The business of beauty: The evolving med spa landscape and opportunities for manufacturers
By: Yasasvi Popuri
The US medical aesthetics market is valued at close to $20 billion and is expected to grow to about $50 billion by 2030 at a compounded annual growth rate of over 10%, a much faster rate than the 5–7% anticipated for the pharmaceutical industry. At the heart of this surge lies the Med Spa industry, with US revenues close to $17 billion in 2023. The American Medical Spa Association estimates that there are a total of about 10,500 Med Spas in the country — not far fewer than the 15,000 Starbucks stores in the US — with an average annual revenue of about $1.4M. Almost 81% of the Med Spas report practicing in only one location, indicating that Med Spas are often small businesses that provide a personalized and intimate experience for their consumers. The Med Spa industry is rapidly evolving due to changing consumer preferences, wellness trends, business pressures and technological innovation. This creates both the need and opportunity for manufacturers of medical aesthetics products and devices to create unique value offerings that transcend the standard product model.
The evolving med spa landscape
The Med Spa industry is experiencing four transformative forces of change: accelerated consumer preferences for personalized treatments, weight loss revolution powered by GLP-1 (glucagon-like peptide) class of drugs, push towards diversification of revenue streams, and emergence of generative AI.
Beauty is personal
Consumers are increasingly seeking customized solutions that cater to their unique skin or body types, and aesthetic goals. Consumers from different generations, races, and ethnicities have unique aesthetic needs and preferences that Med Spas must understand to provide truly personalized treatments. Millennials, generally born between 1981 and 1996, tend to be more inclined towards a polished, curated look, often favoring high-end skincare products, professional salon services, and natural-looking enhancements. They are more likely to invest in anti-aging treatments and procedures that maintain a youthful appearance. In contrast, the younger Gen Z, born between 1997 and 2012, tends to embrace a more experimental, bold, and individualistic aesthetic, often deviating from the perfectly manicured look. Similarly, individuals from diverse racial and ethnic backgrounds often have distinct skin tones, textures, and concerns that require specialized products and services. In response, Med Spas are increasingly looking to tailor their services, product recommendations, and treatment plans to each consumer, leveraging data and technology to deliver a more personalized experience.
Weight loss is the “means” not the “end”
The emergence of GLP-1 agonist medications, such as semaglutide and tirzepatide, has sparked a weight loss revolution that is significantly impacting the Med Spa industry. For Med Spa consumers, weight loss is the start of a transformative life journey toward a better social life or a more confident personality. Recent studies found that 2 out of 3 consumers who reported using GLP-1s indicated that they are more inclined to seeking aesthetic procedures. Long-acting neurotoxins and non-invasive body contouring are two procedures that are expected to see an uptick in demand due to the GLP-1 trend. Consumers at some Med Spas can now access a holistic approach that combines the power of these medications with personalized nutrition counseling, customized exercise regimens, and ongoing support from medical and mental health professionals. Med Spas are also beginning to leverage their expertise in body contouring and skin tightening treatments to complement the weight loss achieved through GLP-1 agonists, helping consumers achieve their desired aesthetic goals. Even Med Spas that don’t directly offer weight loss programs are seeing an uptick in consumer footfall due to elevated interest in post weight loss wellness and aesthetic aspirations.
Topline diversification = business health
Med Spas are increasingly needing to diversify their revenue streams to remain competitive and resilient in an evolving industry. This includes expanding beyond traditional in-person treatments to offer virtual consultations, subscription-based services, and retail product sales. Med Spas are beginning to explore partnerships with healthcare providers, nutritionists, and fitness experts to provide integrated wellness programs that combine aesthetic treatments with holistic approaches to weight management, nutrition, and lifestyle coaching. Additionally, Med Spas are investing in advanced technologies, such as AI-powered diagnostic tools and body imaging systems, to enhance their service offerings and improve consumer outcomes.
Real consumer experience meets artificial intelligence
Perhaps the biggest change that Med Spas are adapting to is the emergence of generative AI both for front- and back-office applications. Front-office applications relate to the efforts that create demand for Med Spa services and shape consumer experience. Med Spas are increasingly engaging with technology vendors of generative AI platforms to create customized email campaigns, social media posts, and video messages for each consumer, highlighting treatments, products, and promotions that are tailored to their specific interests and past interactions. Med Spas are incorporating AI-powered skin and body analysis tools into their service offerings. By scanning a consumer’s skin, for example, and analyzing a wealth of data points, the generative AI tools can provide personalized treatment recommendations, tailored to the individual’s unique skin type, concerns, and goals. The impact of AI and generative AI extends far beyond the consumer experience. Med Spas are also leveraging these technologies to streamline their back-office operations such as optimizing inventory management and automating appointment booking.
Opportunities for medical aesthetics manufacturers
As small businesses adapting to a changing landscape, Med Spas present an interesting challenge and opportunity for manufacturers of medical aesthetics products and devices. Successful manufacturers will differentiate themselves by helping Med Spas navigate the winds of change through product modularization, aesthetic journey prediction, data and insights productization, and AI integration.
Product modularization
Med Spas and manufacturers need to approach each consumer as a segment of one. This starts with product development. Manufacturers need to think more actively about product modularization: building flexible features on foundational and clinically required aspects. Manufacturers should actively consider product lines with a modular design, allowing Med Spas to mix and match different components to create customized treatment protocols in a manner that is compliant with regulatory guidelines. Some manufacturers are leading the way. SkinCeuticals Custom D.O.S.E. system allows providers to formulate personalized skincare products by blending different active ingredients based on each client’s unique skin type and concerns. Another area of innovation could be to design aesthetic devices, such as laser systems or body contouring machines, with open architecture that allows for integration with other manufacturers’ products or software. Cynosure’s Icon Aesthetic System features a modular design with multiple applicators, enabling providers to address a diverse array of aesthetic concerns, from hair removal to skin rejuvenation. Beyond the core product features, offering product packaging that can be easily customized or cobranded by Med Spas can allow them to cater to their clientele more closely. The segment-of-one approach will require enhanced data savvy and the ability to deploy AI and generative AI capabilities at scale. This is now no longer a “nice to have” for manufacturers, but rather a critical piece of the competitive advantage puzzle.
Aesthetic journey prediction
The GLP-1 driven weight loss revolution has highlighted the need for a more comprehensive approach to understanding and addressing consumer aesthetic concerns. To gain competitive advantage, manufacturers will need to harness the power of AI algorithms to learn from patterns in consumer behavior, preferences, and outcomes to ultimately anticipate where their aesthetic journey might lead them next. This becomes a critical input to partnering with Med Spas and delivering seamless experiences. Leaders in medical aesthetics will connect individual consumer aesthetic journeys to their product portfolios. For example, manufacturers can analyze data from third party sources (such as point of sale data providers) and their own loyalty programs to infer which consumers undergoing weight loss treatments are also likely to seek toxin treatments for facial wrinkles or fillers for enhancing facial volume. This insight can then be communicated to Med Spas along with a clear positioning of why the manufacturer’s products best serve those consumers. This creates a symbiotic opportunity for the Med Spas and manufacturers.
Data and insights productization
As Med Spas contend with increasing personalization and seek additional revenue streams, they will need deeper insight into their clientele: the socio-economic makeup of consumers in their catchment area; the aesthetic influencers, preferences and spend patterns; and forecasts of consumer spend potential across aesthetic categories. To gain competitive advantage, manufacturers will need to treat data and analytics as a product unto itself. They will need to use their unique access to diverse data sources and analytical power to provide Med Spas with a tool that “wraps around” the core aesthetic product offerings. The tool should allow Med Spas to analyze and dissect their immediate consumer base to make important business decisions around which services to offer and how best to shape promotions. Data and insights productization will elevate the need for manufacturer field forces to upskill on the digital assets and transform from a business-to-business (B2B) to a business-to-business-to-consumer (B2B2C) mindset. A well-executed data and insights productization strategy can give Med Spas the intelligence needed to succeed as small businesses and build loyalty for the core aesthetic offerings of manufacturers.
AI integration
Manufacturers can partner with Med Spas to incorporate AI into their front and back-office management. On the front-office, manufacturers can layer AI on top of the data and insights products discussed previously to help customize Med Spa service offerings to the local clientele. More importantly, manufacturer developed AI “companion tools” can not only identify the right line of products for a consumer but also the right dosing, adjacent treatments if appropriate, the likely outcome from the treatment and progress tracking against the anticipated outcome. On the back-office side, manufacturers can offer AI-based automated inventory and ordering plug-ins that can interface with Med Spa electronic health records and book-keeping systems.
In conclusion
The rapid evolution of the Med Spa industry presents both challenges and opportunities for manufacturers of medical aesthetics products and devices. As consumer preferences shift towards personalized, wellness-focused treatments, and the competitive landscape becomes more dynamic, these manufacturers must adapt their offerings to provide unique value that goes beyond the standard product model. By closely collaborating with Med Spas, understanding their evolving needs, and leveraging technological innovations, product manufacturers can develop solutions that seamlessly integrate with the holistic, customized approach that consumers now demand. This symbiotic relationship between Med Spas and their supplier partners will be crucial in shaping the future of the industry. The Med Spa revolution is well underway, and those manufacturers who can rise to the occasion will be poised to thrive in this dynamic and rapidly evolving market.
