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Salons Get a Makeover. Just Don’t Call Them Spas.

Facing competition from Sephora, Ulta and Amazon, beauty salons are repositioning themselves as one-stop shops offering everything from massages to cafes to skincare regimens — all designed to win repeat business.
Heyday | Source: Courtesy
By
  • Jessica Schiffer
BoF PROFESSIONAL

NEW YORK, United States —  At Chillhouse on New York's Lower East Side, stylish young women congregate weekly to check off a few boxes on their ever-growing self-care lists. In one swoop, customers can get a manicure, a massage, and shop for beauty and wellness products from brands like Circumference and The Nue Co, all while sipping on a drink infused with adaptogens (meant to reduce stress) from the store's cafe. The goal is to "scale up to a certain level of chill," says brand founder Cyndi Ramirez.

Just don’t call it a spa.

Although the beauty industry is booming, traditional salons and spas are struggling to keep up with the momentum. While customers still want massages and facials, they prefer to shop for beauty products at chains like Sephora and Ulta, or online. Last year alone, over 10,000 salons closed down and product sales rose just 2 percent, the slowest pace in at least five years, according to Professional Consultants & Resources, a beauty consulting firm.

While women once relied on their local salon or spa for finding niche professional products, they now have all of those products and more at their fingertips, whether it’s online or at a global chain offering a wider selection than any hair salon. Even as salons have struggled, Ulta’s salon product sales grew by 15 percent in 2017, according to a Professional Consultants & Resource study. Amazon introduced a new professional beauty category at the start of 2018, signalling a concerted push into the space.

To compete, a new class of spas and salons are bundling traditional services with a curated selection of products as well as in-store attractions designed to convince women to stay and shop. Brands like Heyday, Chillhouse, Skin Laundry and Facile are selling an experience, turning their stores into clubhouses that encourage women to primp and relax on a regular basis (and post about it on Instagram, too).

They're tapping into consumers' hunger for experiences, a tactic retailers from Chanel to Ikea are deploying to convince their customers to stop by their stores. Salons, with their focus on physical treatments — you can't get a facial online — are at the forefront of this trend. Ideas perfected by trendy spas in New York and Los Angeles are being picked up by the industry's biggest players, with Sephora this year offering facials in some stores and Saks Fifth Avenue devoting the bulk of its revamped floor space to branded services from the likes of FaceGym.

“If a consumer can walk into a store and feel catered to, be offered complementary services like a facial or manicure and have a curated experience that goes beyond searching for product, they will develop a brand affinity that will keep them coming back,” said Maya Mikhailov, the co-founder of GPShopper, a retail app developer.

The concept appears to be paying off: Heyday, a New York-based spa offering skin consultations, facials and curated product shopping, has raised $3 million in funding since it opened in 2015 and has five locations in New York City and one in Los Angeles. Skin Laundry, which boasts laser facials, a product line and a custom prescription program, grew from one store in 2013 to 21 locations in the US, UK and Hong Kong, with more stores on the way. Chillhouse opened its first space in New York last year and is planning for more locations and will sell products online starting later this month, Ramirez said.

But excelling at the one-stop-shop model can be tricky. Brands need to avoid overwhelming the consumer with too many options while also ensuring that their merchandising and service offerings are in alignment.

Offer deluxe treatments at affordable prices

To really make a splash in the crowded beauty market, its important that retailers offer something truly new for consumers — relying solely on a tried-and-true manicure service, for example, won’t cut it. Often that means adapting high-end salon treatments for customers on a budget.

I wanted to offer something that had a cool aesthetic but that also wasn't going to break the bank and stress me out post-massage.

That’s central to the offering at Chillhouse, which offers massages at a mid-market price point in New York, where competitors tend toward the very cheap or very expensive. A 25-minute express massage, for example, costs $45, compared with $70 at Elizabeth Arden. Still, massages can be tailored to individual needs, ranging from prenatal to hangover cures, and take place on infrared-heated tables.

“I saw that there was a big price-gap in the market,” Ramirez said, noting that the sweet spot should be under $100. “I wanted to offer something that had a cool aesthetic but that also wasn’t going to break the bank and stress me out post-massage.”

Skin Laundry found its niche by offering laser facials outside of their historical home, the dermatologist’s office. Customers had to be convinced early on to expose their skin to lasers outside a medical office, but an education campaign and lower price point helped. Prices start at $65, where laser facials can cost $300 with a dermatologist.

“Staying very focused [on a small number of procedures] has helped teach people that our methods are safe and effective, and helped them gain trust,” said Yen Reis, the company’s founder.

Keep things complementary

As beauty retailers start to branch out from their core procedures, they find the best-selling additions tend to be closely tied to what drew in customers in the first place.

Two years after opening, Skin Laundry launched an “essentials” product line comprised of skincare basics like cleansers, toners, and moisturizers after customers asked for products that could support them pre-facial while also helping to maintain the results. Now the company is testing a program called SkinLaundry Rx, which relies on telemedicine to connect doctors and consumers online to ease the process of obtaining skincare prescriptions.

Chillhouse stocks its stores with products grouped around the theme of relaxation, and started an editorial platform called The Chill Times that runs articles on topics like the best vitamins for sleep.

Sometimes that means foregoing potentially lucrative services to avoid confusing customers. Chillhouse and other stores see this as a differentiator from traditional salons, as they can become known for being the best at a handful of services, rather than merely adequate at a wider variety of treatments.

“We want to deepen what we offer in the category of skincare and facials,” said Heyday chief executive and co-founder Adam Ross, “but you won’t see us doing brows and makeup.”

Make it personal

Upstart brands thrive off of the close relationships they develop with their consumers. In this case, being small is an asset, allowing employees to better acquaint themselves with each individual who comes through the door.

At Heyday, an esthetician reviews a customer’s skin and discusses their ultimate skincare goals before recommending a facial procedure drawing on products from multiple brands, a break from the tradition of facialists relying on one product line from beginning to end. Each customer’s information is kept in a database so the team can refer back to it at every appointment and track progress.

“People are drawn not just to brands but also real people who have a point-of-view,” said Heyday’s chief brand officer, Michael Pollak. “Offering that forum for discussion and connection is our main product.”

Larger competitors are pursuing similar strategies.

Sephora collects customer data at every touchpoint, including its Virtual Artist makeup try-on app and Beauty Insider loyalty program, which can then be used in store when a customer is looking for product recommendations. However, the chain’s new 30-minute facials rely on the same set of tools and products for each person.

Sweat the details

When Ramirez and her husband were first discussing the idea for Chillhouse, they looked for inspiration to men’s grooming spaces like Blind Barber and Three Seat Espresso that had a unique hospitality element.

The aim was to create a space where women actually wanted to hang out, regardless of whether they had an appointment. Pews are spread throughout the airy space as a “reminder to take a breather,” said Ramirez, who also curates the store’s playlists. Massage rooms feature vintage-inspired chandeliers, velvet bedding and quirky artwork. The cafe offers a place to work, or catch up over coffee or wine.

“We don’t want people to just be quiet, as they might in a normal spa,” said Ramirez. “We want you to have a nice conversation and chill out.”

Heyday, which shares the same bright, millennial-geared aesthetic, aims to present a less intimidating space than the traditional spa. Ensuring that the vibe from all employees is friendly and welcoming is central to that.

Soft, happy music helps to set the tone, but, as the brand’s website says, “you won’t hear jungle rain or pan flutes.” Every treatment room has phone chargers and mirrors with lighting meant for selfies.

“Good hospitality goes really far in creating loyalty in a really crowded beauty market,” said Ross.

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Editor's Note: This article was revised on September 13, 2018. A previous version of this article misspelled Adam Ross's name and misstated Michael Pollak's job title. 

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