Re-merchandising Re-merchandising refers to changing products and visual displays to optimise retail mix and sell-through. The majority of spas surveyed re-merchandised monthly (44 per cent), followed by weekly (31 per cent). But, many experts recommend re-merchandising more frequently – even every day. Small, daily changes can have a big impact and keep things looking fresh and new.
Compensation strategies Almost every respondent (98 per cent) offered some sort of commission structure to either therapists and/or front-desk staff, and 64 per cent offered both commission and incentives. In terms of the structure of commission payout, 70 per cent offered a flat percentage payout, 34 per cent offered some type of sliding scale percentage, and 16 per cent offered “pooled” or shared commissions.
Vendor support Overall, respondents appeared satisfied with vendor support. Raising vendor service levels will increase sales and strengthen brand and vendor relationships, but expectations must be realistic on both sides. The key areas for improved vendor support are in the www.spahandbook.com
Graph 1: Resort/Hotel Spa. Percentage of overall revenues from retail sales January 2015 - January 2016
Graph 2: Day Spa. Percentage of overall revenues from retail sales January 2015 - January 2016
14%
5%
5%
16%
36%
5%
21%
9% Source: Contento Marketing
retail sales. “Vendor drop-shipping will become a must for spa retail sales in the future,” she explains. Only 10 per cent of respondents sold spa retail outside the four walls of the spa, representing a significant opportunity to increase revenues. Strategies are needed to sell retail outside of spa; kiosks, pop-up displays and portable rolling retail cases can generate interest in the spa while providing an additional revenue centre.
11%
42%
36%
<10 21-25
11-15 26-30
16-20
areas of in-spa visual merchandising, partnering on consumer-facing events and vendor-sponsored staff rewards.
KEY PERFORMANCE INDICATORS Retail sales versus overall revenues When respondents were asked to benchmark retail sales against total spa revenue, nearly one-third of all respondents reported that retail made up less than 10 per cent of total sales. The highest number of respondents (38 per cent) reported a range of 11 to 15 per cent retail to total sales, and only 2 per cent reported retail-to-service sales of more than 30 per cent.
Retail per square foot By obtaining retail revenues and the square footage allotted to retail space, Contento calculated average retail per
<10 21-25
11-15 26-30
16-20 >30
square foot – the standard performance metrics for retail outlets. According to Patton, industry benchmarks suggest that a good goal for total annual retail sales per square foot is US$1,000 per square foot (€858, £769). Survey results indicate that day spas are proving to come very close to that overall benchmark at US$898 per square foot, while hotel and resort spas are averaging around US$750 per square foot. ● ■ about the author: Nancy Griffin is principal of Contento Marketing, a strategic marketing firm for spas and wellness brands. She is a founding Advisory Board Member of the UC Irvine Spa & Hospitality Management programme and member of the Global Wellness Institute’s Career Initiative. SPA BUSINESS HANDBOOK 2017 – 2018 119