The recession hit spas hard Diagonal Reports reveals in a new report [1]. “Spas describe 2009 as a disaster”, says the market research firm. Revenues fell by 15% compared to the previous year. “Such a drop shocked spas which had become accustomed to continuous expansion. A decade of double digit growth had led to oversupply of spas, which has made the problem worse. In addition, costs had spiralled out of control during the boom. Initially, spas delayed their response to falling revenues and did not react – by reducing prices - until late 2009”.

Massage and facial skincare to resist

Massage and facial treatments account for more than half of revenues in spas. According to Diagonal Reports, changes in people’s lifestyles (such as prolonged computer use) and their desire to improve their wellbeing have driven demand for massages. It augurs well for the future of spas that these massage therapies attract the widest range of consumer segments in terms of age and gender.

Facial skincare is also one of the most recession resistant spa treatments. Consumers are willing to continue spending and even to pay premium prices for quality professional services to maintain the face, which is their most visible body part.

New brands have emerged

Diagonal Reports also notes that an unusual situation has emerged as regards brand share in the spa market. “Long established companies in the personal care market failed to develop suitable spa lines, leaving a gap in the market which has been filled by mainly new start-ups. Spas served as the launchpad for the development of an entirely new category of beauty care products.”

Organic and science brands have filled in the gap and taken over this market, accounting for nearly all sales and have squeezed out traditional beauty brands in the process.

From luxury to convenience

According to Diagonal Reports, no significant upturn is expected in spa spending until 2011 or 2012. The budget-minded consumer is here to stay and the free spending levels of 2007 and before will not return any time soon.

Spas must now move into a more mature phase of their market development. Spa usage has been democratised and spas have gone mainstream. The consumer switch from luxury to maintenance treatments benefits a certain type of spa operators. Convenience is the key word. Compact services are now in demand and spas which offer “smaller price and smaller time packages” to their clients are now expanding in the US.