BW Confidential - Issue #8 - October/December 2011 - (Page 56)

Wellness Spa chains Strength in numbers An analysis of the challenges and opportunities facing spa chains and franchise operations by Alissa Demorest T he number of spas chains may be low compared to the independents on the market, but it is a business that is growing. According to market-research company Diagonal Reports only 11% of day spas in the US in 2010 were chains; however, the company predicts that national chains will begin to roll out their offer and that as a result single-unit businesses will also consolidate. “ I see the chain model as a good thing—it is opening up spas to people who couldn’t go otherwise as they are more affordable and convenient The Mandarin Oriental Hotel Group director of spa Andrew Gibson Many of today’s chains are associated with cheaper services. For example, one of the growing chains in the US is Massage Envy, which caters to consumers with limited budgets. Massage Envy now has close to 700 locations and another 200 are in development Chains such as Massage Envy are seen as boosting the number of consumers who visit a spa, (although they also put pressure on independent operators, many of whom are still reeling from the effects of the downturn). Spa operators polled by BW Confidential see the rise of reasonably priced spa chains as a welcome alternative to the discounting frenzy that has plagued the industry in the past seve56 ” s Spa chains, such as Massage Envy (above) and the more upscale Woodhouse Day Spa (top) are a growing force in the spa market ral years. “More big chains are coming, but it is strange that this trend hasn’t happened yet as it is a mature market. I see the chain model as a good thing—it is opening up spas to people who couldn’t go otherwise as they are more affordable and convenient,” comments The Mandarin Oriental Hotel Group director of spa Andrew Gibson. Blu Spas Inc principal Cary Collier agrees: “Companies like Massage Envy are serving a good purpose. A few years ago prices were so high that consumers were saying ‘enough’, so prices coming down made some sense.” Spa branding One of the keys to success in the spa chain business is brand recognition. One chain spa to have capitalized on its name is UK-based Dove Spa. The company, which is 75% owned by Unilever with the remaining shares part of UK group Spa and Salon International, opened its first location in 2006. Dove Spa now operates 20 spas in the UK and four in Canada and is in the process of vetting franchisees for its first franchise locations. One of its biggest challenges was getting around the Dove brand’s mass positioning, according to International Dove Spa development director Fran Hayter. Dove Spa does not offer cut-rate prices nor engage in discounting. The facials, for example are priced from $50 to $110. The range of Dove Spa branded products are also priced on par with other high-street day spa retail offers, and not in the same price bracket as mass Dove products. “We did a lot of consumer research andwhat came out was that if we had dropped our price points to supermarket prices, people October-December 2011 - N°8 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #8 - October/December 2011

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
Launches
- The latest in fragrance, skincare & make-up
Interview
- Estée Lauder Companies group president international Cédric Prouvé
Insight: Fragrance
- Category overview
- Retailer roundtable
- Retailing strategies
- Rare fragrance brands
- Launch roundup
Wellness
- Spa chains
- Spa case studies
Retail
- E-commerce
- Store concepts
Travel retail
- Sector analysis
- Hainan & China Duty Free Group
- Retail concepts
- Passenger habits
Digital
- Industry experts on harnassing the power of social networks
Radar
- Six up-and-coming beauty brands
Market watch: Russia
- Country overview
- Prestige retailing
- Industry viewpoint
Packaging
- Market outlook
- Sustainabilty
- Trends
Last word
- Buyology Inc president & co-founder Donna Sturgess

BW Confidential - Issue #8 - October/December 2011