Hair Salons Industry Trends

Consolidation

The number of salons in the US decreased but the number of workers at each salon has increased. Economies of scale favor larger establishments that can support a receptionist and various assistants. A popular hairstylist can serve three or four customers at one time if (lower paid) assistants are available to wash and dry hair.

Seasonality

The hair care industry follows the same cycle as the fashion industry. Fall and spring fashion shows guide the new looks for the season, while summers and winters are slower.

Franchises

Regis generally retains ownership of high-end salons while franchising lower-end stores. Franchise agreements are usually site- but not territory-specific, have quality requirements, run for many years, and require company approval if a salon is sold. Leasehold improvements and acquiring fixtures, inventory, and working capital are the responsibility of the franchisee. Franchisees can usually buy the rights to sell sub-franchises in a particular territory.

Favorable Demographics

The large Baby Boom generation is now at the age when income is highest and hair is graying. Older women and men, who drive most of the demand for higher-end hair care services, are increasing their use of color to hide gray hair and also have the means to pay for it.

Male Salon Format

Men's attitudes toward grooming have been changing gradually: they now represent about a quarter of the clientèle at unisex salons. The differences between a salon and a barbershop are many: for barbers, no appointments are needed, and they're generally cheaper with fewer value-added services like styling and salon-style products. A new salon format for an upscale men-only club-style salon is taking hold in New York, complete with leather chairs, TVs, cigars, pool tables, and a bar.

Salon Success

Once firmly established with good stylists and loyal clients, many salons seem to have a better long-term survival rate than the average business. More than half of salon owners surveyed say they have owned their current business for 10 years or more. According to the Small Business Administration (SBA), more than half of all new businesses fail within four years.