Retail Management for Spas

Retail Management for Spas represents an important step in the sustainability of the spa industry. The global spa industry has experienced a great deal of change. In some countries, the industry has seen phenomenal growth and in other areas, this growth is just beginning. As the industry continues to evolve, and as more and more consumers learn the benefits of spas and health and wellness lifestyle changes, the industry must be ready to address their needs.

In order to sustain the spa industry, it is imperative that spa professionals have the business tools that are necessary for their own growth and vitality. With such growth and demand, informational tools and resources on subjects such as retail, financial management, compensation, consumer and industry research and trends, and standard operating procedures and management skills are imperative. These tools will allow for an even greater customer service experience and allow spas to be even better prepared for their guests.

Retail Management for Spas | Chapter 4.2 | Basic Retail Management

Two key concepts are fundamental to all retail management: turnover and stock-to-sales ratio.

Retail Management for Spas | Chapter 4.3 | Advanced Retail Management

Basic retail management concepts can help spa retail professionals improve their inventory management methodology by implementing the basic techniques of min and max order levels and keeping the stock-to-sales ratios within industry standards. This will certainly improve their retail effectiveness but it does have limitations in terms of how precisely it can hold the operation to its retail plan.

Retail Management for Spas | Chapter 4.4 | Manual Recordkeeping

An important step in monitoring the retail plan requires posting to the planning format each month’s actual sales, markdowns, and other activity. 

Retail Management for Spas | Chapter 4.5 | Shrinkage

Simply stated, shrinkage is the difference between the inventory the spa has on hand and what it should have on hand. In the retail industry, an estimated 1.54 per cent of annual sales losses are due to inventory shrinkage. According to the 2004 National Retail Security Survey, specialty apparel is the category with the highest shrinkage, at 2.93 percent, while department stores run around 1.51 percent. But where is the merchandise going? Losses break down as follows: 47 percent internal/employee theft, 34 percent shoplifting, 14 percent paperwork errors, and 5 percent vendor fraud.

Retail Management for Spas | Chapter 5 | Evaluating Financial Performance

At the Urban Spa …

Reuben, the manager of the Urban Spa, hung up the phone in frustration. Fiona Matthews, the owner of the Urban Spa, a day spa and salon, was demanding that Reuben explain why the cost of goods sold in April was 56.5 percent when it was budgeted to be 50 percent.

Retail Management for Spas | Chapter 5.1 | Retail Sales Percentage of Total Spa Revenue

All of the information needed for financial evaluation can be found on the retail department schedule in Exhibit 1. This departmental schedule covers revenue, adjustments, cost of goods sold, gross margin, direct expenses, and the final income/loss departmental contribution. This is a generic schedule designed to fit all spas; individual spas will have modified schedules to meet their own needs and requirements. Several of these items are evaluated monthly.

Retail Management for Spas | Chapter 5.2 | Retail Sales Contribution by Merchandise Classification

Some spas with significant retail revenue will want to monitor retail sales by classification as compared to plan. This information is valuable as it can aid spa professionals in…

Retail Management for Spas | Chapter 5.3 | Retail Sales Per Ticket

Another way to evaluate the retail sales of a spa operation is to compare retail sales to the number of tickets posted during the month. 

Retail Management for Spas | Chapter 5.4 | Retail Sales by Therapist

The most common measurement of spa retail is retail sales per treatment by therapist. 

Retail Management for Spas | Chapter 5.5 | Retail Markdown Percentage

Markdowns and retail discounts are two factors that affect the cost of sales. Discounts are strategic decisions made by management. 

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