What are some of the bigger challenges facing the industry?
The profitability of individual companies depends on technical expertise and marketing skills. Large companies enjoy economies of scale in purchasing and marketing.
Small companies can compete successfully by offering superior service or securing favorable locations. The US industry is highly fragmented: A typical salon offers haircutting and styling, coloring, shampooing, and permanents.
Sales of hair care products are an important revenue source for many salons, providing from 5 to 15 percent of revenue.
Gross margins are higher for hair care products than for services. A typical salon occupies about 1, to 1, square feet and is located in a mall or strip center.
Revenue growth is expected to improve over the next five years, rising at an average annual rate of 3. This will be driven by increases in per capita disposable income and declining unemployment over the five-year period.
Higher disposable incomes will also lead hair salon customers to spend more on higher-value services such as manicures, pedicures, facials, hair modification treatments, and massages.
Industry profit is also expected to see gains which could encourage more new businesses to enter the industry.
Profits have increased from 1. Continued profit gains will be mainly due to increased sales of higher-value products which have larger profit margins. Improving market conditions continue to increase the number of industry operators at an average annual rate of 5.
This growing number of industry operators will drive employment growth. The improving job market will continue to contribute to higher enrollments at cosmetology schools. This continued trend, combined with the growth in new industry operators, has driven beauty salon employment upwards at an average annual rate of 3.
Demographics of Consumer Demandwhich provides detailed information on consumer demographics for many industries. This resource, and other demographics and marketing materials are available for purchase from New Strategist.
Personal Care Services The largest households and older householders are the best customers of personal care services such as haircuts, massages, manicures, and facials.
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