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Estée Lauder CEO Leonard Lauder called it the “lipstick effect” – the increased demand for small luxury items in times of economic uncertainty. The assumption behind this phenomenon is that beauty and self-care rituals provide a form of psychological comfort when people are under increased stress.
McKinsey even reported a surge in demand for skincare and wellness products during the pandemic. With fears of an economic downturn looming, the question is whether the same could be true for cheaper alternatives to surgical procedures, such as tummy tucks.
LaserAway, one of the most recognized dermatology brands in the U.S., now has over 120 locations and reports that the industry in America is growing at over 20% annually. CEO Scott Heckmann says that despite the recession, LaserAway experienced “strong years” in 2008 and 2020. He attributed this in part to patients moving away from more expensive providers such as plastic surgeons and dermatologists.
As CMO of Vagaro, a software provider for the wellness industry, I've seen it firsthand: So many people are foregoing surgical procedures in favor of noninvasive methods like body contouring that are now possible thanks to advances in beauty technology. They're simply more accessible and less overwhelming. I want to dive deeper into LaserAway's growth as a barometer of the industry because it has revealed three lessons that can help other beauty brands recession-proof themselves in an unpredictable economic climate.
Related: 7 Strategies to Recession-Proof Your Business in 2024 and Beyond
1. A changing market is a good market
When clients trust a clinic's doctors with something as sensitive as their bodies and faces, it's critical for credibility that they're very transparent about what the treatment entails. LaserAway's social media features videos with real people, real nurses, real treatments and basic storylines – at the core, these treatments are about helping people regain their confidence.
Giving people a realistic picture of likely outcomes also makes them more likely to be satisfied with the treatment. Internal data from our marketplace shows a growing demand for these non-invasive aesthetic treatments. Over the past five years, we've seen an average annual growth of 24% in new medspa businesses on our platform.
Technology has been a key factor. While plastic surgeons have a very limited audience and charge high prices, medspa clinics offer countless services that open the door to a large market – which increasingly includes men. In fact, skincare accounts for 45.6% of the global men's grooming market (worth $85.2 billion in 2023) as old male stereotypes give way to self-care among younger generations.
Related: 5 Recession-Proof Businesses to Start in a Turbulent Economy
2. Diversification creates resilience
In many industries, brands have to be niche with their products or services. However, medspa chains like LaserAway, Sculpt MD and Sono Bello can resell a range of services while remaining proficient in each area. This diversification is really important because it brings repeat customers and more sales. Once people have body contouring, they are likely to come back. The same goes for Botox.
On our platform, we found that medspa businesses offer an average of 47 services. A balance of higher-value and lower-value offerings like this is a great strategy for maintaining a stable income even during economic fluctuations, as people view treatments as an ongoing investment in their well-being.
Technology with integrated payment options is also a key factor in enabling people to afford all types of treatments. Many consumers are opting for non-invasive procedures because they provide the same results as surgery without the long recovery time.
However, the “pay later” option can make these treatments financially viable. However, aggressive selling is not necessary to attract people because consumers today know what they want and expect better than ever before.
3. The power of recommendations
All beauty companies need to be aware that the traditional sales model has evolved after initially engaging customers through their various digital and marketing channels. The pandemic was the big boost for digital influence, but people now want to be influenced by real-life case studies rather than feeling like they are being 'sold' something. Hence the role of influencers.
Today, we can assume that people who have searched for a product or service online and done their own research are already warm-hearted. Personally, I am not willing to speak to a salesperson until I am convinced of the authority and integrity of a company. The demand for more authenticity only reinforces the idea that recommendations should be the most important selling point in the beauty and wellness sector.
It will be interesting to see how companies adapt to this new expectation of how consumers want to be influenced by sales, especially since they are already doing so much right, such as their onboarding process where patients select their treatment, their target areas, the number of treatments they have already received and their age. This type of data can form the basis for the appropriate treatment and can be used to anticipate consumer trends and continue to build credibility.
Related: How small businesses can survive and thrive in a recession
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