New Global Report: Still Pampering? Opportunities and challenges facing the spa & beauty industry in 2010

The new Euromonitor International Strategy Briefing sheds light on current global consumer interest in pampering. As consumers become increasingly recession-weary, the need for pampering has perhaps never been greater. In a bid to look and feel good, consumers continue to indulge in the services of salons and spas while supplementing these with at-home beauty treatments to save costs.

This report examines the latest trends in hair & beauty salons, nail bars, tanning salons, and spas and compares these with trends in the retail beauty market, identifying those sectors which are most poised for future growth.

Demand factors

  • With consumers facing depressing news of record unemployment, falling house prices and insurmountable debt levels on a daily basis, the need for escapism via pampering has never been greater;
  • The desire for affordable indulgence in hard times, dubbed the “lipstick effect”, has boosted demand for all kinds of personal services, including hair, face and nail treatments, massages, tanning salons and spas;
  • At the same time, the need for consumers to rein in expenditure has hit certain areas of the professional services industry hard, and given rise to greater demand for at-home pampering treatments, such as colorants, spa treatments, nail products and self-tanners;
  • Anti-ageing is still a priority for many consumers, who feel as much – if not more – pressure to look young than before the crisis. This has boosted revenues at beauty parlours and spas, as well as leading to higher retail sales of premium anti-agers and anti-cellulite creams;
  • The market for professional services has been adversely affected by the ongoing trend towards “cocooning”, whereby consumers attempt to make savings by staying at home rather than going out. Conversely, this trend has benefited the market for home spas and beauty kits.
  • Another positive influence on the market for pampering products and services has been the consumer obsession with celebrities and their lifestyles. The influence of these trend-setters on young people, including tweens and teenagers, is especially strong. Consumers buy into the celebrity image by adopting the clothes, hairstyle and overall “look” of their favourite icons. This means more visits to the hairdresser, nail salon, beauty parlour or tanning studio, and more money spent on at-home beauty products;
  • As well as being the face of beauty campaigns, several celebrities have themselves become involved in the beauty industry. For example, Shilpa Shetty launched her own medical spa in India in 2009, while Lindsay Lohan launched a range of self-tan products in the USA;
  • A trend towards male pampering emerged in line with the birth of the “metrosexual” movement in the 1990s. According to the International Spa Association (ISPA), men now make up 29% of spa-goers in the USA, while male-only hair salons are mushrooming;
  • The USA dwarfs other markets in terms of total expenditure on personal care, at almost US$191 billion in 2009, although in per capita terms, Denmark led the way. Brazilian consumers spent the most on personal care as a proportion of total consumer expenditure;
  • The fastest growing markets in terms of consumer expenditure on personal care over the 2004-2009 period were China and Russia, with growth of 121% and 130%, respectively.

Consumer market trends

  • The at-home beauty products market, including perming and colouring kits, spa products, self-tanners, depilatories and personal care appliances, has benefited from the fact that consumers are reducing the frequency of visits to salons or are opting for cheaper treatments;
  • The market for perms and relaxants largely serves ethnic consumers, and this area has recently become a source of focus for hair care companies and retailers alike, due to rising disposable incomes among this consumer group;
  • Self-tanning products have benefited in Europe from a combination of a trend towards the tanned look, the economic recession, bad summer weather and the negative publicity surrounding sun beds and sunbathing. However, in the USA these products are not as popular;
  • Retail products relating to home beauty and relaxation encompass a wide range of skin care products and appliances which allow consumers to create the home spa experience;
  • Skin care products with an air of self-indulgence performed well in the latter part of the review period, as the lipstick effect kicked in. Anti-agers and products such as Nivea’s new My Silhouette! met with considerable success;
  • More specialised skin care products appearing on the market include microdermabrasion kits and chemical peels, which are being launched by professional skin care companies which previously sold such products only in salons.

Trends to watch

  • Depressed economy will drive need for escapism: The ongoing climate of doom and gloom will continue to fuel consumers’ desire for escapism by indulging in beauty and relaxation regimes. The beauty industry has proved to be recession-proof to some extent, since appearance and wellbeing are two things that women, in particular, are not prepared to compromise on;
  • Flexibility will be key: The trend for convenience will create greater demand for mobile hairdressers and beauty therapists. While they cannot offer the same levels of service and equipment as those found in larger salons, mobile beauty professionals and “pop-up salons” appeal to working women on the move or those with small children at home;
  • DIY beauty: Studies have shown that, despite the ongoing desire for pampering and self-treating through salon treatments, consumers increasingly want to balance this by using treatments at home. The trend towards cocooning is partly responsible for this, as is the need to reduce costs;
  • Safety concerns will continue to plague tanning salons: The tanning salon industry, in particular, will continue to suffer from its negative image, as the dangers of UV rays are increasingly exposed. In some countries, such as the UK, regulations surrounding tanning salon operation are likely to be tightened;
  • Demographic changes to favour the beauty industry: Ageing populations will ensure that there is a growing market for pampering and health-related products and services;
  • Growing consumer demand for spas: While other markets may be approaching saturation, there is believed to be plenty of room for growth in the market for modern spas. Spa facilities will become the norm in upmarket hotels and resorts, and will be expected by travellers as part of the overall holiday experience. Meanwhile, taking a break in a residential spa will be a popular holiday choice for stressed consumers wishing to unwind, and those seeking experiences over material possessions;
  • Natural products will prevail: As in the salon sector, the trend towards natural ingredients and fewer chemicals in skin and hair care products will become more pronounced.

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