Pulse Magazine, September 2014
by Alexander Menrisky
Managing one’s retail inventory is a critical part to a spa’s profitability. “Making good inventory decisions should always be based on demand and sales history,” says Linda Mahramnia, retail buyer at Spa Gregorie’s located in Newport Beach, California. “I firmly believe in a product life cycle, like a bell curve. You have to know when to buy, when to maximize and when to decrease product [orders].”
According to Mahramnia, staying on top of sales history will help give spa directors or retail buyers solid ideas on how to best manage their inventory. “Once a product slows down, you must investigate the cause. If you determine that consumer demand has simply changed, then it is time to move on to the next new exciting product,” she advises.
Given how fast the industry may evolve, it is important to re-assess retail inventory on a regular basis. “We are part of an ever-evolving industry with ongoing advancements and new alternatives,” says Charlotte Prescott, spa director at Biltmore Hotel in Coral Gables, Florida. “Our guests look to us to be their professional resource and falling behind would cause them to lose confidence in our professional knowledge.”
In fact, Prescott observes that guests generally demand to see results-oriented products in the retail area. “When guests see immediate results they quickly form a trust with the product—and spa—and then are willing to try some of the products that require a little more time to prove themselves,” says Prescott.
When establishing par level for your retail, Glen Ivy Hot Springs’ Assistant Spa Director Debra Gromfin stresses the importance of monitoring the stock levels as other factors could come into play. “Sometimes, [it could be because] a provider is promoting a particular product over another, so re-assessing this on a regular basis is very important,” Gromfin says. “Manual counts and/or cycle counts are done in between official inventory counts to confirm the stock levels are accurate. Any adjustments need to be documented and changed in the system if there is a discrepancy in the count. We also follow strict guidelines for the ideal storage conditions of the products where temperature gauges have been installed.”
As for Mahramnia, the first step in product selection for your retail area is being in the marketplace: read the latest trade magazines, attend ISPA Conference & Expo, and keep up with trends in ingredients and new lines. “Once you have determined some brands that interest you, research your trading area,” she says. “If other [spas] are carrying the brand, is it one that competes with you or [one that would help to] enhance your image if a client found the products at another location?”
Mahramnia also advises spas to research how products are being sold, distributed and, equally important, discounted. “Finally, contact the vendor in your region to determine whether they will make a good business partner,” she says.
Finding the Right Product
Glen Ivy Hot Springs, located in Corona California, stocks products based on current spa services offered, while the Biltmore Hotel selects products that extend the guest’s visit to the home.
“We select products that would be a natural take-home experience from the guest’s visit with us to the spa,” Prescott says. “Many of the product selections we carry are designed to prolong the benefits of the treatment that was experienced, others are to support the benefits or primary concern/condition that the guest expressed.” She notes that Biltmore Hotel also stocks lifestyle and fashion pieces that might be enjoyed as souvenirs.
Because of the Biltmore Hotel’s diverse clientele of business travelers, leisure guests and local visitors, Prescott looks for products that address a wide variety of needs. Oftentimes, the best way to determine what will be popular is to ask the spa concierge team what guests are asking for and how they react to certain items, and to ask providers for information on their products.
Once Prescott has placed an order, she insists on a product knowledge session from the provider company to educate and launch the merchandise. She often organizes special promotions or events to accompany the launch. She tracks sales daily reports and monthly summaries in order to determine a product’s success before making ongoing orders.
As for Gromfin, she says there are three important things to keep in mind when deciding whether to restock a certain product: sales/demand; core skin-care line and seasonal promotions; and seasonal or holiday trends. “Choosing products is based on promotions, skin-care protocols, holiday items, seasonal items, gift with purchases (GWPs) and eye-catching trends,” she says. “Once ordered, the trend in selling is followed closely to determine if it is something to re-order.”
One of the most integral parts of retail management is choosing a good resource partner. If the partner is good, retail knowledge and strategy are easier to attain, especially in price. “Sometimes we use the vendor suggestion or we come up with our own pricing,” Mahramnia says. “Pricing is based on market demand and competitive pricing while factoring in commissions paid to the front desk and the staff. We always look at perceived value—what does the customer expect to pay for this item?”
“We also look at what a model inventory number should be on that item before we reorder,” she says. “For example, if I sold 24 pieces in a month, then I might set the model at nine pieces and then reorder.” Furthermore, spa directors must always take into account shipping time and the fact that every product sells at a different rate.
Prescott agrees that building a strong partnership with resource partners is a critical component to the entire retail management process. “When working with a new product, I will often rely on information from my vendor representative, when I have an established relationship and level of trust with that representative,” Prescott says. “Once we have been carrying a product for some time, our sales report history does all the talking.”
Biltmore Hotel restocks as needed, but the baseline is different for every product, and should be determined based on sales history. “When a product is new and we don’t have that history, we may be ordering more frequently,” Prescott says. “For items that are tried and true, we usually have a two month par.” Product popularity can also change seasonally, and spa directors should pay attention to these trends.
“Things change all the time,” Mahramnia says. “Clients are always looking for newness and the most effective products. What was your bestseller last month might have changed due to external factors, such as staffing or competition. In order to have a healthy retail turn, it is important to stay in stock on the items that customers want and phase out the slow sellers. If you don’t review the inventory on a regular basis, you might find that your sales are not being maximized and you could be left with unsalable goods.”
As a result, Mahramnia makes her stock decisions based on careful review of rate of sale. Spa directors, she says, should always have a good overall feeling of sales, and walk the floor and stockroom daily.
Glen Ivy, on the other hand, works closely with its retail specialist when determining what, when and how much to order. “Our retail specialist is the key point-person in communicating guest requests, trends and often informs me know when inventory of a particular item is running low,” Gromfin says. “We focus on rotating products and keeping things fresh.”