Hair Care Services Industry Profile

In the US, about 70,000 hair care salons (65,000 beauty salons; 5,000 barber shops) generate combined annual sales of $19 billion. Large companies include Regis Corporation, Ratner Companies, Sport Clips, and Premier Salons. The industry is highly fragmented: the 50 largest companies hold just 15 percent of the market. The large majority of salons are small independently owned. A large salon has annual revenue of about $300,000 and 10 employees.

COMPETITIVE LANDSCAPE

Demand is partly driven by demographics and partly by population growth. The profitability of individual companies depends on technical expertise and marketing skills. Big companies have few advantages over small ones, which is why the industry remains fragmented. Small companies can compete successfully through technical superiority or favorable location. The industry is highly labor-intensive: average annual revenue per employee is less than $45,000.

PRODUCTS, OPERATIONS & TECHNOLOGY

Major products are hair cutting, hair coloring, nail care, skin care, and merchandise sales. A typical salon offers haircutting and styling, coloring, shampooing, and permanents. Some salons also offer nail care, facial treatments, makeup, bikini waxing, massage, tanning, and other types of spa treatments, but the lower volume of demand for such specialty services often makes them uneconomical. 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.

The average salon occupies about 1,500 square feet and ...