Emerging markets in the spa industry: India

 

This week, we will resume the topic of the emerging markets in Asia and take a closer look at the strategies for growth and development in the Indian spa industry. Earlier this month, the Global Spa and Wellness Summit was held in New Delhi, a sign that clearly points out the potential this market promises to the region.

In a recent article in spabusiness.com, Liz Terry reviewed the main opportunities and challenges of the Indian spa market, based on the report by PricewaterhouseCoopers on the Indian wellness economy, Imperatives for growth: the wellness industry.

According to the report, the wellness industry in India experienced an 18% growth in 2012 compared to the previous year, despite the general slowdown in economic growth in the country. Consumption of wellness-related products and services kept stable. However, the forecasts point to the need for businesses in this sector to tune up their operating models and carefully analyse opportunities in the market in order to guarantee sustained growth and profitability.

 

The main demands in India’s market

Indian consumers tend to favour areas related with health and beauty.  More than half of all sales in the wellness field have been registered in alternative therapies, hair and skin care, and nutrition. Furthermore, in 2012 the profit margin was significantly higher for products than for services, which means that there are niche opportunities for businesses that represent and distribute well-known brands.

One of the sectors with the biggest growth is the fitness industry and other services related to staying in shape. Last year these industries experienced a growth rate of 18-22%. This can be a clear advantage for spa businesses that base their offering in alternative therapies and fitness-related services.

 

Differences and similarities between the two great Asian markets

The trends in the Chinese and Indian markets point to two very distinct roads.  While in India consumers want to stay in shape and are focused on fitness and eating well, a growing Chinese sector with high spending power is looking for luxury services and beauty-related treatments.

On the other hand, it is possible to find some similarities between both markets. China and India share powerful ancient healing systems that are deeply rooted in their cultures. China’s Traditional Chinese Medicine and India’s Ayurveda are widely known and appreciated locally and on a global level.

Nevertheless, the two great Asian giants seem to be leaning towards more western spa models that offer well-known international products and brands – a key factor for the businesses that want to tap into these markets.

Most importantly, both countries are experiencing an emerging middle class with higher disposable incomes and growing spending power that is interested in the spa, beauty and wellness industries.

 

Challenges ahead

Although both the Chinese and the Indian spa industries provide a promising outlook for the global spa industry, each of these markets faces a number of challenges that they will need to overcome in order to successfully embrace the growth opportunities that their increasing middle and upper middle classes are offering.

 

The challenges the Indian spa industry faces include:

  • The lack of qualified staff at the required level, which substantially increases wage claims for spa professionals who are already trained.
  • The need to design strategies that increase the profit margins of a market with a very high volume but a lower return.
  • The need to implement certification systems and quality standards within the Indian spa industry in order to strengthen and raise its international focus

 

China’s challenges are at a different level. They include:

  • The complexity and costs implied in the introduction of international product brands into the Chinese market.
  • The growing demand for highly qualified therapists who can speak the language fluently and satisfy the expectations of the Chinese VIP clients.
  • The difficulty in finding and keeping qualified talent, considering the rapid growth in the market and the lack of sufficient supply of trained and qualified spa professionals to meet market needs.

 

Without a doubt, these two Asian markets offer interesting business and growth opportunities for the spa industry. Those spas that are able to design the right market strategy, ensure quality training and education, robust operational systems and quality of offering, will have greater chances to succeed in the Indian and Chinese spa industries. For Asia’s two giants, the focus on fitness, healthy eating, alternative therapies, luxury brands and products and results-orientated beauty treatments will be key.

By Sonal

Sonal Uberoi creates and delivers smarter spas around the world. Spas and hotel groups hire Sonal to help them design, set up and manage their wellness businesses. Her finance background and worldwide operations experience in the spa, wellness and hospitality sectors make Sonal the go-to expert for business optimisation solutions. Connect with Sonal on LinkedIn www.linkedin.com/in/sonaluberoi.

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