. A treatment session can build a level of rapport that’s impossible to replicate online. And no algorithm will understand the client’s needs better. These types of encounters, known as ‘prescription selling,’ can produce a lot of sales. And like printed books versus e-readers, the experience of a personal sensory transaction is always going to feel better than an online one, fulfilling a basic human need; the need for human interaction.

If the meeting is no-contact via Zoom or Facetime, your product prescription program can still be used as part of your customer care outreach and retail sales strategy. And your trained therapists can still assess clients’ needs and skin type, and recommend personalized skincare programs.

 

Maximize use of spa software

Online or in-person, I always recommend the diligent use of spa software. Its powerful features can enhance the customer experience by building trust and confidence by (for example) tracking product sales and recording prescriptions to maximize professionalism and efficiency during return purchases.

 

Feature comparable pricing with no shipping costs

What about online vs. in-spa pricing? Consumers think products sold in spas cost more than ones purchased online. But they don’t necessarily. Once you factor in shipping and customs costs, prices are generally about the same, or even less.

And speaking of shipping, there’s no substitute for the instantaneousness of OTC. Why wait for a delivery driver to arrive with your moisturizing cream when you can walk away with a bottle right now? The hybrid click-and-collect model, also known as curbside pickup, is also one to keep going.

So why don’t all spas prioritize product sales, at least until COVID finally departs?

For one thing, it takes some training. Closing a sale takes confidence, practice and a little understanding of customer needs. Just because you think $50 is too much to spend on an exfoliant doesn’t mean your well-heeled client will.

Plus, the perception that online has a lock on prices and reviews can dissuade some spas from even trying. Why not confront that perception head-on? You could, for instance, print out and post a list of your prices and Amazon prices side by side – along with some of those very same reviews. Saving clients time, trouble and any feelings of buyer remorse can put more money in your till.

 

Stock the right products

There’s also the issue of stocking the right products for the times. And as the song says, the times they are a-changin.’ We’ve reached a tipping point in eco-consciousness, whereby today’s shoppers are looking for brands that pay as much attention to their values and and to their ingredients, even in cosmeceuticals, as do makers of (say) yogurt or fruit juice. One example is the trendy new Vessi waterproof shoe brand which started in Vancouver in 2018. After raising $14 million on Kickstarter, it didn’t take long for this über-trendy firm, which shuns any animal products or testing, comes with an eco theme and packs its footwear in 100% recyclable designer boxes, to hit some pretty dizzying sale heights – up to 60,000 pairs a month. For a while, the company actually had to halt operations to catch up. From electric cars to edible straws, I think we’re still in the early stages of eco-consciousness. So choose your product lines accordingly.

 

Become a preferred supplier

Of course, becoming your clients’ preferred trusted product supplier also builds your relationship with them and bodes well for continuing non-product business when we’re all circulating again.

And while we are looking forward to that, keep in mind the following:

  • Our world has changed; we now live in an e-commerce world where customers practice omni channel shopping, often researching products online and going to bricks-and-mortar stores to buy them and vice versa.
  • Consumer’s comfort and confidence with shopping in store have started to rebound since spring 2021.
  • Consumers want to support their communities and do business with people who share their values.
  • Consumers are seeking eco-conscious skincare solutions, evidenced by their online searches for “free-from,” “cruelty free,” “natural ingredients,” “eco-friendly,” “reef-friendly” and “sustainable source,” according to Nielsen Consumer LLC.
  • Revitalize your retail area, update your merchandizing, and create a welcoming atmosphere to entice and be inclusive of non spa-goers, the community at large, men’s skin care and other niche markets.

Remember our strength as an industry is our ability to educate our clients and, as a result, earn their trust and acceptance of our recommendations.

 

Published as “Retail to the rescue” in Spa Canada November/December 2021

Vivienne O’Keeffe, CIBTAC, AAD, PEA, is President of Spa Profits Consulting Inc., and an expert in designing successful spa concepts. She is also an international consultant in developing product lines, treatment plans and training programs, a member of ISPA and a recipient of the Spa Industry Association of Canada Outstanding Industry Service Award in 2001, 2005 and 2012. 

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