From LA to Detroit to NY salon and spa owners are looking for solutions to lackluster consumer spending at their locations.
This past weekend featured the ISSE show in Long Beach. Crowds packed the exhibit floor with attendees looking for that "spark" that could change their business. What they weren't looking for was another flat iron and bottle of polish. Reports were that sales were weak and most likely, attendees left the show wondering.
I was on the road last week and met with several salon owners in high end neighborhoods. While all were happy that 2009 was behind us, all had their concerns about 2010. They lamented that they couldn't raise prices and their clients were spending less. Another major concern was that their staff was being involuntarily thinned out. Unlike the good old days where stylists walked out to get higher commission at another salon, now stylists are retiring or becoming full time moms as they aren't earning enough money to make it worthwhile.
Unlike other industries that depend on technology to drive productivity and reduce costs, the salon industry is built on human labor and until Silicon Valley invents a virtual stylist, that will be the case for years to come. Interestingly enough, even specialized doctors such as cardiologists are seeing less revenue not because of falling demand (pretty difficult to do a heart operation in someone's basement), but because Medicare is paying up to 30% less.
One thing our industry has abundance of is capacity. One idea that consumers are accustomed to with health club memberships is paying an annual fee for unlimited use. Salons can charge an annual fee for manicures, haircuts, color and so forth and clients can come in based on the frequency of the contract. The clients pay less per visit but it uses capacity the salon has anyway and more than likely, increases the opportunity for retail.
Salons will always be part of the American landscape. Salon owners have to rethink what they do best, make sure they are the best, and then most importantly, ask their clients a few simple questions. Here's one to start with: Would you mind paying an extra dollar or two for your service? Hey, if Starbucks can raise their prices by 8%, why can't we?