4 Steps to Transform your Boutique into a Profit Center

by

Dori Soukup

Right Retail Mix and Creative Merchandising Equal Success

Have you assessed your Boutique\’s performance lately? Is it as profitable as it could be or are your products collecting dust on the shelves? It seems that most spa entrepreneurs focus most of their attention on treatment revenue and pay less attention to their boutique, even though the profit margin from retail is much greater than that of treatments. This action is causing major revenue loss. As an industry, we are not capturing our share of the personal care market. According to SRI International &Global Summit study, Beauty & Anti-aging is a $679 Billion Dollar industry and spas are barely capturing a sliver of this market.

How can you gain market shares? By focusing on the following 4 steps:

1. Retail Mix Selection

2. Creative Merchandising

3. Team Training

4. Performance Measures

1. Retail Mix

One of the biggest mistakes I see often is the lack of variety in retail mix within spa boutiques. Most spas get stuck on skincare, hair care and nail products. Instead of expanding to other retail items, they expand on skincare products and carry way too many skin care brands. As a rule of thumb, it\’s wise to have one primary and one secondary skincare line and free up your inventory budget to buy other retail items, helping the guests to continue their spa experience at home. Attend gift shows and select de-stress products such as music, aromatherapy, books, neck wraps, etc… products your target market would like to have. In addition, I am a big fan of branded items. I love selling or giving away t-shirts, stress balls, hats, or caps as \”a gift with purchase.\” This action will turn all your clients into spa promoters. I don\’t see enough spas practicing this. The other important factor is to select products at the right price and make sure you manage your inventory. Order just the right quantities for your sales cycles and manage your cash flow.

2. Creative Merchandising

Merchandising is a fun function if you let the creativity flow… but often I just see the products lined up on the shelves like little soldiers, one after another. This tactic does not entice or pique your guests\’ interest. You will multiply your product sales if you add points of interest and tell a story on the shelf. You can tell stories by using some of the ingredients in the products, use shelf talkers, electronic frames, elevation, sampling opportunities, and so on. You can also feature your professional treatments and the home care products that complement the treatments. It\’s also wise to keep moving inventory in order to keep your merchandise fresh and give the impression that you have new items in your boutique. 90% of communication is non-verbal and color plays an important role in the sales process. Color evokes emotional response. Use color to capture attention. Perhaps, paint an accent wall. Use appropriate lighting to highlight certain areas featuring the product of the month or a special promotion you are offering. Merchandising should engage your clients and take them on a sensory experience. When you do that… you increase sales. Merchandising should focus on the benefits your clients will gain and compel them to purchase and re-purchase your products.

3. Team Training

Who on your team is trained to manage the boutique and insure its success? Your team should be trained on merchandising, inventory management and sales. Are they? The number one killer in retail is the phrase, \”May I Help You?\” How often do you walk into the store and still hear that phrase and your answer usually is \”No Thanks,\” yet sales associates, spa receptionists and other retail clerks still ask this silly question. This question should be buried, never to surface again. For a team to succeed in engaging the guests and generating sales, they need training. No one is born a sales expert. Just like in sports, no one is going to win an Olympic Medal if they don\’t spend hours and years practicing over and over. Yet, in the spa industry we expect to be successful by skipping sales training. Companies cannot survive if they think \”sales\” is a dirty little word. If you want to be successful at anything, training is a requirement. To be successful in retail, your team must be able to effectively communicate with your guests. Guests buy products when they trust, like and see value in what is being presented to them. They buy when they see that your products are going to solve a problem. They buy when your team comes across as professionals and experts. Spend time training your team on how to approach the guest and how to make recommendations and see your sales soar.

4. Measuring Performance

During the Leap Ahead Spa Leader seminar I ask attendees what is your boutique\’s revenue per square foot? What is your boutique\’s turnover rate? Or how much are your sales by transaction or by receptionists? Often, I don\’t get an answer or I get a guestimate. If you are serious about your business, you need to know these answers. Measuring your performance is the only way to improve. Here are some retail concepts and formulas to help you determine how well your boutique is performing. a. Revenue per Square Foot: This is an important concept. This is how retailers measure their performance and so should you. ¢ Total Net Sales ÷ Square Feet of Selling Space = Sales per Square Foot of Selling Space Example: $400,000 in revenue ÷ 800 Sq. Ft = $500 per square foot.

Average Revenue per Sq. Ft ¢ Women\’s Accessories $450 ¢

Personal Care $504 ¢

Department Stores from $200 to $500 ¢

Hotel Shops from $500 to $1,000

Turnover Rate

This refers to how often you turnover your inventory. A good turnover rate is 4 to 5. Calculating turnover ¢ Annual retail sales ÷ average inventory at the beginning of the month for each month of the previous year = turnover Let\’s assume your inventory is $10,000 each month X12 = average inventory is $120,000 for the year. If sales were $600,000 what would the turnover be? ¢ $600,000 divided by $120,000 = 5- very good turnover rate.

Sales per Transaction

This measures how much you are averaging per guest. We also call it Retail Volume per Guest. Gross Sales ÷ Number of Transactions = Sales per Transaction Or retail volume ÷ by receptionist = Sales by receptionist

Measure your performance and see how well you are doing. If you are doing well, congratulations! If not, develop retail and merchandising strategies and begin implementing new retail concepts. If you don\’t have time to develop your strategies reach out to professional companies to assist you. No need to reinvent the wheel. The important fact to remember is that you have a golden opportunity within your facility to generate a large sum of revenue and experience exponential growth. Focus on your boutique and practice the 4 steps I shared with you and you will elevate your success.

Copyright (c) 2013 InSPAration Management

Dori Soukup is a recognized spa consultant, expert, speaker, coach and author. Dori is the founder and CEO of InSPAration Management, a business firm that specializes in providing business solutions to spa and salon leaders. The firm offers education via CDs, DVDs, Coaching Memberships, Seminars, and more. To learn more, visit http://www.

InSPArationManagement.com

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