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Why Salons Are Closing

In 25 years of business, we have never seen this kind of devastation to the salon business. In previous recessions, salon business remained solid and in some instances, actually grew. The beauty business was always coined "recession-resistant."

No longer. More salons have closed in 2009 than the past ten years combined. If salons aren't closing, they are merging, renting space and doing whatever to survive.

What's different this time around than previous recessions? After all, there are 300 million people in the USA, more than ever before. Surely everyone still needs a haircut, nails trimmed and hair colored. I have yet to walk in an airport or shopping mall and noticed "gray" being the new black for hair color.

What's different this time around is that more consumers are doing their own hair and nails at home. But why now and not before?

Product quality at retail has never been better. While our industry has been focused on consolidation the past ten years, retail has been focused on innovation. Both Procter & Gamble (P&G) and L'Oreal have used the salon market to exploit their interests at retail which is extremely more lucrative both in sales and bottom line profits.

P&G who markets brand such as Wella, Sebastian, and Nioxin to salons openly advertises that their Pantene brand is superior to any salon brand. Pantene is the #1 selling shampoo/conditioner in the USA and outsells most salon brands combined.

L'Oreal who markets L'Oreal Professionnel, Redken, Matrix and Pureology to salons markets their in-home hair color brands featuring French salon colorist Christophe Robin. In several videos to help consumers color at home, one video even offers Robin's Top 10 tips for perfect results.

Another reason why now and not before is pricing. Before diversion, consumers had to buy salon brands at a salon. With the advent of diversion and online retailing, salon brands are everywhere and discounted up to 50%. In the meantime, ULTA and J.C. Penney are engaged in a price war selling salon brands cheaper than wholesale. You can shop ULTA and buy any KIWI or Textureline product for $4.99. We can't even sell for those prices.

And who is selling direct to ULTA and J.C. Penney? No surprise, P&G and L'Oreal. Together, they control the lion's share of the salon market and consumer market. And most salons are incognito.

Understood, our industry has lots of issues. The economy and recession has brought most of them to the surface. But if there is any one thing that a salon owner can do today to not only help assure their continued livelihood but that of the salon community, that one thing is to be cognizant of the brands used and retailed at their salon.

Happy Tuesday!

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