Selling Retail
Increasing The Spa’s Bottom Line

by Gary Henkin and Denise Marchisotto

With the many costs associated with managing employees, including payroll taxes, benefits and training costs, service businesses traditionally have had low profit margins. Selling retail as part of a comprehensive system helps to offset soft operation costs and therefore is a critical component in the financial and operational success for any spa. Thus, owners of existing or future spas have many issues to consider when entering the world of retailing.

Since retailing now is an accepted part of the spa industry, every effort must be made to seamlessly integrate it into the spa’s total marketing plan. Spa services and retail-product sales must be consistently marketed, promoted and exposed. Some questions to consider include: Is there a dedicated and visually exciting retail area? When the client walks in, is it apparent there are retail products for home use? Is there an area to leave recommended products following services with a retail specialist? Is there someone to show the products, explain their benefits and close the sale?

One overall theme can focus on helping a client to “create the spa experience at home.” Homecare is one way to continue the results the consumer will experience at the spa in the comfort of his or her home.

Another theme can focus on creating solutions to solve clients’ concerns by gathering important information on a form at the beginning of their visit. In addition, seasonal promotions can be added, with retail products chosen to complement specific services or packages and then featured at specific retail stations.

The system should flow seamlessly from the time clients call to make appointments—always with a focus on meeting their needs.

When clients call for appointments, the receptionist can be the first to assist in clarifying if they need any other services during their visit. This is an area where additional services and revenues easily could be added.

Clients first should complete a form detailing their skincare and body-care concerns, which follows them from each service provider until the end of their visit. Each service provider can make recommendations for future service visits and retail products that will address those concerns. The retail specialist then can view the recommendations and make further helpful suggestions. When the form arrives at the front desk, the receptionist can ask to book future treatments according to the recommendations. The form can be put into a client’s file for future visits and follow-up.

Knowing clientele is crucial to be able to carry the products that will meet their needs, thus creating consumer satisfaction and possible repeat sales. Some questions to consider include: Are 30-something clients looking for general skincare and body-care?

Does the spa attract a mature, over-40 clientele looking for anti-aging solutions? Is it a flexible retail line that can answer a variety of concerns for many age groups? Which lines have products that appeal to men? The answers may be to have several lines addressing various groups, or even to develop a private-label line that addresses all areas.

There is significant competition for skincare and bodycare products from department stores and discount houses. Spa products must be differentiated by emphasizing quality. A knowledgeable staff can readily describe the benefits of higher quality during the consultation part of the sales process. It is also important that retail products are equal or similar in quality to products used during services to meet consumer demands for home use.

The optimal price-point is one that fits the clientele profile. If night-cream prices begin at $50, and clients have young families, an expensive cream may not be their highest priority. However, a more moderately priced line focusing on basic skincare, such as cleanser, toner and moisturizer, may sell in volume. If, however, the majority of clientele is females over 40 with more disposable income, then a line emphasizing anti-aging properties may be the right fit.

Many effective private-label spa retail lines are available, and most have a comprehensive variety of skin and body products for all needs. The marketing and promotions of private-label retailers usually are comprehensive and effective, and typically can fulfill all of the spa’s retail needs.

Bringing in a private-label line can be extremely effective in creating branding opportunities and potentially higher profit margins. It also can mean coordinating back-bar service products with retail products so the client can determine how they feel and the results they deliver. Clients then can purchase products for home use, creating continuity from beginning to end.

Usually there is much higher start-up costs involved in private-labeling, but for certain circumstances they can greatly improve image and consistency.

A successful retail operation can use to its advantage much of what is seen in professionally merchandised retail stores. Ideally, a spa should have a special area dedicated for the retail department. Ideas can be found by visiting department stores, and professionals can be brought in to assist in the development and design for maximum impact.

One effective idea is to change the retail area according to the “selling season.” The four traditional seasons—spring, summer, fall and winter—are excellent times to feature special services and products. Colors and decor can be changed appropriately to stimulate sales. Other important landmarks include Valentine’s Day, Mother’s Day and Fall Back to School/Work.

Products must be displayed effectively and creatively. The area should be kept clean and well organized. Products can be arranged by line or use. For example, skincare should be grouped by skin type. Signage can be used to clarify products and usage, and to help self-service of items. Testers should be available for each product so consumers can experience products prior to purchase.

Spa operators need to commit to making certain that staff is well-trained in the system, sales techniques and product knowledge. A soft-sales approach smoothly points out products used, benefits to clients, and solutions to concerns.

An orientation period allows staff members to learn what they will need to know to fully function within the system. Sales reps can conduct product-knowledge meetings to create a well-versed staff. Sales trainers can help staff with sales techniques. Staff often are reluctant to become involved in selling retail products. This reticence can be addressed if they are trained in the benefits of resolving their clients’ needs through providing answers to stated concerns.

Regular staff meetings can be scheduled to review promotions, product knowledge and the sales process. Goals should be set, and ways to achieve them should be constantly emphasized with regular performance standards in place.

Staff compensation, commissions and incentives must motivate and work well. Once a retail program is in progress, a viable commission structure for the staff must be determined and with clarity.

A common industry average is 10 percent, but this may vary by spa and region.

If a retail specialist is employed or if closing a sale commonly is done at the front desk, there needs to be a clearly defined commission structure. A monthly pool commission often can be employed. Because staff can reacquaint the client with information from the therapist and help close the sale, they can receive bonuses when the target number is met each month. The therapist providing the product education typically receives the individual commission.

Inventory must be managed appropriately right from the start. Many spa owners see retail products as items that generate sales and can add to the overall atmosphere of the spa, but they don’t realize that this area should be seen as cash sitting on the shelf.

Inventory must be computerized from the beginning—it’s a time-consuming but necessary function that pays off in inventory tracking. There are many programs built into comprehensive spa systems or that easily can be added on to an existing one.

There are many leasing programs available through manufacturers to ease the financial bite a startup system can take. Integrating the use of a scanner is an easy method for front-desk staff to manage checkout, and commissions can easily be tracked this way.

Track inventory turns. Use an inventory system to determine the number of turns per year or number of days of inventory on hand to see how much inventory is being tied up and for how long.

Calculate the best sellers. Obtaining information on which items are selling or not also is important for future purchases, so valuable assets are not sitting on the shelf collecting dust.

At least once or twice per year, perform a physical inventory. No matter how good an automated system is, a physical inventory is needed to verify accuracy. There are many components to creating and maintaining an effective retail sales program. It is worth the time and effort involved and dramatically can increase a spa’s overall bottom line.

Click here to purchase reprints