CC Exclusive Analysis
Medical spas offer services that are discretionary to patients, meaning that their basic needs can be met without ever entering a medical spa. This means that medical spa treatments are often grouped into a discretionary spending bucket with other choices that don’t meet basic needs, aka fun, entertainment, beauty, LASIK, gym membership, subscription food services, travel … this list goes on and on.
Although discretionary, the importance of medical spa services to certain consumers can’t be overlooked, and, in fact, was proven after the pandemic when forced closures caused medical spa treatments to be unattainable to normal medical spa patients.
The reason I bring all of this up is to help you better understand the next piece of the puzzle, which is the confusing state of consumer spending in the United States right now. On Thursday, JP Morgan Chase’s CEO, Jamie Dimon, told CNBC that he believes the economy is “weakening,” which is evidenced in an increase in inflation rates (how much more you spent on groceries today than a year ago) and an decrease in jobs (almost 1 million fewer jobs were added in the U.S. economy than projected, the largest preliminary adjustment on record).
So, what does this mean for you as a medical spa owner? Logic dictates that you start to worry about these negative aspects of the current economy trickling down to your bottom line due to consumer hardship. If the consumer feels hardship, then they are less likely to spend on … you guessed it … discretionary experiences, like medical spa services.
HOWEVER, and interestingly, this doesn’t seem to be the case, at least right now. The reason for this is rather fascinating: Consumer spending remains consistent among all income levels, says Charles Sharf, CEO of Wells Fargo. Lower-income consumers are “spending the money that they have, so their balances are below where they were pre-pandemic levels,” he explained. Still, credit delinquencies are falling and consumer credit is strong. According to Synchrony Financial’s (CareCredit) CFO, Brian Wenzel, “The consumer is hanging in there.”
So, what do you think? Are you reassured by what the top dogs at the big banks are saying, or are you seeing it — or more accurately — feeling strain in your bottom line? I would love to hear your experience with this. CC
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