US spa market hard hit by economic recession

By Simon Pitman

- Last updated on GMT

Related tags: Late-2000s recession, Recession, Cosmetics

After years of phenomenal growth that has given way to countless spa-based skin care brands, the US market has been hard hit by the economic downturn, a new report says.

The market is now approaching a new ‘mature growth’ phase, which is also being characterized by the launch of ‘science’ and ‘organic’ brands, something that market report firm Diagnol Reports says is replacing straight forward beauty brands.

According to the company, the recession has hit US spas hard, with annual revenues falling by 15 percent in the period up to May 2010, a stark contrast compared to the double digit growth in the category during the 10 years before the recession.

The US spa market is currently worth $16bn, and, according to Jacqueline Clarke. Research Director of Diagonal Reports, will remain stagnant over the next couple of years, with no change expected until 2012.

Costs and increased competition make conditions tougher

The researchers point out that this situation has been exacerbated by the fact that costs have spiraled, increased competition that has led to market saturation and the fact that salons have been slow to reduce their prices in the face of reduced consumer spending power.

The slowdown has also bought about a clear focus for salons, which during the boom times diversified into increasingly niche services aimed at tapping into what seemed to be endless consumer spend.

“Media-hyped, exotic sounding services may attract attention, by in the end people buy the basics: massages, and facials”,​ one spa salon owner is quoted as saying in the report.

Massage and facial treatments lead the way

More than half of all spa revenues continue to focus on massage and facial treatments, tapping into the pronounced desire to both look good as well as a need to feel relaxed.

Another trend highlighted by the report is the fact that the large personal care companies have failed to tap into the spa market, which has meant low levels of competition that have enabled smaller spa brands to develop within the category.

“This gap has allowed smaller niche companies to enter the professional beauty market, but it remains to be seen when and which of these companies will use the spa channel as a launch pad for the wider beauty care market,” ​Clarke told CosmeticsDesign.com USA.

The development has led to a large number of sophisticated premium products that have tapped into two key trends in the skin care market – the desire for green and natural products and the trend for scientifically advanced products.

Scienctifically advanced and green products

“One of the most significant product trends is that spas are now rolling out to the wider market product concepts for which they were the pioneers; scientific skin care and organic lines,”​ explained Clarke.

As a result spas are devoting increasing amounts of retail space to products that are either organic or certified natural, as well as products lines that contain highly sophisticated active ingredients, many of which fall into the cosmeceutical and botanical categories.

Clarke said that the spa industry has long benn recognized as a pioneer in new beauty trends.

“We see consistently in our research, which has been carried out worldwide over the last ten years, how the professional market sets trends for the retail or mass market,”​ she said.

Related topics: Market Trends

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