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DR. MALL

Nuvo finds malls ideal for skin-treatment clinics

BY KIMBERLY PFAFF

Mall executives are always crying out for a fresh new face among the usual retail offerings. Now they’re gettingone that will turn a few heads — literally and figuratively.

Most people probably don’t think of stopping by their local mall to get a Botox injection, have their teeth whitened or do a little laser hair removal. But Jeff Schmidt, CEO of Henderson, Nev.-based Nuvo International Laser Skin Centers, believes his full-service clinical skin care centers are a natural fit with regional centers. And he’s betting that Americans’ obsession with youthfulness, and their need for convenience, will make Nuvo a recognized name in malls nationwide.

Now nearly two years old, Nuvo specializes in a variety of anti-aging and cosmetic services, including photorejuvenation, Botox and collagen treatments, microdermabrasion, spider-vein and stretch-mark removal, pigment augmentation, facials and spray-on tanning all offered in a relaxed, spalike setting that more closely resembles a resort than a physician’s office.

So far, Nuvo’s numbers look good. The firm anticipates annual revenues of over $60 million for 2004 — triple last year’s revenues. With 22 stores currently open in California and Nevada, Nuvo is on target to finish out the year with 60 stores throughout the Western U.S., including Arizona, Oregon and Washington. The company also plans a slow eastward expansion, and management ultimately envisions having 400 stores nationwide. “We’re open to any and every ‘A’ and ‘B’ mall,” Schmidt said.

For developers, Nuvo offers a truly new shopping center concept, one that already has considerable consumer demand.

“If you picked up any fashion magazine in the past year, almost every month you would have seen an article on new laser treatments or Botox,” said Julie Cameron, SCMD, vice president of retailer productivity at General Growth Properties, which has seven Nuvo stores in its portfolio. “The media has created a real demand for this. But for the consumer, it’s a little intimidating; they’ve read about it, but they don’t know where to go to get these treatments. That’s the great thing about having Nuvo in the mall — it’s a venue that consumers are already so comfortable with.”

And, as any developer knows, there’s a certain cachet that comes with offering an entirely new concept.

“[Nuvo] is a great addition to the center, in terms of both generating repeat traffic and differentiating ourselves,” said Bruce F. Johnston, CLS, vice president of leasing at The Macerich Co., which owns 59 regional malls. Macerich has two Nuvo stores open now and about 10 more in the works. “We want to make our malls more competitive. And we’re trying to say to our customer, ‘We value your time. And, as a result, we want to make sure that we’re as close to one-stop shopping as you can get.’”

Industry insiders say that Nuvo’s move into malls signals a growing shift toward more-service-oriented tenants. And in a time of rampant retail consolidation and bankruptcies, many analysts believe this may be just the type of face-lift centers need.

“Do you really need another shoe store, another jewelry store, another apparel store?” asks Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based retail consulting firm. “And a lot of them are going broke anyway. [Nuvo] is something different, and it’s where Americans are going. More people are into their health right now, so this fits right into that.”

Before launching Nuvo, Schmidt offered these same services in a freestanding medical-dental building. Then he realized how inconvenient that was for his clients. These days he is focused on malls, though he will also consider lifestyle and downtown urban centers. “We just don’t feel compelled to step out of the box with what we know works,” he said.

And there are reasons why Nuvo works in a mall setting. Many of the company’s treatments are available on a walk-in basis, so the company benefits from foot traffic. A procedure typically takes from 30 minutes to an hour, with an average ticket per session of about $200. Also adding to the concept’s appeal for mall operators is that many treatments require multiple sessions.

“These services are not a one-shot deal,” said Macerich’s Johnston. “For laser hair removal alone, there may be a schedule of six, eight or 10 appointments. That’s guaranteeing us that the customer will come back to the mall on a regular basis.”

Another plus is that clients can easily go shopping either before a treatment or afterwards. “Most of our procedures are lunchtime procedures,” said Schmidt. “You put some makeup on immediately afterwards, or at most you’ll look like you’ve been out in the sun a little bit.”

And Nuvo has just introduced its own line of corrective skin products, designed to address everything from wrinkles and age spots to sunspots and such skin diseases as Rosacea. Currently, the line accounts for 15 percent of revenue, but Schmidt hopes to increase that to 30 percent over the next six months.

Nuvo’s clients are predominantly women, age 30 to 50. Increasingly, though, men are seeking out the firm’s services too, from laser removal of back hair to Botox injections and photorejuvenation.

Though the firm started out with spaces of 1,000 to 1,200 square feet, it soon found those to be too small. “Now we don’t look at spaces below 2,000 to 2,500 square feet,” Schmidt said. Some stores are 3,000 square feet, he added.

It’s too early to get a full read on the firm’s sales per square foot, but Schmidt says the stores generally average about $1,000 per square foot. He notes, however, that unlike most mall tenants, Nuvo centers have significant add-on expenses, including about $500,000 in leases for laser equipment. The on-site doctors, nurses, skin care specialists and other professionals are paid about $40 to $50 an hour each.

As for positioning within a mall, Nuvo looks for a space with high visibility and traffic — wherever that may be. Recalling one recent deal, Schmidt said: “The mall operator thought we needed to be down by the high-end female client base. But the major area of traffic was a children’s play area where there were a lot of moms. That’s where we wanted to be.”

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