How CITISPA has grown in the beauty industry
Gerald Teo, CEO of CITISPA, a chain of spas in Singapore, joined the family business in 2002. His initial agenda was to modernise the business and build brand equity. The family-owned business had catered almost exclusively to Chinese-speaking housewives in the heartland areas, where dense housing estates were located. The success of the company had been predicated on a strategy that focused on women, who considered indulgent beauty treatments weekly necessities.
Building on the company’s initial success, Teo oversaw a rebranding exercise in 2003 to broaden the company’s appeal beyond the Chinese-speaking market. CITISPA would be the manifestation of the ‘spa in a city’ concept developed over the previous few years. While CITISPA owned the properties for its first five outlets, Teo saw an opportunity to embark on an aggressive expansion plan into urban and suburban regions. He began searching for rental shops near the central business district to accommodate busy executives. He also maximised the chain’s accessibility by locating new stores in shopping centres.
CITISPA advertised aggressively through every available media channel and ran many promotional events. It was especially successful with its roadshows conducted in the various malls. At each roadshow, potential customers could experience trial massages, test various products and browse information on the latest technology salons used in skincare treatments.
CITISPA had a predominant business model of selling prepaid packages for beauty treatments. Teo said: “In the 2000s, business was booming. Our spas were over 90 percent full on most days. We offered various prepaid packages and these promotions proved to be very popular. These prepayments made CITISPA a cash-rich business. When we started on the expansion plan, we literally had zero debt on the books as this was due to the prudent policies established by the founder.”
Teo then set a long-term objective for CITISPA to be the premier spa and beauty provider in Asia. He believed that while any beauty regime began with adequate rest, “life can be stressful". "Most people do not get enough rest, which is the most important ingredient for healthy skin. When our customers come to our spa, we want to ensure that they leave feeling relaxed.”
Teo strengthened the CITISPA brand further with various marketing initiatives including running a 30-minute prime time beauty segment on Channel 8, a free-to-air Chinese television channel, and increased brand recognition through sponsorship of the high profile Miss Singapore Universe pageant. CITISPA offered services such as massage treatments and beauty treatments that included facials and slimming services. Each of its branches is outfitted with high end spa facilities such as cold and hot plunge pools, jacuzzis, steam showers, and saunas that customers can enjoy at their leisure. It also entered into exclusive partnerships with leading global skincare firms like LPG and Algologie from France and Mesoestetic from Spain to devise exclusive holistic wellness rituals.
Challenges
In 2008, the local industry underwent a shakeup following the global financial crisis. Many spas, including several established ones, were forced to close due to the economic downturn. Many customers were left holding worthless packages, which undermined CITISPA’s business model. Teo and his team had to reassure customers that the company’s balance sheet was strong, “We have a 35-year track record of fulfilling our obligations. Besides, most of our stores were wholly-owned, there was no way we could run off.”
CITISPA also faced manpower challenges with increases in foreign worker levies and a decrease in consumer spending. However, people were willing to continue spending on beauty products and services while cutting down on other expenses in this challenging economic environment. In the end, CITISPA benefited from the situation and increased its market share. CITISPA’s perseverance and commitment to excellence was recognised by the ASME (the Association of Small and Medium Enterprises) Singapore and the Chinese newspaper Lian He Zao Bao, awarding CITISPA the accolade of Singapore Most Promising Brand Award in 2011.
CITISPA had to constantly improve its product and service offering as the Singapore market began to mature. Consumers were more product savvy and performed their own research on the different types of treatments available. Still, Teo believed that in-house treatments were more effective than the self-application of products. Due to the ever-changing business environment, Teo started to consolidate the business and decelerate the opening of new branches. Instead, he embarked on a Customer-Centric Initiative in 2010 to improve service standards and service delivery to customers.
The employee training regime emphasised having the necessary product knowledge and being helpful and polite to customers. Teo explained the need to form good relationships: “We want to listen to our female customers and discover what their beauty needs are. Fundamentally, we believe that every woman is beautiful. We hope to instil confidence in our clients by accentuating their beauty. In general, the best advice I can give to customers is to stay hydrated by drink more water and to reduce exposure to direct sunlight.”
With good service underpinning the business, Teo invested in technologically advanced equipment to ensure each branch provided a similarly first-rate customer experience. He also decided to subdivide the market into three segments. For the mass market, CITISPA aimed to provide a comprehensive range of value for money products and treatments. Teo noticed many customers demanding better quality treatments and products: “Our local customers have grown up with us and have higher disposable incomes. They are always asking about the latest environmentally friendly products or feedback on the newest treatments.”
He introduced a masstige (mass prestige) range of luxury products for the masses that commanded a premium over conventional products but were priced well below super-premium ones. Teo elaborated on the shift in consumer demands: “We see less distinction between the mass and premium segments of the market. We have adjusted our procurement processes to search for more innovative products or services.” He imported state-of-the-art FDA approved treatments and technologies to target niche, high margin segments.
In 2012, Teo established DERMACARE Aesthetics Medical, which offered a range of aesthetic, slimming and luxury facial treatments. It is a clinic where sophisticated non-invasive medical procedures are performed by licensed medical practitioners. It provides high quality, non-invasive cosmetic dermatology procedures under a doctor’s supervision. One of its signature treatments is the Liposonix Custom Contouring, which uses a high intensity, focused ultrasound system that targets unwanted subcutaneous adipose tissue and assists in weight loss.
In 2013, he introduced SPA CLUB At Beach Road, an exclusive spa with premium treatments. Personal consultants are available to customise treatment programmes to suit individual customer needs. The spa uses ILA-spa products, a range that uses 100 percent organic products including rare exotic ingredients such as Himalayan salt and rosehip seed oil for their skin healing benefits.
While many products can be found online, good service staff help to provide a personalised purchasing experience. The in-store ambience helps to give clients a more unique product experience. Teo gave an example: “We ask about the needs of our customers and provide tailored solutions. For example, a client wanted to buy a serum to cover up her freckles. After a brief conversation, I realised the root of her problem was exposure to the sun and recommended a good sun screen instead.”
Growth Opportunity
The Singapore market is saturated; consumers are more aware of their options and willing to experiment with and compare different products and services. Rapid urbanisation and an emerging middle class mean the rest of ASEAN has more room for growth. Increased Internet penetration has also levelled the playing field for smaller companies. However, CITISPA will continue with its personalised approach and use its e-commerce platform to complement its in-store experience. Having a reliable brand is essential in shaping consumer choices. Consumers are more willing to spend on branded beauty products for health reasons and want to avoid cosmetics that use toxic ingredients.
Teo thinks the region has big potential. “I think Malaysia is poised to grow but you have to be on the ground to control your operations," he mused. "I would prefer to expand overseas by using a franchise model. Many of these markets like Myanmar, Vietnam and Cambodia are like Singapore 20 years ago. The growth trajectory will be like Singapore’s.”
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Last updated on 27 Oct 2017 .
