Spa RETAIL: Handy Retailing Guide for the Holidays

Dec 20th, 2013

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Here’s your handy spa management reference for mastering your spa retail operation—with expert strategies proven to make bottom lines soar.
Just when the general public was starting to see spas as filling a need beyond simple pampering, the Great Recession stormed in, curbing visiting frequency and leaving potential newcomers reluctant to part with precious discretionary income. The day spas that survived and thrived despite this blow were those that scrambled to make up for lost service dollars by sharpening their selling prowess, mimicking big-box retailers’ tactics and finding creative ways to accommodate an increasingly plugged-in and time-starved generation of shoppers.

The paradigm shift to retailing is perhaps what ultimately saved our industry, despite the fact that spa professionals are, by and large, nurturing by nature, and wary of coming across as aggressive or pushy. Fortunately, in compiling this reference guide, for which DAYSPA consulted with retail experts, spa consultants and successful spa owners (see Our Panel, below), we found that much of retail savvy lies in channeling that same creative, nurturing energy used to engage clients with a peaceful sanctuary and superb treatment. Evidently, it’s not necessarily the “bulldogs” who achieve record retail-to-service profits ratios, but rather the planners, who think outside the box to devise tantalizing promotions, and approach each client with the caring attention that sends the message, “We want to take care of you and your loved ones, here and at home. Let us help you out.”

It’s also the thinkers who can put themselves into each unique client’s shoes, and ask themselves: What is her five-second impression of my upfront retail area? Does it invite her to linger and shop? Can she clearly read labels and see sections? Is my entire staff able to communicate to her the vast importance of home care? What are the points of difference between my spa’s offerings and her other choices?

Read on to uncover foolproof display strategies, sales-training pointers, sampling wisdom, inventory management how-tos and online selling techniques, and discover the amazing things you can do to maximize your gift card operation. Here’s to this upcoming holiday season’s many gifts; may they include a truly engaged staff, and repeat clients who appreciate your spa’s guidance and take-home goodies!

Our Panel:

Stacy Cox, owner of Pampered People in Los Angeles
Mark Deans, CEO of Deserving Thyme and Deserving Thyme Lifespa in Vancouver, British Columbia, Canada
Eva and Scott Kerschbaumer, co-CEOs of EsSpa Kozmetika Skincare & Spa with multiple locations in Pennsylvania
Carol Phillips, founder of BeauteeSmarts
Bruce Schoenberg, president of Oasis Day Spas in New York City and Westchester County, New York
Dori Soukup, CEO of InSPAration Management
Lisa Starr, senior East Coast consultant for Wynne Business
Keith West-Harrison, CEO of Spa Enrichment Strategies and co-owner of Great Face & Body Spa in Albuquerque, New Mexico

RL Productions/thinkstock

Make Service Providers Star Salespeople

Without a well-trained and educated team driving product sales, any retailing plan quickly loses steam—along with a spa owner’s bottom line. Beverage retail giant Starbucks, in fact, takes sales training so seriously that it requires no less than 100 hours of training before a staff member is allowed to so much as turn on a coffeepot! While the spa industry’s approach to retail training may be less intense than that of other markets, this doesn’t make the business segment any less important to a spa owner’s operation.

“Retail is a non-negotiable in our industry,” says Great Face & Body’s Keith West-Harrison. “Forty percent of a spa’s revenue should come from retail.” The industry veteran says investing in staff sales training is just as—if not more—vital to business health as are marketing and advertising. And it works: West-Harrison has seen sales triple in the months following his training sessions.

In his customized program, which includes written materials and one-on-one training with spa management, West-Harrison introduces a script that can be applied to each customer interaction—or, as he likes to call it, “the dating process.” Like dating, selling to customers can cause some anxiety. Typically, training spa technicians to overcome their initial fear of rejection is the first hurdle, says West-Harrison, stating, “Employees need to understand that clients aren’t turning you down personally just because they didn’t buy a product from you.”

Another vital component to training: explaining the importance of not rushing through client treatments. “The key to selling products is allowing enough time to do it,” West-Harrison says. “Give your staff enough time to do an intake interview with clients—that means tacking on an extra 15 minutes before the treatment and 10 minutes after to discuss the products that were used.” But avoid the “skin analysis” approach that is so common with spa technicians. “We tend to tell clients everything that we think is wrong with their skin but neglect to ask them what their issues are,” West-Harrison explains, adding that sales must be tailored to a client’s specific areas of concern.

Wynne Business’ Lisa Starr advises spa owners to create a compensation system containing specific bench marks to drive behaviors, which helps to ensure employees are utilizing the training and making sales a priority—along with the quality of their services. As employees improve their sales, they gradually elevate their compensation level; in turn, employees are penalized should they not meet the required expectations.

“Refresher courses” incorporated into weekly staff meetings is another great way to keep staff focused on sales. “Training needs to be ongoing to be effective,” notes Starr. To drive home the point, she helped develop “Selvice: Seven Essential Steps that Increase Sales and Guarantee Stellar Customer Service,” a DVD training tool, that includes clips of successful—and unsuccessful—client and technician interactions.

Showing these examples and allowing employees to role-play sales scenarios serve as easy learning tools—and they’re not time-consuming. “Technicians are very tactful,” Starr explains. “They learn by doing.”

Ensuring your staff is educated on your spa’s products and brands is also vital to a successful retail strategy, says Oasis Day Spa owner Bruce Schoenberg, who employs a retail manager in each of his three spas to ensure employees are being continually trained on sales techniques. “Whenever a new product comes in we give each employee a product knowledge ‘cheat sheet,’” he says. To put their education in practice, Schoenberg’s spa technicians must fill out an education/prescription treatment card for each client who receives a service. For this spa owner, the retail system isn’t so much about monitoring employee sales as it is about ensuring that the right efforts are being made and that the spa is staffed with passionate people.

“In this business, you have to enjoy dealing with the public,” he says. “We seek people who genuinely care about the complete guest experience.”
—Angela Melero

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Stocking Up

In many day spas, inventory management is the least-coveted task. Indeed, it takes a detail-oriented staff member to properly track and manage a spa’s arsenal of retail items. Here are some strategies to keep you on course to reap higher retail sales—with less overstock.

1. Choose an “inventory captain.” There are plenty of software programs designed to help track inventory, but a human being is still essential to monitoring what goes in and out of your spa—and into treatment rooms. You may want to assign this task to a front desk person, since these employees physically see what’s moving, or delegate the job to a spa manager. “We task our general manager with handling incoming inventory and go to great lengths to reduce shrinkage via password-controlled access to track sheets,” says EsSpa’s Eva Kerschbaumer. “However, our most difficult issue still lies in monitoring and tracking inventory, because therapists sometimes grab items off the retail shelves to use in treatment rooms without proper communication.”

This is where an old-fashioned hand count comes in, according to Schoenberg. While he also suggests using an inventory software program (see below), he says it’s a must for someone to regularly count products to keep shrinkage to a minimum.

West-Harrison suggests an inventory protocol that includes daily walkthroughs with staff. “Take stock of what’s there and help employees identify alternatives if something they need is out of stock,” he says. “Too often inventory gets forgotten about and pushed to the end of the to-do list.”

2. Use an inventory software program. There are several options available. Look for one that allows you to centralize your lists in a single file, easily access stored historical purchases and notes, keep track of vendors’ pricing and track past buying/restocking activity.

3. Order based on existing sales results. “Many spa owners and managers think that good inventory management means having plenty of stock on hand at all times, but what it really means is having the appropriate amount—enough to satisfy potential demand, but not so much that capital is tied up unnecessarily,” says Starr. “The products you carry year-round have a history that you can easily access through your software. Looking at what has sold in the past, and at what frequency, will help you to forecast future sales and make purchases accordingly.”

To simplify this task, Starr suggests making a list of your 10 top-selling and bottom-selling products. “If you have five SKUs that have not moved in the past six weeks, put those products on sale, clear out your stock, and put the money you would have spent on replenishing them into your top sellers.”

4. Befriend vendors. No one wants to be left with boxes of leftover product that won’t sell, so always inquire about minimums when testing a new product. “Go slow when you bring in new retail,” cautions Schoenberg. “Negotiate with vendors and order minimums; don’t get excited and order too many. Overstock on shelves is money. Ask vendors about product turnaround time, and forecast to have three to six items in the back bar.”

Build a good relationship with your vendors so you can quickly obtain more product when you need it. “Ask them about their best-selling items, return policies and restocking minimums, and get the answers in writing,” Schoenberg says.

5. Stock products that sell. This may seem impossible to gauge, but try to carry a mix of products that appeal to all budgets, yet cater to your unique clientele. After all, the spa that only carries $150 moisturizers will not move as much product as the one that offers the same creams alongside $35 lotions and $20 candles. Some of the easiest items to retail, according to Schoenberg, are hand creams and candles—anything you might consider an “impulse buy.”

Another way to figure out what will sell? BeauteeSmarts’ Carol Phillips suggests surveying shoppers or checking into the buying patterns of your top 20 clients for instant insight.

6. Consider product benefits. Deserving Thyme Lifespa’s Mark Deans advises stocking products that offer both diversity in protocols and multiple client uses, such as scrubs for body and feet, lotion for face and hands, etc. “With versatile products you can carry eight SKUs instead of 16 and get a faster return on your investment,” he explains. Deans adds that too many choices and scents can be overwhelming for consumers and hinder sales. “Take a look at your most popular treatments and products and then pare down,” he advises. “Focus on benefits and value instead of multiple scents.”

7. Move inventory via treatments. While therapists should already be in the habit of recommending products after performing treatments, consider making this easier for them by creating programs such as Lifespa’s Service + Saving Promotion. Deans explains, “A client receives 15% off the retail price of any skincare product when purchased on the same day as their facial.”

8. Consider shelf-life. While last-minute ordering may not be the right practice for everyone, Eva Kerschbaumer reports that it works well for EsSpa, given the relatively short shelf-life of its organic, natural offerings. Not only does this allow the spa to reduce returns due to expired product, but Kerschbaumer says it helps her better meet the immediate needs of her clientele “without having to worry about large inventories of product in storage.”

9. Curb returns. “I always offer 10% off any retail product if a client will sample it before buying it,” says Stacy Cox, owner of Pampered People in Los Angeles. “I get the samples from the vendors, and it often saves a return. If a client calls after sampling and says she loves the product, and the sale is worth more than $200, I’ll personally deliver it.”

10. Out with the old. Always keep your inventory looking fresh. Phillips says to take any item that doesn’t sell and discount it for 30 to 45 days before donating the remainder to a shelter, writing it off or dumping it. “Don’t have it hanging around the store forever because it saps other sales,” she says. “Highlight this season’s displays to get everyone focused on new products. If you’re working with a four- to six-week display cycle campaign—definitely shoot for four weeks if your clientele visits monthly—all stock, posters, emails and displays must be changed out, too.”

While you should already be on a monthly ordering schedule, InSPAration Management’s Dori Soukup says owners should aim to turn inventory over completely three to four times per year. This task, of course, is made easier through proper staff training. “Educate your team on retailing and make sure there are rewards or consequences when they do or do not reach targets.”

“Remember, products are money, and you don’t want to have your money sitting around on shelves collecting dust,” concludes Starr. “If products are not selling or are regularly turning, they are not working for you.” —Liz Barrett

The Art of Presentation

In the retail world, a well-done display—whether created in a window or on a table or shelf—is often the vehicle driving consumer interest and, in turn, product sales. Don’t treat displays as afterthoughts, but rather as a vital component to your retail business and overall operation. Here are some expert-approved pointers on creating displays that are easy on the eyes and heavy on the profits:

• As with real estate, displays are all about location, location, location. Oasis’ Schoenberg says that for his business, effective merchandising is a team effort: The retail director places items the spa wants to move quickly into prime selling spaces, such as the checkout area, and ensures the “hot spot” has ample lighting, and the creative director makes signage and visuals for these displays. BeauteeSmarts’ Phillips stresses the importance of getting your clients to automatically look for new products. “Carve out a permanent place for a ‘newcomers’ display, and customers become trained to always look in the same spot,” she says.

• Avoid overwhelming clients with an overcrowded space. Soukup recommends creating a retail space that’s about a quarter of the size of your spa (think 600 square feet of retail in a 2,000-square-foot spa). For smaller spas that can’t spare that much space, Soukup recommends giving vendors specific measurements, or creating your own displays to keep clients from feeling overwhelmed and overcrowded. And avoid stocking your shelves supermarket-style. “You don’t want rows and rows of products,” says West-Harrison. “Display oranges or lavender alongside products that contain these ingredients, and group serums together, moisturizers together, cleansers, etc.”

• This industry is filled with creative people—use this to your advantage. “We find that big and unusual works best,”says EsSpa’s Scott Kerschbaumer. “We recently started selling some German bath fizzies that look exactly like little cupcakes. For the display, we used porcelain, holiday cake platters and some little cupcake boxes set up at the front door with all the cupcakes showcased on a waist-high table. It literally looked like a dessert table for a wedding. We sold out of our entire stock in 36 hours!” Stacy Cox of Pampered People utilizes clear acrylic risers for skincare products as they lend a modular, streamlined look. When stumped for “pretty display ideas” she turns to friends and clients for creative advice. “I have a client who is an interior designer who just helped me design my retail area.”

• Utilize shelf talkers to help clients understand your products, or to give recommendations. “Use props to illustrate ingredients,” says Soukup. “Keep products at eye level, rotate items so customers think they’re new, and price all of your products.”

• Create a theme for each season. Phillips reminds owners that clients need to see something five times from the time they enter until the time they check out in order to “activate” its impression in their minds. “Create the same seasonal message in various places—front desk, changing room, mani/pedi station, etc.,” says Phillips. “Don’t lose sight of the promotion you want the customer to focus on.”

• Don’t keep your products under lock and key. While this may help prevent theft, it could also alienate your customers and sap sales. “Set products free!” says Soukup. “The retail area needs to be open, not locked up—customers need opportunities to touch, smell and feel. Engage the guest; let them open a jar.” For smaller spaces, like Pampered People’s 500-square-foot studio, Cox finds that placing samples of fragrances in the changing room is a great way to promote products. “Take advantage of all the square footage you have,” she says.

• Add your own personal touch. “The key to boosting spot sales beyond placement and pricing is to create signs and personal notes,” says Scott Kerschbaumer. “All of our therapists pick their ‘weekly favorite’ retail product and we place a little note—on either a bottle tag or a place-setting card-holder—next to it that says, for instance, ‘Eva’s Favorite.’ The idea is to catch a customer’s eye and provide her with the reassurance that someone else is using this product and thinks it’s good.” —Liz Barrett

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Slick Sampling

Done wrong, product sampling can hurt your bottom line and keep your staff from selling. When mastered, however, sampling is an educational, morale-boosting and sales-generating power tool. Here are five simple strategies for smart spa sampling:

1. Offer the bulk of your samples to clients who’ve already purchased retail. If a guest buys a moisturizer or raves about a certain cleanser, tell her you’d love to have her try other products from that line. Then dig out those manufacturer-supplied samples, or create a customized, mini container of a complementary toner or serum. “Giving someone who’s already buying something else an item that they’re likely to actually want is key to turning samples into sales,” says Soukup.

2. Make the transaction interactive. Keith West-Harrison shares this strategy: “If someone is curious about a product, but not convinced, I’ll say, ‘Let me make you a sample to take home and try.’ Then I’ll scoop some into a clear container, but before the guest takes it home, I’ll wipe some on her hand, telling her what it’s doing and explaining exactly how much should be used.” Not only is this approach more personal than simply loading someone up with manufacturer-supplied product samples that may not even be suited to her skin type, but the client is typically grateful for the education and more likely to actually benefit from the product and eventually buy it.

And when you send a guest off with a sample, write down how much she should be using and when, West-Harrison adds. “If she’s in that blissful, post-service state, you’ve gotta provide at-home instructions.”

3. Have employees track their sample distribution. It’s easy for estheticians and therapists to blindly hand out samples—as West-Harrison points out, it’s a “feel good” practice and spa employees who aren’t comfortable selling due to fear of rejection know that “no one ever rejects a sample.” But supplying oodles of samples only trains guests to expect “gifts with purchase” and precludes full-size retail purchases.

Have staff keep track of which clients are receiving samples, and you’ll be able to evaluate whether sampling is actually leading to full-size product purchases. And if it isn’t? “This tells you who needs more sales training,” says West-Harrison. Soukup adds, “Tracking gets people in the habit of custom-recommending products, rather than complacently taking the path of least resistance.”

4. Set up “discovery testing stations.” Your relaxation lounge is the ideal setting. Set aside a noticeable space in which to feature open, full-size product containers and “testing” supplies. Include something for face, body, and hands and feet, and rotate the products you feature on a monthly basis. “Display framed literature explaining the benefits, ingredients and costs of each, and you may want to suggest professional treatments that pair well with featured retail products,” Soukup says.

To avoid waste, Soukup suggests using small sampling plates with spatulas. “If you don’t have room for a full station, a single shelf in your retail department or a tray in a small reception area works well,” she says. West-Harrison adds that “testers can be a lot more effective for sales than packaged samples,” because clients can actually feel and smell them.

5. Exercise caution. While they have their reservations about over-distributing manufacturer-supplied samples, both Soukup and West-Harrison are all for including samples with purchase for special promotions, and placing them in gift bags for spa event attendees. One thing to keep in mind when broadly distributing samples: “You never know how product samples are going to interact with the products guests are already using,” West-Harrison says. “People can think that because something is ‘a sample,’ it’s a one-time-use thing. Then they use too much, have an adverse reaction and lose trust in you and your product lines. Rather than risk unpredictable reactions, stick to handing out touchy-feely stuff like body lotions and basic cleansers.”

And if you find yourself with leftover samples following a big event or promotion? “Bring them to a women’s shelter,” West-Harrison advises.
—Katie O’Reilly

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Net Profits

Taking your retail effort online is a great idea—in theory. Look before you leap to ensure you have the management resources and time to make an electronic venture profitable for your spa and beneficial for your clients. Here are some key considerations:

1. Factor in time and budget. While West-Harrison says online retailing is a great investment, he warns budding online sellers not to harbor unrealistic expectations of selling 100 products overnight. “Get an e-commerce site up first, before launching an online store,” he says. “Spa software can help you put items online and handle payments, but the main problem is figuring out who will handle orders and manage packing, shipping, etc.” And in our society of instant gratification, West-Harrison reminds spa owners that it’s crucial to inform clients exactly how long it will take to receive their orders.

Eva Kerschbaumer says that running EsSpa’s online skincare operation is the most difficult aspect of her business. “Most of our vendors do not allow online sales of their products,” she explains. However, EsSpa is considering launching its own brand of products for electronic selling purposes. “Selling online requires a lot of up-front detail work, patience and constant updates,” Kerschbaumer cautions. “For those just starting, I’d recommend creating a blog and engaging visitors in discussing ideas, trends and lifestyle choices. Find out what people are looking for, get them to talk about it, and then start selling them products.”

2. Publicize your e-store. An e-commerce site is not a build-it-and-they-will-come endeavor. Without proper promotion, you’ll find that online products gather virtual dust much like in-store retail that gets neglected.

Phillips reminds spa managers that they are competing with major companies, such as Sephora and Ulta, that market their online wares consistently and constantly. “Online sales can be a third profit center, but only if it’s promoted aggressively,” Phillips says.

Make your online component an “integral part of your marketing matrix,” says West-Harrison. “Mention it via newsletters, follow-up emails, business cards, social media—anywhere to help build awareness for your offerings.”

3. Incentivize electronic purchases. Yes, an online store allows clients to shop in their pajamas any time of the day or night, but what is truly driving guests to visit your online store, and return?

Oasis’ Schoenberg incentivizes clients with offers exclusive to online shoppers. For instance, “During the winter holidays we have something called ‘25 Days of Oasis’,” he says. “People sign up for emails advertising different promotions every day.”

Soukup recommends bundling printable, online gift cards with other gifts, similar to what an online flower shop might offer at checkout. “Offer to package the gift card with a robe or candle,” she suggests, adding, “All types of gifty items sell well online.”

4. Offer “prescription refills.” Speaking of incentives, what better way is there to keep clients coming back than by letting them make repeat skincare orders from the comfort of their couches? After performing a skincare analysis in the spa, custom-recommend products via a spa prescription card that directs guests to your online retail center. “This gets clients into the habit of coming back when they need refills,” Phillips explains.

Get Textual

While you may not be ready to leap head-on into the mobile-ordering business, there’s nothing complicated about promoting specials and promotions via texts. “Text messaging gets a tremendous response,” says Schoenberg. “It helps spas raise awareness, and vendors can help by providing copy for specials on new products.”

Make it a point to ask clients for their cell phone numbers when they fill out their intake forms, and include a box to receive “exclusive offers via text,” Schoenberg advises. “Keep text offers relevant and infrequent, and clients will look forward to receiving them.”

—Liz Barrett

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Gift Card Gauntlet

Everyone knows the super sales periods for spa gift certificates: the winter holidays, Valentine’s Day and Mother’s Day. In fact, Phillips notes that there’s such a last-minute pressure crunch surrounding Valentine’s Day that the average dollar amount loaded onto certificates actually rises as February 14 nears! But ask yourself this: How are you promoting spa gift certificates throughout the rest of the year?

Market THE GIFT OPTION

Soukup says that the spa industry has gotten so accustomed to clients just coming in and picking up gift certificates that many owners have stopped actively pushing them. “They just expect people to ask for them,” she says.

All employees of EsSpa Organic Skincare & Spa carry at least four $40 “1st Time” gift cards at all times that they can present to potential clients, wherever they might meet them. “We also keep a database of everyone who has ever interacted with our spa that includes their birthdays and anniversary dates,” says co-owner Scott Kerschbaumer. “Every day, our software scans this information and automatically generates birthday and anniversary reminders that include a complimentary gift certificate that must be used within the next 45 days.”

EsSpa integrates gift-card marketing into every possible channel and promotion. “Every email we send has a link that takes guests immediately to a page where they can instantly purchase gift certificates—in any amount or for a specific treatment or package of their choice,” explains Kerschbaumer. “And every page, treatment and service on our website has one-click capability for online visitors to buy anything we offer, including a gift card that we’ll send via priority mail. And we run specific sales for every special occasion on the calendar.”

Another way to regularly promote gift cards? West-Harrison offers this tip: “When clients are thrilled with their facial service, we say, ‘Tell everyone you loved it, so they’ll buy you gift certificates to come back!’”

Placement Pointers

Remember, never wait for clients to ask about gift certificates. “Set up a kiosk or designated place in your retail area for a year-round gift card display with a banner,” suggests Soukup. “Offer card packages at three different price points ($50 card w/$50 gift, $150 card w/$100 gift, etc.) and, for the holidays, wrap gifts along with the cards. Then let every client know that you have three options—everyone leaves happy.”

Phillips agrees with the “separate station” philosophy and suggests displaying an enlarged gift certificate (like the jumbo checks you see presented to charities or sweepstakes winners). “Fill in the blanks like it’s a real gift certificate and it’s sure to be an attention-grabber.”

At Oasis, the reception staff is trained to offer everyone gift cards. “It all comes down to asking questions,” says Schoenberg. “We say, ‘Who is this for? What’s your budget?’, tell them about our most popular packages, and suggest spa dollars if they don’t know what they want.”

And since the holiday rush is always a hectic time, why not take advantage of opportunities to help clients check people off their gift list? “Keep an iPad at pedi stations so clients can avoid lines by purchasing online gift cards while receiving a service,” suggests Phillips.

Creativity Consult

Getting bored with certificates in envelopes? Your clients likely are. Look around and see what other spas are doing to jazz theirs up. Cox of Pampered People embraces signature flourishes to create rapport and make her spa memorable. “I put certificates in Chinese takeout boxes along with chop sticks, a fortune cookie, foil product samples, a lip balm, business card and other goodies to get the conversation going,” she says. “This gets the client sampling and becoming educated right away, and it sends the message that this is a spa that puts a lot of thought and detail into what it does.”

Whatever you do, Phillips cautions against making certificates look like bills. “Try wrapping gift cards in the pocket of a high-end silk robe, along with samples and a spa menu, and then placing everything in a robe box with a clear lid,” she suggests.

Profit Center

So, say the winter holidays are over and you discover you had the best gift card sales to date. Now is not the time to go on a product spending spree or to redecorate the spa with your gift card bounty. Always consider the lean times to come (ahem, January) when gift sales may not be as fruitful.
Schoenberg urges spa owners to put gift certificate profits into a reserve fund. “Place at least 50% of gift certificate sales into a ‘piggy bank’,” he says.

Soukup and Phillips agree—this is not your spending money. “Put it into an accrual account and pull it out monthly, depending on what’s redeemed,” advises Phillips. Soukup suggests that the money sit in an escrow account until all certificates have been redeemed. —Liz Barrett

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