Pampering Yourself Is Newly Back in Fashion

If American consumers seem to be carrying less stress in their shoulders, it could be because they're buying more back rubs and beauty treatments. 

Sales of personal-care services, including at spas, salons and weight-loss clubs, rose nearly 5% in 2011 from a year earlier, according to data from Sageworks, a financial-information company. And sales in the sector were more profitable, generating net profit margins of 9% last year, more than double the rate before and during the 2008 recession, Sageworks said. 

"Consumers appear to be going to the salon more often and spending more when they do," says Sageworks analyst Greg Mulholland. "They're more comfortable spending money on themselves."

So-called prestige beauty products sold primarily by department stores saw an 11% spike to $9.5 billion last year, according to a study released last month by The NPD Group, a market-research firm. All the top brands had sales exceeding prerecession levels, it said.

Although many consumers remain antsy about spending, "in the 15 years that NPD has been tracking the prestige-beauty industry, we have never seen growth like this," says Karen Grant, vice president at NPD Group. 

High-end products account for about a third of the total $33 billion market for cosmetics and beauty products, according to the U.S. Commerce Department.

"During the recession women spent more on their kids but not on themselves," says independent retail analyst Jeff Green.

"Strangely, they do appear to be getting more massages and weekly manicures," he says.

Massage Envy, a salon with 772 outlets across the country, says it added 134 franchises to its chain from January to April, a 60% jump on the 84 outlets added during 2011. "We had a record-setting number of franchise agreements in April alone," says Lori Merrall, the company's national director of franchise sales. Three-quarters of the new stores were opened by existing franchises, she says, reflecting an increase in demand.

Some experts wonder whether such strong discretionary spending can last.

Robert Brusca, chief economist at Fact & Opinion Economics, says a personal consumption growth rate of 3% or more is unlikely to be sustainable throughout 2012, which doesn't bode well for retail sales.

Still, he says: "People typically spend for two reasons. They're either very confident or, if they get into debt, very desperate. This is a sign of the consumer becoming more confident."

(Source: The Wall Street Journal, 05/03/12)