April 2009

Salon Industry Showing Small Growth in 2008

Professional Consultants and Resources, a strategic consulting company and industry data source specializing in the beauty salon industry, have just completed its new study. It reveals overall salon industry growth at a historically low 2.8 percent and hair care product growth is even lower at 2.1 percent.

However, in spite of the deep macro-economic recession and low growth, here are some highlights, trends and bright spots emerging from the study:

• A major struggle for industry domination and leadership continues between the apex manufacturer (L’Oréal), the apex distributor (Sally Beauty/BSG) and the apex salon-chain retailer (Regis). Resulting effects of major distribution realignments and the move to direct sales are adversely affecting the industry.
• Sally Beauty/BSG globally grows by 5.3 percent in FY 2008 – Booth-rental salons fuel sales at open-line Sally stores, which are up 6.6 percent, and Beauty Systems Group stores are up 3.2 percent on exclusive lines.
• Salon hair care service revenues experience very low growth at 2.1 percent, which mainly impacts chain-salons. Home hair styling during the recession with new genres of electric styling tools is very popular.
• Specialty products grow 6.7 percent; Hair styling grows 6 percent. Shampoos and conditioners are in a low growth due to realignments, mass-retail brands and diversion.
• Hair color experiences the lowest growth in years at just 3 percent, due to the recession and home-use haircolor purchased.
• Hardgoods and electrics see an 8.5 and growth, from new genres of Chi, Bio-Ionic, Ceramic, Tourmaline and other product advances and due to heavy home-styling.
• Booth-rentals are seeing burgeoning growth in select parts of the USA.
• Direct sales begin to plateau and decline slightly to 12 percent of salon industry. Aveda, Bumble and Bumble, Wella Intl, Kerastase etc., all sell direct to salons.
• Great Clips, an “economy chain,” has seen a 37 percent increase in franchisees. Sports Clips is doing well, too.
• Small to mid-sized product companies, like Aveda, TIGI, JOICO, Goldwell, Sexy Hair, Farouk, etc., are still growing, in a low-growth salon industry, while market leaders falter due to distribution realignments.
• New genres of “Naturals” products, like “Brazilian Keratin” and “Moroccan Oil,” are showing pockets of vitality.

For purchasing information or questions regarding the 2008 Professional Salon Industry Haircare Study, via E-mail at: cbulsara@augustmail.com or go to www.ProConsultants.us.