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Rumors of the “Death” of the Salon & Spa Industry

October 16, 2017 | By Neil Ducoff | 1 Comment

death of salon spa industry

RUMORS of the death of the Professional Beauty Industry are not only greatly exaggerated — they are 100% FALSE.

Our industry has changed a lot since I graduated beauty school in 1970.

  • The wash and set gave way to precision haircutting and the blow dry.
  • Professional product retailing transformed waiting areas into “retail centers.”
  • The “Unisex” salon damn near killed off barbershops whose resurgence in recent years is nothing short of amazing.
  • The term “and Day Spa” became a common extension to a salon’s name.
  • Product diversion came and never went away.
  • Booth rental morphed into “suites.”
  • There are owners and service providers that still don’t report all cash sales and tip income on their tax returns.
  • Global consumer conglomerates now own all but a few professional product companies.
  • Distributor acquisition and consolidation is like trying to follow pieces on a chessboard.
  • The Internet and social media pretty much changed everything, from how salons/spas operate, promote and educate themselves to how they interact with clients.
  • States want to abolish professional licensing.
  • The “Tip-Tax Credit” for salons/spas has yet to become law.
  • Who could have predicted that your customers would be buying the same professional products you sell, on Amazon?
  • And the list goes on.

To me, the preceding list can be summed up in one word — CHANGE.

The industry hasn’t been poisoned, stabbed in the back, nuked or declared obsolete.

Does the industry have its challenges? Hell YES it does. The industry has big problems — all of which there are solutions for. It doesn’t mean that everyone will embrace the solutions, let alone agree with them. But there are solutions for those that choose to implement them.

So why are some industry people declaring the “death” of the professional salon/spa industry? Death means no pulse. If there is anything that the professional salon/spa industry has, it’s a BIG heart and a strong pulse.

Let’s look at the bullets of the smoking gun that supposedly killed the industry:

  • Diversion: The “diversion” argument has been going on since professional product retailing became mainstream in the 1970s. There have been lawsuits, distributor terminations, secret product coding, retail “collectors” and phantom salons. There have been exclusive contractual agreements with distributors to prevent diversion. There have been contracts with salons/spas not to divert. There have been endless promises to stop diversion. And diversion continues.
  • THE FIX: Hell will freeze over before diversion goes away. If the product brand you use and sell is diverted, stop buying it and stop retailing it. Put YOUR company’s brand and reputation behind a product line that isn’t diverted. If you can’t find one, go private label and deal with the added complexity of making your own retail brand. I’m not trying to be a smart ass; I’m giving you a solution.
  • Product company ownership: The days of the Paula Kent Meehan’s, Arnie Miller’s and Horst Rechelbacher’s, and the passions that drove them, are long gone. As long as publicly traded companies control the major professional brands, generating bottom line profit is what their stockholders want and expect. This doesn’t mean doing business with a major brand is bad, it means that their fiscal responsibilities are always under scrutiny. It’s no different than the fiscal responsibilities we teach and coach owners to follow.
  • THE FIX: Think twice before throwing stones at the major brands owned by publicly traded companies. They dump a ton of money into education, advertising and support for the salons and spas they do business with. Why? Because they sell a ton of product and want to sell even more.
  • Independents: Booth rental and suites are here to stay. Being an independent service provider is an option for those that no longer want to be an employee. But this doesn’t mean that independents could care less about education or the industry as a whole. To even make such a statement is demeaning to all independents.
  • THE FIX: Booth rental and suites are the nemesis of employee-based salons and spas. Also know that my company, Strategies, is dedicated to the growth and development of employee-based salons and spas. Our message has always been, “If your employees would rather work alone than for your company … the problem is your company and the career opportunities it offers.” The stronger your brand, systems, leadership and service excellence — the less appealing going independent is to your employees.
  • Distribution: Once again, the blame is put on “giant corporations” for buying up distributorships, decimating their sales force and cutting back on education and support. It’s not like the “dark side” of the force was intent on wrecking the once powerful network of independent distributors. The intent was to control distribution and market share in a fiercely competitive industry. The growth of independents created new obstacles for product companies and distributors by eliminating the “owner buyer”. That’s why professional-only retail stores reduced the need for “distributor sales consultants.”
  • THE FIX: Companies like Aveda, Bumble & Bumble and a tiny handful of others bypass traditional distribution by selling direct to salons in the US. But being both manufacturer and distributor has its challenges too. It’s just like private labeling your own products requires more planning and work than brand name. Like it or not, good or bad, professional product distribution will continue to undergo change — especially with companies like Amazon and its ability to drive change.
  • Trends: I remember the night when Dorothy Hamill skated her way to Olympic gold and her wedge hairstyle into the fashion history. A statement like, “Hair has become less of an accessory, and almost anti-salon,” does not compute. So does, “Hair is seemingly not as important as in previous decades.” I’m not taking these statements out of context just to support my position. But if true, the industry would have died many years ago.
  • THE FIX: I don’t have a fix because the statements make no sense. Television and magazines are no longer the sole source for new trends in hair. Instagram is the new king of creating individualized trends, linking consumers directly with salons and service providers. In today’s connected digital world, salons, spas and independents have their own audiences to set trends for.

Here’s my challenge to you: When you read “opinion” articles that cast blame for all the woes of our industry everywhere except where it belongs, it’s just that, one individual’s opinion. When the solutions to “fix” the industry are contracts to prevent diversion, legislation to “establish salons as commission-based business, independents have to be relabeled as employees …” and build a better professional-only distribution network — hit your delete key as fast as you can.

The fix for the very real challenges of employee-based salons is as follows:

  • Clean up its business practices including the pirating of employees and income/tip tax compliance.
  • Salon/spa leadership needs a serious upgrade with the implementation of best business practices.
  • Cash-flow management and financial literacy IS NOT optional. You can’t build a profitable business if you cannot do accurate projections and be able to read, understand and make decisions based on your Profit and Loss Statement and Balance Sheet.
  • Delivering consistent technical and service excellence requires ten times the training, coaching and commitment than most owners realize.

You can’t build a viable world-class salon/spa company one column at a time. It takes a team-based culture and business model. Commission is a “one column at a time” business model. Period.

Categories: Information Flow

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Comments

  1. Neil – you hit the nail on the head with this one.

    The professional salon industry is hardly dead.

    Just the opposite – it’s alive and kicking – at least for those who are doing their work.

    Of course, there are challenges, some new as a result of new technologies, some ages old (ie finding and keeping good people) etc. – but hell that’s how business life is.

    Bottom lining it – we all know (but most are reluctant to admit) that if our business is floundering it has very little, if anything, to do with outside forces (ie changing distribution patterns, the rise of the salon suites etc. etc.).

    Quite the opposite, it has everything to do with the person we look at in the mirror every day,

    We just have to understand that our salon business is a reflection of the owner’s thinking (and the actions they take as a result of that thinking).

    There’s an old Sicilian saying “the fish stinks from the head down” – so if an owner’s “thinking is stinking” it’s in the cards that their business is going to crash and burn.

    Neil, I love your clear point of view on how to create salon success – and when an owner embraces that point of view – “whole hog and the postage” so to speak, it’s inevitable that she’ll create the success she’s looking for. Maybe not today, maybe not tomorrow, but it will come … if she does the work.

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