Why Hair Salons Are Recession-Proof

kathryn by Kathryn Hawkins on October 11, 2011
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Americans have cut back plenty since the economy tanked, but they aren’t skipping visits to their hair salons. The New York Times cites a recent Census Bureau report stating that hair care is one of the few small-business industries to grow in the past several years, with the number of stylists and shops increasing by 8 percent between 2008 and 2009.

Why have hair salons survived — and even thrived — in the tough economy? Consider the following factors:

  • Hairdressing jobs can’t be outsourced or automated. Unlike many other careers, a hair stylist’s position can’t be auctioned off to the lowest bidder in a country with a lower cost of living. People who want their hair cut or styled must pay whatever the market rates are where they live. And, although cashiers, warehouse workers, and other employees are losing jobs to various forms of automated technology, hair-cutting robots are likely still a few decades in the future.
  • High unemployment rates often benefit the beauty industry. People who are interviewing for jobs often will spend a portion of their limited funds on beauty products and services, in order to look good — and make a good first impression. Jill Fosco, owner of Allure Hair Studio in Erie, Pa., experienced a surge in demand for makeovers among out-of-work baby boomers in 2009. “They all wanted to look younger while applying for jobs,” she tells the ISSB. “We spruced them up and gave tips and tricks to make an impression and get their foot in the door for their many interviews.”
  • Customers may cut back on salon services, but few will stop visiting altogether. Many people view salon services as a small luxury they can keep, but their budgets may prompt them to buy fewer services. Marilyn SadeQ (pictured), owner of three Willo Aveda salons in Northern California, found that some customers cut back on professional coloring services, while others who’d previously done their own hair coloring “now come in due to being overworked and not having the time or energy to do it themselves,” she says. Revenues at her Roseville, Calif., salon have grown by 30 percent in the past year, she says.
  • Salons can vary services and pricing levels based on customers’ needs. Salons generally offer a range of services, from basic to high-end, so customers can control how much they spend. Salon owners also have the flexibility to provide last-minute discounts and other incentives to increase sales. For example, SadeQ offers 20 percent discounts for same-day appointments at her salons, as well as a monthly subscription rate for unlimited hair services. In addition, beauty salons and barbershops typically sell shampoo, cosmetics, or other products for home use, which have high profit margins. “The bottom line is that there is enough agility in this industry to weather tough economic conditions,” Fosco says. “It’s a matter of watching trends, seeing what people are looking for, and positioning our resources and creativity accordingly.”
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