It All Starts in the Treatment Room
Managing your back bar inventory begins in the treatment rooms, one of the most important parts of the spa. In addition to the actual treatment and happiness of the client, this is where the seeds of the final sale—and repeat visits, are planted. Soft music, warm towels, and a caring service provider are all part of the experience. But so is the product you use, and how knowledgeable the treatment provider is about them.
The efficacy and your client’s enjoyment of the treatment are the starting point for offering add-on sales– a vital part of spa income. Retail sales follow on home-care recommendations from the treatment provider, and a fabulous experience sets up pre-booking of subsequent visits.
Choosing your Products
When you decide what products to offer, think about how they will support your brand and mission. If natural and organic is important to you, then select products that are natural and organic. If you want to have seasonal treatments, consider how you can add products to your primary offering. Most importantly, you want products that truly offer your customers the end result you envision. With so many great products on the market, you don’t have to settle. You can even create your own line of products for very little investment and effort.
We recommend using opaque bottles for your back bar. Clear glass bottles, while sexy, will stop looking great as the product is used. A half-empty bottle of lotion isn’t as fabulous as frosted glass, amber, cobalt or green plastic, or even bamboo jars that always looks clean and neat.
Managing your Back Bar Inventory
Because treatment rooms are secluded and hands-off to management during a spa service, this is the space that is the most difficult to control, while at the same time, is where your clients really experience your services. Tightening up management strategies and operational methodologies will improve quality, cut costs, and improve employee morale. For busy spa and salon owners/managers, training on treatment protocol may be all you think you can do. Unfortunately, that isn’t enough when it comes to managing inventory used in the treatment rooms. That said, some simple steps may make a big difference in lowering costs without scrimping on the customer experience.
How Much Product Do You Need for an Effective Treatment?
Experience shows that when employees are offered an unlimited amount of product for back bar use, an unlimited amount of product will be wasted. A sad but true spa reality, and truly of life. I worked at one spa where we premeasured trays of back-bar for specific services, such as facials, body treatments, and massages. This was surprising for us treatment providers. At first, we thought there wouldn’t be enough product for use, but over a very short time, we came to realize we had been overusing product, and it made our facials harder for us. It also helped us not have our back bar “get legs” and walk out, after a client left the room with the product in their bags rather than willing to buy from our retail section.
You’ll find a Sample Workbook for Pricing Backbar here to demonstrate how you can track and manage the expense and inventory needed for each treatment. With a worksheet like this, you can test out your assumptions in real time and modify as needed until you come up with the exact inventory necessary for each treatment.
When do you bring in new products?
I must admit one of the hardest things to predict is when to bring in new products– and the size of the order. In addition to leveraging your knowledge of trends, and working with your reps, try surveying your clients to see what they want to buy from you. I found if I brought in something trendy or seasonal– especially if I could provide proper training on new products to the team, the new products would sell just as well, if not better, than my regular inventory. Train your team on how to use the new products, and better yet, incorporate them into seasonal treatments. You’ll see a boost in retail sales from your new products.
Embrace your Inventory
Inventory for your retail shelves and the treatments you provide are likely your top two expenses. So managing this area of your business is critical for your financial health. If you’re like many spa and salon owners, you dread taking inventory. But if you have systems in place, it’s really quite easy. And managing your inventory is super important because that’s where your money is. Here are some recommendations from industry experts, as well as methods I’ve used to manage inventory in spas and salons I’ve managed.
- Designate one person in charge of inventory.
Centralizing your inventory process and putting accountability in the hands of one person, is the first step to gaining control of your inventory. Choose someone detail oriented and who can understand the financial numbers of your business, can read reports, and can stay on budget. It might be you or your front desk manager or a treatment provider. But choose and train and monitor. - Order on a budget
Determine how much money you want in inventory based on throughput and turnover. Many spa and salon managers/owners order based on a visual inspection of the retail shelves. To create an inventory ordering budget, you’ll need to understand the turnover rate of your products in 60 or 90 days. Knowing how many units you sell in a 60 or 90-day period will help you determine the right amount of product to buy at any given time. You’ll keep your shelves are full without tying up too much cash. With a 10% net profit margin, every dollar you spend on inventory requires $10 in sales to get it back. 5% margin? That’ll take $20 to get $1 to spend on inventory. - Conduct a Physical Inventory
Not doing a full physical inventory every quarter is a common mistake in inventory management of your back bar and retail space. It’s not the most fun work you’ll ever do, but adding this step to your procedures will help you manage to the buying trends in your spa. Knowing something is selling faster or slower than last quarter will change your buying behavior. Also, a physical inventory will help you see product waste and theft. That will show in your inventory counts, as will whether not people are following the inventory controls you have in place. Use weekly inventory cycle counts to stay on track and prevent small issues from becoming expensive problems. - Keep it Simple
I found using an excel spreadsheet to track sales and usage was super simple. That way I had a history of each product to help me to know how much to re-order for the two month supply that my spa kept on hand. I found that three to four months was too much money out of pocket and two months guaranteed I would not run out of the product.
The Ugly Questions: Is it Waste or Theft?
Accusing someone of theft– or even considering doing so is ugly. Unfortunately, it is something you need to be on alert for in your spa/salon. It can be difficult to differentiate between outright theft and wastage. Conducting regular inventory counts and measuring them against predicted usage will help. It could be that your stylists or therapists are simply using too much of a particular product when delivering a service. Or they could be filling small bottles and sending customers home with a short supply. Or … they could be taking your inventory out in their bags at the end of a day.
Short of searching everyone’s bags and training Close Circuit TV cameras everywhere, experts agree that the best way to identify theft or wastage is to implement a control system that projects product usage. Here’s how it works:
- Know what and how you’ve purchased. Retail size or back bar size? How many? When?
- Identify how much of each product is used for each service. For example, a hair wash might require two pumps of shampoo and two pumps of conditioner.
- If you don’t have a way to track inventory in your computer system, don’t worry. What I did was when I opened up a bottle for the back bar I would write the date on the bottle. When the bottle was empty, I compared to how many services I sold over the period that bottle was in use. This gave me waste and theft info. You can track this in your spreadsheet.
- Once a month you conduct a physical audit of your non-retail products that are in the back bar, in the treatment rooms and your inventory closet.
- Compare the amount of product used with what should have been used (e.g. 200 pumps based on 100 shampoo services delivered).
- Calculate the difference between the actual product used with the projected usage. The difference will help you identify areas of concern. Gross discrepancies typically point to theft. Small discrepancies usually alert you that wastage might be an issue – i.e. a hair stylist is using three pumps of shampoo for each hair wash, rather than two pumps. That’s easily fixed with training.
As you can see tracking pilferage for back bar inventory is more effort than tracking for retail space alone.
Summing it Up
Like anything worthwhile, investing time in retail and back bar inventory management is the only way to stay on top of your costs and your cash flow. Conduct regular physical inventory counts, know how much inventory you need in house at any given time, and create special training programs for new and trendy products. With a little effort and control techniques, you can get your inventory working for you.
Let us know if you have any questions or if you’ve got inventory management tips for the rest of us. We’d love to know how you are managing your back bar.
Happy Inventory Counting,
Laura
Additional Reading
There are numerous books on inventory management from dry textbooks to hands-on-workbooks. You can also find a lot of good, industry-specific information online by searching for inventory management for spas and salons. You’ll find related topics on our blog, too.
Six Ways to Make Money in your Business
Selling Branded Skin Care Products in your Spa or Salon
Six Activities to Define your Niche and Plan your Product Line
Zenoti White Paper: An Easier Method for Managing Inventory (we do not endorse or recommend software. We selected this paper because it is an excellent resource on inventory methodology.)
Effectively Manage your Retail inventory – Skin, Inc. (http://www.skininc.com/spabusiness/management/retail/Effectively-Manage-Your-Retail-Inventory-200655681.html) Note: Link is not live as we are prohibited from linking to sites with drug or medical claims.
