SpaFinder’s Research Division Releases First Annual Day Spa Industry Report
NEW YORK, NY (November 10, 2007) − The report is an overview of the United States day spa industry generated from the SpaFinder Day Spa Industry survey 2007*, including valuable data from day spa operators, industry insights, and easy-to-implement recommendations for day spa owners. It’s designed to offer a 360-degree snapshot of day spas’ business, including data on business performance and revenue, operations, facilities, marketing, personnel management, treatment offerings, retail business, technology adoption, trends in spa clientele, etc.
Highlights from report:
BIG INDUSTRY—OF SMALL, FRAGMENTED BUSINESSES
While day spas continue to dominate as the most prevalent of all spa types (representing eight out of ten of all US spas), this is, for the most part, a vast industry comprised of 13,000-plus small, stand-alone businesses. 85% of day spa businesses have just one location, and the majority of spa facilities measure less than 2000 square feet. More than one out of three day spas report gross annual revenues under $200,000, with 56% (the majority) reporting gross revenues falling under $400,000. And these small businesses are also young: the majority of respondent day spas have been fully operational for only two years. The good news for these upstart, small businesses’ bottom line? 60% of day spas reported an increase in revenues in 2006 over 2005, with an impressive average revenue uptick of roughly 32%. And as a day spa matures, revenues follow suit. Spas reporting revenues at the one million mark or above (one in five spas) have been in business for at least nine years.
For an average day spa, it takes 9 years to cross the $1 million revenue mark
TRADITIONAL MARKETING: TARGETED STRATEGIES TRUMPING PRINT ADS IN EFFECTIVENESS.
65% of day spas report they are spending less than $20,000 annually on marketing, and within that group nearly half have a budget of only $5,000. With such modest marketing dollars at their disposal, a key goal of the report was to determine not only which marketing strategies are being used—but which are delivering results. Spas are still embracing traditional marketing methods: 73% used magazine ads, 95% promotions, 79% newspapers, 82% direct mail/coupons, 79% yellow pages, and 56% print newsletters in the last year. But effectiveness ratings reveal that more targeted traditional marketing methods are delivering significantly higher ROI. For instance, only roughly one out of three day spas reported magazine ads, yellow pages, and newspapers as ‘somewhat’ or ‘very’ effective--but 81% reported promotions, and 58% reported direct mail/coupons and print newsletters, as effective traditional marketing methods.
DISCONNECT BETWEEN ONLINE MARKETING ADOPTION & HIGH EFFECTIVENESS RATINGS
Almost all day spas (95%) have now invested in a website, but, quite surprisingly, many are doing very little to promote their online presence—especially given the high effectiveness ratings online marketing is receiving from day spa adopters. For example, 74% of spas that have adopted keyword purchasing report it’s effective, yet over 50% of day spas are not using any search marketing. 60% report that email newsletters are effective, and yet 30% are not using them. So, while days spas rate their own website as their most effective online marketing investment (92% rank it as effective), many are doing far too little to drive traffic to this source of incremental business.
THE DAY SPA WEBSITE: THEY’VE BUILT IT...BUT NOT MUCH MORE
Furthermore, many day spas are not investing in the content, tools and user-generated features that help create a more compelling, ‘sticky,’ interactive consumer resource. 56% of day spa websites don’t offer consumer reviews, but 80% of those that do report they’re effective. 77% don’t offer message boards, despite a reported 58% effectiveness rate. 68% don’t offer social networking/user groups, despite a 70% effectiveness rate. And far too few spas are embracing sophisticated visuals and new media at their sites that would greatly help them showcase their spa: 38% don’t offer photos, 80% don’t offer streaming video, and 77% don’t offer virtual spa tours, despite being ranked as effective strategies by roughly four out of five spas who do use these tools.
Advanced website features highly effective, yet less than 30% of day spas using most options
Overall, the report reveals that despite day spas’ persistent high usage rates of traditional print advertising (magazines, newspapers, etc.), Internet marketing methods (search, referral programs, email newsletters, etc.) are now outscoring print ads in effectiveness ratings by significant margins. Day spas would be well served to invest more of those precious marketing dollars in both targeted traditional media (promotions, direct mail, etc.) as well as the spectrum of online marketing options.
RETAIL: UNTAPPED OPPORTUNITIES AT THE ‘SPA STORE’
In an increasingly competitive local day spa universe, the spa ‘store’ represents a key revenue opportunity—but one that remains relatively untapped. While more than nine out of ten day spas now have a retail presence, almost half report it’s still only contributing 10%--or less--to their overall gross revenues.
For roughly 50% of day spas, retail represents 10% -or less- of gross revenues
Should store offerings be further diversified and better managed? Spas are relying heavily on skin care products: more than half report that the significant majority of their products are skin-care lines. Should product and inventory be increased? 60% of day spas report they’re currently carrying less than 150 retail items.
To achieve the retail successes that 31% of day spas are now reporting (with 20% or more of gross revenue generated by retail), spa operators may need to rethink their commitment to, and strategy at, the ‘store.’ After all, 41% of spas report their clients are now spending over $50 per visit on purchases…And as the day spa industry becomes more competitive and saturated, retail represents an important way to differentiate the spa, while growing critical new revenue streams.
The preceding represents highlights from SpaFinder’s ‘2007 Day Spa Industry Report.’ To purchase a copy of the report, please contact SpaFinder Research Director, Dr. Shah-Kapoor: Komal.firstname.lastname@example.org or 212-716-1221. Price: $99; SpaFinder day spa partners, $49.
* The Day Spa Industry Survey was conducted electronically in August 2007, with email invitations sent to a random sample of 6200 day spas nationwide, generating 389 complete (54-question) surveys—representing a 95% confidence level of the U.S. spa universe.
Betsy Isroelit (email@example.com)
RBI Communications, Inc., (213) 300-0108
About SpaFinder, Inc.:
The world’s largest spa marketing and media company, SpaFinder reaches millions of wellness-focused consumers via its global media network, including the award-winning SpaFinder.com, Luxury SpaFinder magazine and the annual Global SpaFinder Directory. SpaFinder Europe and SpaFinder Japan offer regional spa marketing programs, including localized, native-language websites showcasing day spas, salon spas, and onsens. Redeemable at 4,000+ spas worldwide and available at thousands of retail outlets across North America and the United Kingdom, SpaFinder Gift Certificates and Gift Cards represent the world’s largest spa gifting program. Through its investment partnership with SpaBoom, the company also provides an array of technology and online marketing services for spas. Founded in 1986, the privately held company is headquartered in Manhattan.