Industry Outlook Guide Esthetics

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1 Industry Outlook Guide Esthetics What is the future of esthetics? This is a very good time to get established as a professional in the esthetics industry. The industry is still in its infancy. Even though in theory it has been around for a long time, as a profession it s relatively unknown in this country. However, there is a lot of growth in the spa field which is the precursor to the esthetics field. There is also a lot of the support structure in place to help you grow a successful esthetics business. But even more importantly, with the aging of the Baby Boomers, the need for well trained estheticians could grow more rapidly than anticipated. But more on this later. Where is the growth in the esthetics industry? Two key things come to mind: 1. Skin is the single largest organ of the body and it directly influences our immune system, endocrine system, self esteem and general health 2. The baby boomers want to stay young for as long as possible and are willing to pay to look their best These two powerful factors are going to cause growth in the industry well into the future. The following information from the International Spa Association from 2009 is helpful (Year End) 2008 (Year End) Percent Change Revenue $10.9 billion $12.8 billion 17.8% Spa Visits 138 million 160 million 15.8% Locations 17,900 21, % 2008 (June) 2009 (March) Percent Change Total Employees 303, , % Full-Time 143, , % Part-Time 112, , % Contract 48,500 70, % Square Footage 60 million square 81 million square 34.7%

2 feet feet Key findings from the 2009 Spa Industry Update include: Overall industry revenues continued to grow at an annual rate of 17.8 percent, while at a per spa level revenue experienced a slight decline. Day spas continue to dominate the industry at 79 percent of total spas. ISPA members average more revenue, visits, employees and space by significant margins. When looking at spas by type, the number of medical spas continues to grow at the fastest rate. Since July 2007, the number of medical spas has grown by 85 percent, further proof that this spa type is still a notable part of the industry. The number of locations in the U.S. has experienced a five year average growth of 17 percent. Spas and day spas offer the most opportunity for new estheticians. As the spa industry has grown, spas are looking for ways to differentiate themselves by offering more exotic services. This has created a great deal of growth in the demand for highly trained estheticians with advanced skills in body services. The medical spa is the newest and fastest growing segment of the industry. As doctors find hospitals and private practices become less viable under the new health care laws, they are expanding into medical spas where they can make significant income and grow a business for the future. This is creating a need for estheticians who are able to work within the medical field in pre and post operative environments as well as with the after affects of more invasive procedures. Eventually, many estheticians go into private practice. Being self employed is where you make the most money per session. The key component is the ability to attract and retain clients. If you give great sessions and are a good communicator, your practice should grow steadily from referrals. When an esthetician has 20 or 30 reliable clients who get skin care sessions between 1 and 4 times a month, they very quickly have a full practice. (A full practice is often about 15 to 20 sessions a week.) If the esthetician practices from their home or a small office, the rewards of a private practice can be substantial. Estheticians also receive significant income from product sales. Teaching clients how to maintain good skin care between appointments and selling the products to support better skin health is an important part of the business that can account for up to 20% of income. There is also a lot of demand for estheticians who are product representatives and trainers for product companies. What other trends are developing? As stated before, the fastest growing segment of the industry is the medical spa industry. We live in a media driven society that is hyper sensitive to appearance. This is driving the level of cosmetic surgery, Botox, laser and other services. However, there are others who are looking for more natural or holistic approaches that are less invasive.

3 With the new micro technology, imaging and treatment technology is advancing quickly. The evolution of products has also accelerated as a result of genetic knowledge. The opportunity for working with product companies as well as in spas, clinics and medical settings are all being driven by these developments. However, the single biggest factor is the aging of the Baby Boomers. This group wants to stay youthful as long as possible and at the same time their rate of exposure to the sun and elements is significantly higher than past generations. This will create very high demand for services will into the future. How has the industry been affected by the recession? The recession had a pronounced affect on the destination spa industry more than the local or day spa industry. In fact, some of the stronger local clinics or day spas actually saw some benefit from the recession. As people cut back on expensive vacations they often substituted staycations with trips to the local day spa. During difficult times it also appears that many people look for ways to help them feel better. And for those who were interviewing for new positions or looking to advance in existing positions, appearance remained a very high priority. The estheticians who benefited the most were those with top level skills. Many of the less developed or skilled therapists found it more difficult to take advantage of this shift. When money is tight, people are willing to pay for high quality but not for mediocre quality. What are the important changes in the future of esthetics? With the pending changes in the healthcare system and an aging population, there are possible changes that we can t even imagine on the horizon. Some predictions are for reduced access to healthcare services as well as increased costs. A Doctor I know recently attended an industry meeting on changes in reimbursement policies under the new healthcare reform and her observations were astounding. They are being told that there will be three tiers to the hospitals with the bottom tier being where the people that have the national coverage can go, the second tier having about a $5000 deductible and the third tier having about a $10,000 deductible or higher. Doctors will receive significantly lower compensation depending on the tier where they work so the lowest tier will have the fewest good doctors as a result and yet they will often have the highest case loads. It s anticipated this will lead to significant overcrowding and lengthy waits for services or procedures. Funding for specialists will be greatly reduced or eliminated so people with heart, endocrine and other problems will be left to get whatever treatment they can afford out of pocket.

4 With education for doctors running in the $500,000 range, the best and the brightest will go into other industries where they can make better money without the restricted access rules that will limit their pay in the future. There was much more about how their reimbursements are being cut to levels that will eliminate the small general practitioners and leave mostly only large clinics, but the bottom line is still the same: People will need to do everything they can to avoid getting sick. This could create significant demand for professional estheticians, particularly estheticians with experience. Skin is the single largest organ of the body and a major contributor to overall health. As people learn that healthy skin contributes to better health overall, the demand for experience estheticians should grow. Prevention is very important when the cure may be unavailable. The aging Baby Boomers are also going to put tremendous pressure on the healthcare industry. Generally speaking this demographic is already very open to alternative health and wellness and will continue to look for the best estheticians they can find. For established therapists there will be tremendous opportunities to build successful practices or businesses or work in top spas, clinics and other treatment facilities. Have there been changes in esthetics education? Esthetics education has been going through important changes over the past 20 years. After many years of teaching esthetics as an extension of cosmetology, there is a new wave of schools that are focusing on skin health and spa services. An important addition to the field has been the training developed by PRI Educational Development Company with the concept of Human Haptics, the study of how consciousness and energy influences touch. With a focus on health and wellness in skin care using natural and holistic products, graduates learn a wide range of skills including aromatherapy, foot and hand reflexology and how to use all natural products. Additionally, Pivot Point International, the world renowned developer of top level cosmetology training, has developed a scientific and well documented structured approach to the art and science of skin care that serves as a wonderful foundation. The quality of the teaching materials makes it much easier to learn the business of esthetics as well as the fundamental techniques. In both cases, the quality of esthetics training has gone beyond the application of techniques for making the skin look pretty to the deeper understanding of how to make it healthy and radiant. But more importantly the education also provides the understanding of how to succeed in the spa and skin care industry.

5 What support is there for estheticians? One of the most important levels of support comes from the Associated Skin Care Professionals (ASCP) that provides insurance for estheticians and spas. The company is an extension of the ABMP (Associated Bodywork and Esthetics Professionals). The membership not only offers relatively inexpensive insurance, it also provides seminars, conferences, training support materials and many other benefits for members. There are other regional and national organizations like the ISPA (International SPA Association) which is primarily an education and promotional group as well as national and regional associations to promote communication and education of spa professionals. Often these associations are focused on promoting various products or technologies. The ASCP is the most active on legislative and regulatory issues. One area that is often overlooked for support is that the school you graduate from should have a level of post graduate support. At the very least the school should provide some sort of a job placement facility, referral network or website and be there to support you with continuing education, support and service after you graduate. Many of the national for profit chains, community colleges and small start up schools often lack this support. Another very important part of support comes in the form of continuing education. Constant education is at the heart of growing the industry. An important part of retaining clients is providing them with continually improving sessions that helps them to grow. The evolution of your work is critical to keeping existing clients and attracting new ones through referrals. Continuing education is offered at most good schools as well as from companies that only provide continuing education. Some schools even offer discounts to graduates as a way to help them succeed. Why is this the best time to get started? Unlike in the past when people had to carve out a place in an industry that had a lot of obstacles, there is more recognition, support and acceptance than ever before. With the growth of the spa industry there are many opportunities to work in the field when you graduate. When you add the reality of an aging population that may have an increasingly difficult time getting access to healthcare, the market should continue to grow. The combined affect is that there is a lot of growth potential and a lot of support for growth. Anyone who enters the field now has a great opportunity to be in a strong position as the demand hits the steep part of the growth curve. This allows for having a strong private practice or the potential for building a large and successful spa, esthetics or healing clinic, depending on your interests. As the economy continues to get stronger and people continue to age, the need for good skin care should continue to grow well into the future.

6 So how do I get started? That s the easy part. Simply contact a career adviser at a school where you want to attend. If you would like to attend Spa Tech Institute you can call to set up a preliminary interview to determine if this is the right thing for you.

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