Features

Skin Care's Bright Light?

April 29, 2008

Laser technology catches up with consumers' expectations to create a blockbuster market.

Skin Care’s Bright Light?



Laser technology catches up with consumers’ expectations to create a blockbuster market.



Jacqueline Clarke
Research Director
Diagonal Reports



Lasers and related technology represent a new, potentially blockbuster beauty category. According to a new study by Diagonal Reports, the new laser technology is not just creating a new beauty sector but it could reshape longer established markets in a number of ways. For example, it may become the gold standard for consumers or it diversifies the profile of beauty consumers. Or it poses a threat to existing beauty procedures, products and devices. Finally, lasers could help create a new type of beauty service provider/setting.
   
We recently examined specific segments of the emerging cosmetic laser market, focusing on demand for hair removal and skin renewal procedures in particular. The report excludes cellulite, fat-related, vision correction and dental procedures. Hair removal is depilation from various body parts (usually faces, legs, underarms and backs). Skin renewal treatments are corrective and preventative, mainly, but not only, for the face. The main skin treatments are anti-aging (e.g, wrinkles, age spots and sagging skin), and blemish removal (e.g., sun damage, acne scars, birthmarks, tattoos, lesions and spider veins).

Hard to Quantify



The cosmetic laser category is growing so fast that it is difficult to maintain up-to-date figures. Currently, the only reliable data covers those laser procedures provided/supervised by licensed physicians. These procedures are attractive for many of the 600,000 physicians in the U.S. who are interested in additional or new business, given the severe cost pressures on their traditional sources of income. Cosmetic medicine is usually paid for in cash eliminating the paperwork attached to insurer reimbursed medical treatments.
   
Lasers are widely used to treat a variety of beauty-related skin issues, including varicose veins.
It is very difficult to quantify the size of the cosmetic laser market in the non-medical channel—for example, in spas, medspas, spas, day spas, hotel spas and in specialist clinics (laser vision and dental). U.S. market experts interviewed by Diagonal Reports caution that the laser category in these channels is fragmented in terms of revenues generated by individual businesses and by the combination of treatments offered. However, we estimate that the total value of cosmetic laser treatments in the different channels could be up to $1.5 billion.
   
The pace of growth of the new laser beauty category, both in the U.S. and elsewhere, suggests that it meets a demand that was not previously satisfied by more established procedures. Market experts who venture to forecast future growth rates suggest the new category will possibly double in size during the next three years. Such strong growth contrasts with the generally stagnant, if not negative, trends in the traditional beauty service channel.

Gold Standard



Laser technology is fast becoming the gold standard for cosmetic services because of the range of benefits it offers consumers. The procedure takes very little time, with little or no recovery time, and no pain or side effects. It provides long-term solutions to beauty problems, at least in some categories and is superior to alternative methods.
   
As one example, recent developments in laser hair removal technology have attracted many African-American and Asian consumer dissatisfied with the older generation of lasers.
   
Cosmetic laser technology is easy because it offers consumers a do-it-for-me (DIFM) solution, and unlike the do-it-yourself (DIY) solution, consumers are not required to expend effort, energy or commitment. The popularity of cosmetic laser services is consistent with other wider consumer trends where they willingly spend on DIFM solutions when they become available. To name but a few such services cosmetic surgery, skin rejuvenation (injectables such as Botox) and cosmetic teeth whitening.

Clinics and spas offering the new technology attract a wider range of consumer segments including teenagers, under 30s, the over 50s and men.

Threat to Established Markets



Cosmetic lasers procedures pose a threat to existing beauty services, in particular hair removal and anti-aging skin segments and products. Perhaps the most immediate and obvious threat is to traditional hair removal methods. Laser procedures are marketed to young women as a lifetime investment and they compare favorably to a lifetime of repeat depilating with wax or razors.
   
The laser category is also a threat because procedures are expensive and are eating into other beauty dollar spending. The least expensive procedure (hair removal) typically starts at a few hundred dollars with the most expensive costing many thousands of dollars. Furthermore, consumers tie up a lot of money in programs of laser treatment when they make advance and non-refundable payments to avail of discounts.
   
Technology developments have created multiple platform (single box) lasers. That is where different attachments allow one device to be used to offer multiple procedures (e.g. hair removal, skin tightening  and veins). Technology will transform the traditional beauty services market by facilitating the emergence of a new type of business: the one-stop shop. Technology will do this because laser service providers will need to purchase only one device, rather than many, as was the case in the past. Providers, no longer limited to just one procedure, can and will offer the full range of services to recoup the cost of those expensive devices.

Future of the Market



Laser service providers continue to experiment with business concepts. Some position themselves as “med-led (that is physician-directed), and others as “cosmetic-led” businesses.
   
Diagonal Reports’ research in the U.S. and elsewhere reveals optimism about the future of the cosmetic laser sector. Experts highlight the strength of the market fundamentals, they include consumer concern with personal appearance, and the technical developments that make laser and related procedures more affordable and accessible.
   
But in a generally positive market there are some negatives/uncertainties, among which experts highlight:
    • Staffing shortages.
    • Regulatory uncertainty and inconsistency. This significant concern arises because inherited regulatory frames cannot deal with the new market conditions where traditional distinctions between the medical and the cosmetic are blurred. This began with the use for cosmetic purposes of lasers originally developed for medical purposes. Currently many states have established bodies to propose appropriate oversight systems. Many businesses are reluctant to invest until the shape of the new systems is known.
    • Costs of entry are very high. Equipment starts at about $100,000, and annual maintenance expenses run to many thousands of dollars.
    • Fear of competition from and being squeezed between high volume/low cost chains and DIY market.
    Still, despite these potential pitfalls, the future looks bright for lasers.

More info: www.diagonalreports.com/pdfs/laser 08us.html. Email: info@diagonalreports.com. Tel: 353-4695-49027

A Note on Laser Terminology


The term laser/energy technology is used in this article as a short hand to refer to the new energy based technologies. They include laser, light, radiofrequency, ultrasound, plasma and photo dynamic therapy (PDT). The term laser is used because of its familiarity. Some in the industry would prefer another term such as “energy-based” or even “displaced energy” technology. However, whatever might be the technical accuracy, it is unfamiliar to most people and unlikely to indicate the industry under discussion.
 
About the Author

As research director of Diagonal Reports, Jacqueline Clarke has designed and developed the company’s professional beauty market research program. She directs its flagship publication, the Global Salon Panel (GSP) series, which tracks developments in medicalized beauty, spa and wellness markets worldwide.
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