Out Of My Mind On A Wednesday Mornin’

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Sally Beauty Holdings (SBH) reported their latest quarterly results last week. The results were dismal enough to send the stock to a 52-week low. Is SBH a victim of the pro beauty industry, Amazon, terrible business plan or a combination of all three?

I recall vividly back in 1991 CND cut us off because full-service distributors didn’t like us shipping into their territory. Same thing occurred in 1997 with OPI. Back in the day full-service distributors ruled the world with exclusive distribution agreements that made them financially secure for life. Competition was non-existent.

During this time, Sally was buying OTC beauty suppliers . Sally grew quickly through acquisitions and became the dominant beauty retailer well before Ulta opened its first store. While Sally was creating a monopoly in its niche, the then CEO decided to start a new division that would eventually dominate the pro beauty side by acquiring as many as full service distributors as possible. Hence the creation of BSG/Cosmoprof. (L’Oreal got into the game late as it didn’t want BSG to control its brands so it started Salon Centric to compete and bought as many full service distributors as possible as well).

Fast forward to today and what to do we have? While Sally has more than 3000 stores, Sally’s business is declining. BSG/Cosmoprof is flat and that is with its monopoly on key hair care brands. In what used to be equal number of stores to DSC’s, stores are now more than 2/3 of the mix. Meanwhile virtually every distributor has been bought so growth is not an option through acquisitions.

Some say Amazon will buy SBH to get a foothold into the beauty business. Then again, anything is possible as Amazon ponders getting into medical/dental distribution, auto parts, fresh food and just about any business that has margin it can eat. Perhaps a more intriguing question to ponder is the fate of SBH the fate of the pro beauty business? One clue: The demise of DSC’s.

One thing is certain, SBH is in survival mode. Look no further than their email blasts advertising new lower prices, BOGO’s, 25% off everything and a deal of the day that makes one ponder what their pricing strategy really is. And here is the thing about today’s economy: No one cares if SBH survives or not, their products will always be available somewhere else with free shipping and two day delivery, sooner or later.


Thanksgiving is tomorrow and my favorite holiday of the year. Plenty of great food, family fun, sports on TV and the Turkey Trot. But what about Black Friday this year? Never before have so many retailers advertised weeks in advance their Black Friday deals. Add to the fact that there are no must have gifts this year, it’s going to be a shootout on the OK Corral. Who is going to win? Walmart for sure, the rest, we will see. Cyber Monday? Who else but Amazon? We are more conditioned to buy from Amazon than at any other time even with the economy firing on all cylinders. 2018 will certainly be a watershed year for many retailers. And as far as football goes, does Detroit have a chance against Minnesota?

I just got done watching Big Little Lies on HBO. The story focuses on parents in Monterey, CA that have first-graders. Who knew how much drama could come from six-year olds. No wonder stress and high blood pressure is at an all-time high.

And yes just in case you were wondering, pumpkin pie is still my favorite Thanksgiving dessert, candied sweet potatoes favorite side and a little dark and white turkey with a touch of gravy makes the perfect plate.


The Future Of The Hair Salon Business

[Reader’s Note: This is a continuation from the previous blog entry]

THIS JUST IN: Click here to see all the brands and products available on luxabeauty.com.

Loxabeauty.com is live. Truth of the matter is that it is DOA already. The video is a joke and makes salon owners and hairdressers feel totally inept. Joico, a subsidiary of Shiseido of Japan, is in full support. Why? Amazon.com has its own Joico store and most everything is 30% off EVERYDAY and FREE SHIPPING. It’s just another deflection of what truly is going on: Salon products are consumer products and hence sold everywhere by virtually everyone. Once again some of the manufacturers are trying to show their loyalty to the salon industry even as they ship truckloads to retailers each and every day. With the site more than 90% hair, hairdressers will have to decide which brands to use behind the chair. Most interesting since Salon Centric is owned by L’Oreal and a competitor to SBH (although they sell BSG the MATRIX brand), there is not a single L’Oreal brand on luxabeauty.com.

With the industry more than 90% booth rental, what is the future of the hair salon business? No one has a crystal ball, and most certainly not me. But my best guess is something like this: Back to the pre-1980’s days.

Think about independent service establishments for a moment and which ones over the years have persevered and succeeded? Dry cleaners. Shoe repair. Tailors. Fitness centers. Restaurants. There are a few more but let’s look at these.

Each of these establishments is owned by someone that has a skillset that is not easily copied by the average consumer. Dry cleaners artfully clean and press clothes. Shoe repair guys know how to replace insoles. Tailors can take in and take out just about any clothing article. Fitness centers offers specialized trainers and equipment. Chefs specialize in hundreds of cuisines. The other common trait in these businesses is that they do not retail. Dry cleaners do not sell clothes. Shoe repairs do not sell shoes. Tailors do not sell formal wear. Fitness centers do not sell running shoes or yoga pants. Restaurants do not sell steaks or bell peppers.

The folks at SBH have basically waved the white flag and made the statement that hair salons can offer services but cannot retail products. With that supposition in mind, the future of hair salons is service only. Long before the Paul Mitchell’s, Arnie Miller’s and Jheri Redding’s of the industry showed up, there was no retail in beauty shops. It was pure services. Hairdressers love to cut. Or they love to color. Or they love to do both. Their skillset is hair, not sales. 

The hair salon of the future will not sell anything but services. Ah, but there is a kicker. The successful hair salon of the future will include at-home products but make them part of the service fee. Smart marketers will offer products in special sizes for hairdressers to use for the service and then for the hairdresser to give to their client after the service is completed. This will solve many issues for both hairdressers and marketers.

The Current Process

Client comes into the salon for appointment. Client goes to the wash bowl and gets hair washed. The typical backbar has 10-20 shampoos and conditioners. Does the client even know which one is being used? No. Afterwards, the client goes to the stylist station for the cut and style. The typical station has 20 or more products and the hairdresser may use up to 6 of those on the client. Is the client going to buy all the products the hairdresser uses? No. Is there any way the client can make hair look as good at home? No. Does the hairdresser care if the client buys products? No. The client is still happy with the service. But for products, they are bought at a convenient store or Amazon.com from their smartphone and delivered in less than 48 hours.

The New Process

Client comes into the salon (no appointment necessary is best approach but all hairdressers must have equal skillsets). Client goes to the wash bowl and gets hair washed. Hairdresser recommends shampoo and conditioner to the client, shows the special sized bottles, uses on hair and then gives both bottles to the client. Afterwards, the client goes to the stylist station for the cut and style. Hairdresser recommends products to use. Each specially sized product used has an added fee so the more products, the more the service costs (same as a restaurant, everything ordered is a la carte pricing). The hairdresser uses the products and gives the products to the client to take home. Now the client is assured that they are using the same products at home as at the salon.


In the new process, the hairdresser and client both win. The hairdresser is happy because the client is using the products recommended to use at home; made money on the products without actually retailing them, and has no waste to deal with. The client is happy because she now has the products to use at home and if she likes them when running out, can buy with confidence from any retailer that sells the brands.

Whoaaaa!!! If this really is the future, what is going to happen to all those retail products salons have on their shelves? The better question to ask is does the salon industry really need 8 oz., 16 oz, 32 oz, and gallon sizes of the same item? Does one manufacturer really need to offer 8-10 variations of shampoo and conditioner? The future is back to simplicity, client convenience and superior service.

Want validation? The nail salon model now commands more than 80% of the nail business. No appointment necessary. No retail. And what about the products you ask? They have the system down that their clients must come in weekly or bi-weekly so products are not needed. And touch-ups are free in case of the occasional chip.

Now if we could get women into hair salons with the same frequency, that would be another conversation certainly worth entertaining (bi-weekly color touch-ups so hair never goes gray).

Whatever the future is, one thing is for certain: Change is constant. And for all those one million plus hairdressers in the USA, now is as good of a time as any to think about their future.

Happy Tuesday!