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Jul, 12 2011

Time for some sp(a)ectacular returns

With global spa brands making moolah from the booming Indian wellness industry, the home-grown brands, too, certainly don't want to miss out on the action. Tweaking diverse strategies, brands are cashing in on the spa biz in no time!

WITH international spa brands making swift expansion moves and home-grown brands set to radiate masses, the Indian wellness sector is really going gung ho!

A Nielson survey estimates a total of 2.5 million affluent households across 35 Indian cities with three in 10 individuals visiting a spa or a parlour every month- a figure with sufficient appeal for entrepreneurs to invest heavily in the rising spa business.

Catching on the action and market size of the spa industry, several global spa chains like L'Occitane, Aura Thai Spa, Body Spa International, Serena Spa are now eager for setting base across the length and breadth of the country peddling their seasoned luxury experience.

Jesper Hougaard, MD, Serena Spa, says, “Serena Spa has been operating spas in India for the past seven years and we have seen a steady growth in our business. Even though we have had our share of not so successful ventures, we have now built a solid expertise in surveying the market in a given location and then open locations with a well surveyed plan of action to ensure maximum performance.” Adding more to this, Darpan Sanghvi, Master Franchisee, L'Occitane Spa, says, “It's been quite an incredible journey for L'Occitane in India. We started with our first spa in 2010 that received a huge accolade. We also made the customers enjoy and relate to the standards that L'Occitane stands for. Also, we have managed to grow. It has been quite an exciting journey for us in India.”

Success mantra

The Indian beauty and spa market worth Rs 4,100 crore is expected to touch Rs 19,300 crore by 2014. Experts feel that the spa industry is still in its nascent stage, yet global as well as home-grown brands have put the estimates over 2,000 spas across three broad formats- day spas, spas within hotels and destination resorts. Brands, particularly global spa chains, confess the prospect of rich returns that the Indian wellness segment provides. Kashiff Khan, Director, Aura Thai Spa emphasises, “The spa industry is rapidly growing in India. The journey has been rather smooth only because we have a great business idea, which has worked. Our franchise model is planned to provide benefit to both franchiser and franchisee.” While Anurag Kedia, Project Director of Indian brand Four Fountain Spa, cites his brand's success through the rapid expansion it has been making ever since its inception. Affirms Kedia, “We decided to grow at a slow pace in the initial phase, because we wanted to ensure that the business model is completely fine-tuned and our back up was in place. We are launching in Bangalore in August and subsequently in Delhi, Chennai, Hyderabad, Kolkata, Ahmedabad, Surat and Baroda. We plan to launch 20 spas in this financial year. Our vision is to set up 300 spas over the next four years across the country.”

Diversifying dividends

Amidst the repository of spa chains, a trend that has emerged in recent times is the process where spas are broadening their horizons by expanding into several other emerging aspects of the wellness industry. This includes high-end salons, premium nail bars, and foot spas to name a few. Highlighting this, Hougaard avers on a serious note, “We believe the future of spa business in India will be focused on total wellness rather than pampering. Nail bars, beauty parlours will continue to exist in the market and there is no doubt that there will be upgraded versions of what we see today. We also see future in spas integrated with medical services, such as spas in hospitals where the spa treatments can be used for healing purpose.” In a similar note, Miriam Mathew, President(Spa Division), Sohum Spa, has accepted this burgeoning trend leading to profit pockets. “We have already started the diversification process. We have opened a salon in Juhu Day Spa. We have a salon at our resort spa in Agra. Diversification is going to be a big way in the Indian wellness industry. Even academies can be considered as a part of this diversification.”

Kedia has plans to expand the Four Fountain Spa portfolio by evaluating opportunities in the spa products segment.

With international brands making an entry into the blooming Indian wellness industry, it becomes pertinent to tweak in localisation given the diversity that exists in India. Chips in Hougaard, “We believe it is necessary to customise as per local demands, whether in India or else in the world. The Serena Spa concept is very much a contemporary Indian spa concept with elements of Ayurveda and yoga integrated into our spa menu. It is also necessary to customise your organisation, training and marketing to the local market conditions.” Sanghvi elaborates further, “Though L'Occitane provides a mediterranean experience, but we always ensured that we put in a lot of specific Indian characteristics, which I feel is critical for growth. This means incorporating yoga, Ayurveda, Indian foods and flowers. We have done that pretty well.”

Chasing the challenges

Though international brands have splendid expansion strategies, given the high real estate prices, expensive procedures, products and therapies raises the doubt whether brands can stay afloat securely and continue with their profit trail. Besides, the sparse entry of global spa brands naturally questions the way the Indian wellness industry is heading towards. Kashiff Khan feels, “The only reason for this can be that international spa brands are under the perception that Indians are not ready for body spa services. This, in fact, is true for some cities in India.” Hougaard points out, “Business environment in India is very different from that of the US or Europe. I believe this is a major deterrent to international players. Also, the fact that a spa treatment in a top spa in India is sold for about 1/3rd of an average spa treatment in the US, while at the same time, real estate cost is far more in India. Also, other concerns include rapidly increasing cost of spa personnel, lack of licensing and formal training. It takes a lot of time and effort to get established in India.” Sanghvi adds, “One must be very clear about a good, strong and focussed Indian partner to be successful. The second challenge is real estate and other than these operational challenges and getting the right kind of talent is paramount for a great spa with international standards.”

Adaptability, the key word

While the wellness industry is being soaked with both global as well as home-grown spas, the Indian spa junkie is making most out from the branded, premium and holistic experiences offered. Yet, Indian wellness experts feel it is an advantage per se for global brands that come with international standards but are unable to reach the Indian masses that includes the sizeable chunk of spa goers. Quips Kedia, “International spa brands come with deep pockets. And hence are able to offer good ambience and infrastructure. While the Indian brands have a better grip on the local market, they can engage more closely with their customers to build a sustainable relationship.” Mathew opines, “International spa brands are very professional, but they should accommodate as per diverse Indian culture, as our client care is different.”

However, Hougaard points out the areas where Indian spa brands need to work out. “There are many Indian spas that offer excellent services for the first couple of months, but slowly the quality declines. It is not due to lack of tools for the industry. NABH has accreditation standards for spas and recently certificate training programmes for spa therapists have also been established by the government.” While Khan believes that international spa brands need to add a variety of services to their menu so as to offer varied choices to the end customer.”

Barring a few differences, both global as well lndian spa brands feel it is franchising that has made their success a secured process in this nascent and unorganised Indian wellness industry. Both Kedia and Mathew have applauded the franchise route and experts believe Indian spa brands have been successfully offering about 80 per cent return on investment (ROI) to their franchisees in a short time. While Hougaard sums it up, “I believe that the franchise concept is a perfect match for the Indian entrepreneurial spirit. It's a tested and tried business concept combined with the energy and engagement of an entrepreneur.”

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