As we’ve written about in 2024, the beauty industry’s dominance may be reaching a maturation point. Larger players like Ulta are starting to see signs of softening and competition for market share, and coupled with stagnated consumer demand, the industry might no longer be the standout among specialty players.
So much coverage and attention is given to the cosmetics retail side of the category, but what’s going on with beauty and spa services? Retailers like Ulta and Bluemercury provide services as well as traditional retail products, which may have helped both become frontrunners among the competitive set. As we highlighted in our overview of Studs, blending retail and service has been a winning strategy in attracting consumer visits.
Traffic to the beauty and spa category for the 12 months ending August 2024 is up 4% year-over-year, which is still impressive against today’s retail landscape.
Looking at the performance of beauty and spa services specifically across a few chains, spa-centered services are outpacing the overall industry while tanning and waxing have been more in line with the overall category. According to Placer’s data, consumers haven’t totally abandoned beauty services by any means, but they may be more selective in what services they choose.
In thinking about value-oriented consumers and the desire for small indulgences, more sporadic spa services like a massage or facial might be appealing as opposed to more essential services like waxing or tanning. Spa service providers have also been opening locations throughout the year and still have room to grow.
Looking at dwell times across beauty services, there is also a correlation to visitation growth among chains. Chains with the highest visitation growth, mostly spa services, also have higher dwell times. Again, this underscores the importance of self-care and relaxation to beauty visitors in 2024. Services like waxing and tanning have more at-home alternatives for consumers, and they may be looking at DIY methods to decrease visit frequency.
Finally, looking at visitor segmentation using PersonaLive, our data shows that visitors to spa services have a higher penetration of Ultra Wealthy Families, Upper Suburban Diverse Families and Wealthy Suburban families compared to visitors to waxing and tanning salons. As we’ve reported around the bifurcation of retailer performances related to household income, the demographics of visitors to spa focused services provide another proof point.
Beauty services, overall, still appear to be a vital part of the beauty consumers routine, even despite some changes in visitation over the past year. Similar to what we’ve seen across the beauty space, higher end and prestige retailers and services have seen more elasticity in demand. Retailers that do both are certainly in a good position despite the changing tides in the beauty category.
