It is important to recognize that introducing a private label is not the right choice for every spa. Skin care professionals should explore some of the pros and cons of private labeling, what to consider when deciding if a private label line is right for their spa, and how to incorporate private label products into their treatments and retail inventory.
WHY PRIVATE LABEL?
While the spa experience is centered on pampering and relaxation, the spa industry has evolved at a hectic and dizzying pace. According to the 2016 United States Spa Industry Study by the International Spa Association (ISPA), total spa industry revenue increased from $15.5 billion in 2014 to $16.3 billion in 2015 – nearly a five percent increase. That growth came from more spa visits with more revenue per visit. There is also, however, a lot of competition. ISPA’s study estimates new spa openings exceeded spa closures by nearly two percent from 2014 to 2015.
As the industry grows with more and more spas opening their doors, competitive pressures escalate. These pressures require professionals to constantly search for ways to stand out from competitors and increase revenue at the same time. A private label line can accomplish both objectives. Private label products can be used to create distinctive spa treatments and sold on a retail basis to boost revenue.
THE PROS OF A PRIVATE LABEL LINE
Adding a private label line of professional products bearing a spa or skin care professional’s name can enhance the brand’s reputation and help professionals and spas stand out from their competition. By offering products that are only available at the spa, professionals can create a more exclusive experience that makes guests feel special and exclusive. Custom-formulated products – those that are made with ingredients that reflect something unique about the spa and are packaged distinctively – are particularly effective. The increased credibility that a private label line brings also invites heightened client loyalty as clients regard the spa’s brand as having higher authority and value than the competition.
Introducing a private label product can also make skin care professionals more engaged in their work. If spa owners involve their staff in the product-selection process or give them a say in the ingredients included in a custom-formulated product, it empowers them and shows that they are valued employees. Ultimately, those rewards will give them more reason to be excited about the spa’s private label offering and encourage them to actively sing its praises to clients. Involving spa technicians also ensures the private label line delivers amazing results. Employees know first-hand which ingredients do and do not work well.
According to Paul Fleming, assistant director of The Spa at The Sanctuary on Kiawah Island, “When we chose to change massage oil lines, it was very important for me to engage my staff in the creation and decision-making process. They are talented professionals and their feedback and buy-in was critical. After all, they would be using the products day in and day out.”
A private label line packaged for retail gives the spa something unique to sell, boosting product sales, not only in-person, but also online. When clients have an exceptional spa experience, they enjoy bringing home a reminder of their carefree moments of blissful relaxation. Many, also, love to give spa products as gifts to others.
“By developing our own private label line, my therapists were able to select the most effective blend of carrier oils and the essential oils that best matched our guests’ needs,” Fleming said. “Our therapists love the oils and our guests regularly ask to purchase them. We love that they want to take ‘The Spa at The Sanctuary’ home with them.”
POTENTIAL DRAWBACKS OF A PRIVATE LABEL LINE
While there are many notable advantages to bringing in a private label line, spa owners and managers should also keep some potential disadvantages in mind.
Manufacturers will typically have minimum-order requirements. The quantities the owner must order could vary widely from one manufacturer to the next. If the spa cannot sell the volume of product needed to move its private label product inventory in a reasonable amount of time, owners will not get an optimal return on their investment. They might also end up with products sitting in storage that expire before they make it to the point of purchase.
Something else to consider is the amount of research, testing, and collaboration that goes into developing custom private label lines. Manufacturers charge research and development fees for custom formulations; furthermore, owners and their staff will also spend time and effort as they provide input and feedback to the manufacturer.
It is important to identify that the price point of private label products might receive pushback from some spa clients and online customers. If the spa’s branded product is priced considerably higher than others in the retail inventory, its sales could suffer.
As with any business venture, getting started with a private label line requires a lot of thought and planning. Spa owners need to execute sufficient research to find a manufacturer who can meet their specifications for the products they want to offer and their expectations of quality and service.
Assess gaps in the spa’s present offerings (both treatments and retail products) and consider what clients desire to determine the types of products that should be developed.
Identify what criteria the private label products should meet. For example, should the line be vegan and certified cruelty-free; use essential oils as scent rather than fragrance; or be free of sulfates, parabens, artificial colors, and other harsh ingredients?
Determine if the anticipated manufacturer is a reputable company. Inquire if they have earned a Certificate of Cosmetic Good Manufacturing Practice (c-GMP), which shows their commitment to quality. Manufacturers that earn a c-GMP have a formal affidavit attesting that their products comply with all applicable laws and regulations, including the United States Food Drug and Cosmetic Act (FD&C Act). The FD&C Act requires that cosmetic products not be adulterated or misbranded. Ask for references that can share experiences working with the manufacturer’s product development and customer service teams. Also, ask the references about their satisfaction with the products in regard to client treatments and retail potential. Lastly, request samples of their products and thoroughly test them to see how they perform.
While the development process is underway, involve the spa’s team in evaluating the formulations they produce. The spa’s skin care professionals know the clients best, so their feedback and suggestions will be invaluable when fine-tuning the products.
Develop a plan for incorporating the new line into the treatment menu and retail offerings. This plan will help the spa and its staff clearly transition from eliminated products to new products. For optimal returns on investment in a private label line, the spa should have a marketing plan to increase awareness of the product. From new website copy and direct-mail postcards to e-mail marketing blasts and press releases, think about how the spa will generate excitement about its new products. If skin care professionals will be using the private label products during treatments, owners will also want to update the print and online spa service menus.
At The Spa at The Sanctuary, Fleming’s search for a private label company to partner with centered on finding a manufacturer that had the same commitment to delivering extraordinary customer service as his spa did. “Because we are a five-star spa, we spend every day focused on providing premier customer service. When I select business partners, I want a team that shares that culture. I seek vendors that are responsive, dependable, enthusiastic, and creative.”
HOW TO TELL IF INTRODUCING A PRIVATE LABEL LINE IS THE RIGHT CHOICE
The advantages and disadvantages of private label lines and some tips for getting started have been covered, but how can spa owners know if it makes sense to pursue one for their businesses?
When considering a private label line, determine whether it is in the spa’s budget and if the spa’s sales volume is enough to justify the minimum order requirements. Spa owners should also consider at what price point they will need to sell the private label products, if clients are willing to pay that amount, if they have the time to work with a manufacturing partner to develop the line, and if the benefits of the line outweigh its potential disadvantages.
These questions are just a few examples of what needs to be considered when exploring the risks and opportunities of bringing private label products into a spa. Private label products, especially those that are custom-formulated, provide distinction and drive revenue. They also require, however, more time, money, and effort than brand products.
If a spa owner decides that private label is right for the spa, start small by offering a few products to test the waters. Assess the clients’ satisfaction before investing in the expansion of a line of private label products. Sometimes it makes sense to consider established brand products to complement the spa’s private label line. That solution can be more cost-effective than creating private label products to cover all spa treatment needs. It is also a great way to provide guests with variety, especially when catering to seasonal themes.
It is so important for anyone considering a private label line for a spa to do adequate research on the manufacturer. Many manufacturers offer exceptional products and services. As partners vested in the success of their clients’ spas, manufacturers can help spa owners achieve greater brand distinction, attract clientele, and increase revenue.
Establishing a private label line offers growth opportunities for the spa’s brand. It provides a way to give a more cohesive and complete experience to clients because the spa can develop products to meet the clientele’s specific needs. If owners go into the venture informed, well-prepared, and with a collaborative attitude, they will be on their way to successfully launching what could be a game changer for their spa.