By  on October 3, 2008

Beauty watchers often point to the salon and spa industries as the hardest hit in a rough economy.Several leading proprietors in both areas spoke with WWD and said consumers are not giving up their essential grooming needs (color, cut, mani, pedi and waxing), but are scaling back a bit on special treatments (wraps.) Here, luxury business operators discuss why they are weathering the economic storm.

JOEL WARREN, CO-FOUNDER AND COLORIST, WARREN TRICOMI: “Our salons are doing fine because our clients are choosing to spend their money where they can get the proper service. Great service combined with the best hair and color stylists is what we offer. The big difference between luxury and opulence is the service being provided. People want to spend their money where they can feel confident they will receive superior service. Hair is unique; it is very different to spend money on an expensive dinner or piece of jewelry when times are tough. When you are feeling bad about the economy it tends to show, and we want to make you look good and feel good. We are seeing women who are being more cautious about spending money on the extra services but a standard cut and color is not sacrificed. [In our business] spa services are definitely a luxury. Massages and facials might suffer because they are something that is not visible to others. Our clients come to our salon confident that they are paying for an experience that is worth it. We are projecting a lifestyle that is of the highest standard, but even so we are aware of the economy at this time. Our guests know when they come into the salon they don’t have to think about money woes, they can leave here refreshed and confident that they spent their money wisely.”

TERESA MCKEE, CHIEF OPERATING OFFICER, ELIZABETH ARDEN RED DOOR SPAS: “More challenges have been noticed in the resort environment as people are staying closer to home, although our newest property at Harrah’s Resort Atlantic City [N.J.] is posting double-digit growth over last year. Many of the Red Door Spa’s guests are maintenance guests who regularly depend on services and treatments as part of their routine grooming regimen, and they aren’t going to change their beauty maintenance needs drastically due to the economy. Women are still coming in for services. In fact, we are seeing heavy foot traffic throughout all Red Door locations. Guests are certainly still coming in for their maintenance services and view most of the services they receive as an essential part of wellbeing and grooming, as opposed to a luxury. Hair, face and wax treatments are doing rather well and this is a great testament to the loyalty of our guests and the quality of our services. Our guests like to take care of themselves and aren’t willing to cut back on their appearance and well-being; we have been hearing that they might cut back on other luxuries such as fine dining, etc. We haven’t reduced our hours due to this economy. We’re actually in the process of increasing them for holiday season. We’re very eager to hear from our guests and try to base services and new trends on their needs. Our holiday gift offerings this year will be available to suit all budgets. Recently, guests have been booking their appointments more and more on a last-minute/impulse basis, so we are paying closer attention to our staff schedules to meet the needs. Red Door Spas is currently renovating the Chicago flagship and continues to invest in upgrading our Spas and plans are under way to introduce new locations in 2009.”

BROOKE CARLSON, VICE PRESIDENT AND GENERAL MANAGER, RUSK: “What we see from the salon side is that salon clients are stretching time in between services. We have also heard that they are tipping less and they are cautious of every dime they spend. On the flip side, they still want the respite in going to the salon and they are still looking for a high level of service. From gas to food to transportation, people are feeling leery of spending. We anticipated [this economic trouble] and we budgeted our year to come with aggressive price points. We have two separate initiatives to drive service revenue. One of the initiatives anticipated where the economy was going so we came out with a gift travel set for $4.95 at retail and a designer collection mini pack for $9.95 retail and a couple of gift sets at $11.95 to $14.95 retail. We had nothing higher than $19.95 retail. We sold out in August and we had more orders than we could fill so we were spot-on with that. On the service side we saw an underdeveloped category in straightening for salons and wondered what we could do to increase revenue. Rusk created three levels of straightening services, each with varying prices. The first is Anticurl Antifrizz, a 30- to 45-minute straightening service that lasts 12 to 16 weeks and retails between $50 and $100. Then there’s Anticurl Kerashine, a 60-minute service for about $100 to $150, and then there’s Thermal Shiny, a 90-minute to 2.5-hour service for $200 to $400. The response has been positive.”

ANNBETH ESCHBACH, FOUNDER AND CHIEF EXECUTIVE OFFICER, EXHALE MIND BODY SPA BRAND: “Our business model is unique in that we are not just offering beauty and pampering, we also offer healing and results-oriented spa therapies, which is 40 percent of our business. Then there are yoga and Core Fusion classes, which is another 40 percent, and then there is the retail business. So because we have these three diverse interrelated revenue streams we get to watch and forecast in different ways than a traditional day spa. The traditional day spa sector is experiencing softness [since consumers] are retrenching from services that are pampering in nature. People are not giving up their basic mani, pedi and waxing, but anything that is a special treatment, such as mud wraps and body scrubs [are soft.]. The must-haves that make you relaxed that affect both appearance and spiritually are solid and growing. The Mind/Body classes are growing in comps and are projected at a 10 percent increase for the end of the year. Retail is the one of the lovely surprises: Growth is up over 10 percent year-over-year. The customer base is very engaged. I can’t tell you that if this [economy] were not happening that we would not be up 50 percent. But our comps are as strong as ever. Our business is transformational, it is the one thing that you can do for yourself.”

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