Current State of the Industry
Have a specialty
Right now, specializing seems to work best. For beauty salons, the word that equals success is “niche” as in, “Find your niche.” Salon clients want:
- products and services that address their individual needs
- speed and convenience
- top-quality products-the word “professional” adds to a product’s appeal
To step up to those demands, beauty salons will have to embrace technology on a broader scale; product distributors estimate that only about 15 percent of single-location, low-profile salons are computerized. They will have to change to keep up with clientele who, for example, are beginning to want to text-message an appointment into the salon.
Recruiting and retaining staff have long been concerns for beauty salons. New stylists are becoming increasingly sophisticated and, with the market still in their favor, can demand benefits such as health insurance, retirement planning and paid vacation, as well as continuing education opportunities.
“Now that we have better schools to inspire and educate future stylists, salons need to offer more benefits,” urges Steve Cohn, president of Illinois-based Premier Beauty Supply.
The impact of a slowing growing economy and a shrinking population in the key buying age group of 35-45 resulted in low growth of the hair care segment in drugstores and superstores as well as in salons, which logged in a 2.8% increase in service sales and a 2.4%, or $6 billion, increase in product sales over the previous year. This is slightly lower than in recent years.
But there were some bright spots, chiefly in hair color, body care and nails. The hair color growth is especially significant, since sales of home hair color actually decreased during the same period. The decrease in perming and relaxing is a little misleading, since to some extent those services were replaced by new straightening services-and those were included in the category of “specialty services,” which actually climbed 8.2%.
A boom in spas-both day spas and resort/hotel spas, but particularly medi-spas-helped boost the total number of salons in 2004-2005 above previous levels. Increased numbers of mega-salon/stores and nail salons contributed to the growth as well.
Observers disagree whether the trend of recent years that saw an increase of “booth rental” salons will continue. Already strong in the west and south, rental operations are gaining momentum in the Midwest. However, some industry observers speculate that highly motivated newgrads are shifting the balance back to well-established salons that can offer them a large clientele and perks.
Peek at the future
Beauty salons will meet consumers’ needs best in the months to come if they focus on personal and customized services and if they become more technology-savvy. They can do well by targeting a specific clientele, and they will benefit from creating some quick-service options that address clients’ busy lifestyles.
Sources: two “State of the Industry” articles by Victoria Wurdinger,published in MODERN SALON June 2006 and May 2005; the Industry Study byProfessional Consultants and Resources (PCR); Information Resources,Inc. (IRI); International Spa Association (ISPA); Data for Development,Inc.