Boutique Evolution

Aug 2nd, 2013

What you need to know about retailing to the consumer of today

Creatas/thinkstock

Successful retailing practices stand to double your profits, yet so often, those who are attracted to working in the spa industry—healers and nurturers—cringe at the notion of moonlighting as salespeople. However, today’s most effective strategies don’t require pushiness, but rather, an understanding of the many ways you can make economic and technological trends work in your favor.

Experts agree about the following spending trends:
• People are still insecure about spending.
• Clients are shopping for value rather than price.
• The luxury market is taking off.
• Technology is increasingly integral to retailing.
• Consumers are starting to keep it local.

Here, retailing experts and spa professionals in the know reveal smart ways to put this information to work in your boutique section.

Today’s Shopper

Though consumers are beginning to enjoy a few small splurges, they’re not seeking to extend their own financial stimulant to the economy, per se. We can conclude that as long as the economy continues to teeter between recovery and a slump, so too will consumers’ spending patterns.

“It [has a lot to do with] what’s going on in Washington,” says Pam Goodfellow, consumer insights director at New York City-based consumer-intelligence firm BIGresearch. “The debt crisis and unemployment are sticking points with consumers right now. It’s not that consumers are so concerned with their own gap personally, but seeing [the high] unemployment rate is worrisome. They’re worried that the economy is not getting back on track like it’s supposed to be.”

BIGresearch’s September Consumer Confidence Survey revealed that only about 20% of consumers are feeling “confident or quite confident”—a September rating that is actually the lowest BIGresearch has seen since the survey launched 10 years ago. In a normal economy, 40% to 50% would be the expected consumer-confidence range.

However, consumer confidence has increased since the height of the financial crisis, when unemployed and just plain skittish consumers shopped strictly according to price. Now, consumers seem more interested in what they will gain from their purchases.

“During the recession everybody was really focused on the bottom line—how much they were spending when they were checking out,” says Goodfellow. “Now we’re looking for value, quality and customer service—those types of things have come back into play.”

Value concerns the quality of a product—its potency, its durability or its ability to maximize whatever experience the customer is seeking from the purchase.

“Our job is to educate clients on the value and proper use of products in between visits,” says Sara Schieff-Ross, owner of ArchBeauty Skin Care Salon & Boutique in Newport, Rhode Island. “Once that’s accomplished, clients will continue to invest in what delivers results.”

Value may also involve consumers’ belief systems—ideas they hold about the environment or people in need—in other words, the causes they’re willing to support. Here’s where spa professionals’ caring, nurturing side can shine. If you carry any of the many spa and beauty lines that benefit humanitarian and environmental causes, make sure that’s being communicated, via prominent signage and staff members’ dialogue. Also, highlight retail items that make your spa stand out.

“When consumers walk into a retailer now, they’re armed with the best knowledge possible.”

“Our guests seem to place uniqueness and quality above price,” says Patricia Owen, owner of Faces Day Spa in Hilton Head Island, South Carolina. “If they know they cannot get our products somewhere else, they are more inclined to buy.”

Consumers are also opening up their wallets to a little fun. “We’re seeing a definite increase in mini splurges,” says Steve King, partner at Emergent Research, which analyzes the small-business economy. “Because consumers can no longer afford the big things like fancy new electronics or expensive clothes, they might instead buy a nicer beverage at Starbucks or some small item that brings psychic value at that point in time.” King urges retailers to see this trend as a marketing opportunity, and position themselves accordingly. (Think: fun, fragranced treats such as candles and body balms arranged near your cash register.)

The exception to this trend is the wealthy customer, say experts. “In the luxury market, we see a return to normal buying patterns. The way our economy has shifted, people who do well are continuing to do well, and the rest of the folks are going to be value based,” says King. “So, you’ve got to be either very value focused or you’ve got to have something that appeals to wealthier customers.”

Bruce Schoenberg, CEO of New York-based Oasis Day Spas, believes there will always be the client who only wants the most expensive thing and “equates price with status or quality. Presentation is so key. No matter what you’re selling, make it look beautiful and keep it neat, and it will always seem high-end,” Schoenberg advises.

Market Evolution

Consumers have added a number of shopping tricks to their bags and, though they’re no longer looking for the cheapest prices, they’re still intent on getting a good deal.

“Consumers have become smarter shoppers, whether they’re comparing prices on their smart phones, clipping coupons, perusing advertisements or researching online,” says Goodfellow. “When they walk into a retailer now, they’re armed with the best knowledge possible, and the confidence that they’re getting the best deal from that retailer—so they feel better about their purchases.”

Experts emphasize that consumers are now running with the Digital Age. They arrive at your spa armed with their online research—including product information and competitive pricing—and ready to use their smart phones. Retailers’ strategy must be to keep up. “Retailers should accelerate their integration online and [in terms of] mobility,” says Karen Grant, vice president and senior global industry analyst for NPD Group, based in Port Washington, New York.

Owen of Faces has made her spa’s private-label line available online—”customers can’t find these products anywhere else!”—and consistently visits websites of reputable online retailers. “That way,” she says, “we can make sure to always offer competitive pricing.”

“People are spending more time in their communities, buying more things locally, and believeing that doing so helps their communities.”

As for mobile phones, they are “increasingly becoming the remote controls for people’s lives,” King says. “Any retail business needs to be prepared to: 1) accept mobile-payment technology; and 2) use a growing number of applications that provide opportunities for retail stores, such as specials via mobile technology.”

This may involve texting customers to let them know that you’re offering “20% off tomorrow’s selected items,” suggests King. “You can do that with email too, but they’re more likely to be aware of something that arrives on their mobile phone.”

It’s easy too, as Schoenberg points out: “If we look at the schedule on Monday and see that Tuesday’s gonna be a slow service day, we’ll do a text-blast advertising a retail special to boost sales.”

The urgency with which you should integrate mobile technology in your business may depend on the city you’re in. If your spa is in a tech-savvy city, you may consider accelerating the process. “Retailers have to start thinking about what it means when someone says they want to pay with their mobile phone,” King says. A few months ago, Owen began using FourSquare to enable Faces’ therapists to accept mobile payments when performing spa services off-site.

Mobility in general engenders location-based technologies, which is something else King foresees as a growing aspect of retailing. This translates to consumers checking into their locations on a site such as FourSquare, giving retailers the opportunity to offer proximity deals via consumers’ mobile phones.

Here’s how it could work: A guest awaiting a treatment checks into your spa via FourSquare (Facebook offers a similar function). Her location—your spa—is then broadcast to her followers, and you can use pre-settings to reward her (and all others “checking in” with you) with a special, say, $5 off of a $25 retail purchase.

Owen uses FourSquare and Google Places to offer check-in opportunities. Schoenberg, who also uses FourSquare, notes that it’s important to establish location boundaries—perhaps 500 or 1,000 square feet around your location—before broadcasting a special. “You don’t want people across town claiming they checked in to get a special!” he explains.

Another developing retail concept is localism, says King. The trend derives partly from individuals’ interest in reinvesting their funds in their own communities for mutual benefit, though not all partakers are driven by purely altruistic motives—some people simply need to save on gas. Whatever the case, more local consumers may begin stumbling upon your spa this year.

“It basically means that people are spending more time in their communities, buying more things locally, and believing that doing so helps their communities,” says King. “There’s a whole buy-local effort out there that national organizations are pushing, and communities themselves are starting to see the value of that.”

Owen believes the “locavore trend” helped boost her spa’s sales in 2011. “We were very lucky to gain support from our Chamber of Commerce, as well as receive local press attention,” she says. “Both encourage consumers to shop locally!” Schieff-Ross also believes local investment is on the rise. “We now try to do our best to support neighboring businesses,” she says. “Believe me, as a business owner, you get to know who ‘shops local’ in your community, and who doesn’t.”

Good news: Generating some positive Yelp reviews, maintaining a website and registering your spa with a few different search engines (think: Google and Yahoo) to garner placement in local search results can help steer locals your way, according to King. “Google now really favors local search results,” he says. So, if you type in “antiaging skincare products,” you’re going to get the big beauty supply stores, but you’re also going to get the spas near where you live—assuming you’ve given Google permission to use your location, which most people unknowingly have. “Google is doing this because it’s what consumers want,” King says.

Social media also is key. Facebook and Twitter are now the foremost tools in helping consumers develop attachments to businesses. They provide platforms to present deals and offers, contests, discounts, sales, advice, and plain-old personality and promotion. Their accounts are also, generally speaking, easy to use and maintain.

Schoenberg believes in blasting the same retail special on Oasis’ Facebook, Twitter and FourSquare channels, just worded slightly differently for each. “We do this at least once or twice a week,” he says. “Right now we get the best response on Twitter, because you can mention your retail lines, and once that hashtag goes up, the manufacturers themselves see it and promote it. Twitter’s the most viral and effective tool for us.”

Schieff-Ross treats Facebook as an educational tool. “It’s the best place to introduce and show off new products,” she says. Owen invites plenty of feedback on new products from Facebook fans. “We’ve also found it effective to post YouTube how-to videos, offering our skincare and makeup tips,” she adds.

Go Time

How does the current state of consumerism affect spa retailers specifically?

“Now that we’re returning to a value trend, retailers can take some of the pricing control back,” Goodfellow says. “During the recession, consumers had the upper hand because it was all about price. And, especially in 2008, retailers had way too much inventory, [influencing a] super-high discounting trend. I think that taught consumers to really watch for sales, know their prices and make sure they’re getting a bargain when they buy something.”

So, although spa owners may still offer discounts today, they can offer 30% off instead of 60%, explains Goodfellow. What’s more, they can focus on providing customers with value by training their associates to really get to know their products and educate customers. In other words, they can use nonprice-oriented retailing tactics to win over customers.

“Once that hashtag goes up, the manufacturers themselves see it and promote it. Twitter’s the most viral and effective tool.”

This starts with education. Make sure your associates aren’t blindly upselling, but rather teaching individual clients what products are best for their skin types and preferences to optimize results. “We hired an experienced esthetician who focuses solely on boutique consultation and creating opportunities to upsell retail items with specific services,” Schieff-Ross says.

Schoenberg offers retail commission, and employs secret shoppers to keep front desk staff (and all other employees) on their game. If a product has been sitting on the shelf for a while, Owen has her staff highlight it in boutique displays, sans discounting. “Sometimes that’s all that’s needed to get it moving!”
“It’s interesting,” King notes. “The purchase-decision cycle that a consumer makes before buying something has shifted dramatically in two decades. It used to be almost totally brand-oriented. Today, it’s a combination of brand and a lot of new influences—online influences and influences from social networks.” He further explains that this shift has weakened brand loyalty, making consumers more open to options and thus susceptible to a value focus.

As always, it’s crucial for any retailer to know their customer base. Do you know what drives people into your spa and who those people are? Goodfellow suggests that business owners take advantage of an email list to connect with customers long-term. “What is key right now is for retailers to make customers feel appreciated and good about spending in their stores,” she says.

Although retailers have the upper hand right now, experts warn against complacency. Remember, the relationships you build with clients may be the single most important determining factor for the future of your business. “While business is doing well right now, recognize the fact that consumers are still really cautious. It’s not a time to get comfortable,” Grant says. “Rather, it’s a time to engage and continue pulling out every stop to make it work, and to build relationships with consumers. Sometimes, those relationships will be the difference in why consumers reach out to one store versus another, one brand versus another. So finding ways to build relationships—online and in-store—is going to be important.”

Manyesha Batist is editor/online editor of Beauty Store Business, a sister publication to DAYSPA.

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