SpaFinder’s 2011 Spa Trend Report forecasts that the group buying & online deals craze is here to stay…but big changes are on the horizon. Remember when coupons were unfashionable things people snipped out of the paper? Or, when spas didn’t even consider using the term “deal”?
Well, put an “e-” or “group” in front of “coupon,” and you have the hottest Internet craze to date, poised to accelerate at an even more dizzying pace going forward. Here we explain what changes you can expect to see in the year ahead and which ones impact the spa industry.
Online group-buying deals and flash sales have suddenly burst onto the global scene, and the old-fashioned “deal” has morphed into a hip online industry. With spa and wellness deals a mainstay of generic sites like GroupOn or LivingSocial (where roughly 20% of total deals are spa-related), it’s a sure sign that spa-going has achieved massive, mainstream traction.
The phenomenon is mushrooming globally, with 500-plus major group-buying sites estimated worldwide. North America alone has over 130 “daily deal” sites, including first-mover GroupOn and LivingSocial, the DealList, Yelp, BuyWithMe, etc. The UK has its Groupolas and Wowchers; Spain has Groupalias; Australia has Jumponits, Scoopons, and Spreets; China has QQTuans and Meituans; Thailand has Ensogos and Sanook Coupons; and Singapore has AllDealsAsia. Dozens of sites cater to a single city. And look for major expansion efforts by the powerhouses: GroupOn is already moving into places like Hong Kong, Singapore, Philippines, Taiwan, and China.
With so many spa deals (treatments, yoga classes, even Botox) being blasted into email inboxes, there has been one extraordinary effect: Millions of people now are expanding their spa/wellness horizons, trying new spas and experiences they wouldn’t have without the “50%-75% off.”
BIA Kelsey Research projects that spending on “daily deals” in the U.S. alone will approach $4-$6 billion by 2015, up from $873 million in 2010. And with so many companies backed by hundreds of millions in venture capital, deals will certainly remain a huge deal in 2011. Here is what we see ahead for the spa consumer and industry:
· Consolidation: Consumers will still have an overwhelming number of sites to follow, but a “dot-deal” shakeout (on the dot-com model) looms, in part because of an avalanche of similar and “cookie-cutter” sites, along with players like GroupOn marching across the globe buying and re-branding local deal sites. Branding and meaningful differentiation will become important factors in determining the “shakeout” winners.
· More personalized and spa-specific deals: Spa deals have typically been thrown in between blow-out specials on lube jobs or “two hours of whitewater river rafting,” but new personalization science/software, and the rise of luxury and spa-specific platforms like SpaFinder’s SpaRahRah or Gilt City, will deliver discriminating spa-goers more relevant deals, even “curated” by experts. With the more exclusive customer targeting, higher-end spas (who avoid mob deals like the plague) will jump in to offer more luxury and unique experiences far beyond the $39 massage/facial. For many, the spa deal quest will evolve beyond the “rock-bottom price at any old place,” to seeking (and finding) credible, real values (i.e., $130 for $300 worth of spa services) at a location you actually dream of visiting.
· More manageable, exclusive deals: “Flash-mob” deals that have a small day spa selling 5,000 massages have led to well-publicized gripes by both businesses and consumers (no appointments, short-shrift service, etc.), leaving spas so overwhelmed that their businesses are jeopardized. Look for the parameters of deals to become more exclusive, flexible and manageable.
· Location-based and mobile “deals on the spot”: With location-based powerhouses like Facebook, Google (especially after their recent, failed attempt to buy GroupOn) and Yelp getting in on the action, deals will soon be even more ubiquitous online, as well as headed to your mobile phone. Right around the bend: A spa-seeker launches a mobile app, finds real-time deals in that area, clicks and buys the coupon and then strolls into the spa to redeem.
· Retention and engagement: In 2010 spas embraced group-deals to attract new customers, but in 2011 there will be a much more intense focus on how to retain them, with new tools, training and technology to engage customers after the hordes rush in.
· Deal fatigue: Look for some consumer push back, especially from the spa enthusiast, who is, after all, seeking stress reduction. Ultimately for them, having a regular spa appointment with a favorite therapist at a familiar spa will trump the few dollars saved and the energy needed to engage in deal frenzy.