The Clipping Point

By Christine Esposito, Associate Editor | June 4, 2012

Hair care innovators create cutting-edge products, stylists set the trends, but it is economics that shape the overall health of the professional hair care market.

The total US salon hair care market segment, including services and retail, rose 3.5% to $61.3 billion in 2011, according to “Professional Salon and Pro-beauty Industry Appliances Study-2011,” a new report from Professional Consultants & Resources, a Plano, TX-based salon industry consultancy.

That’s not too bad, especially considering the US economy has been tangled up in a recession.

High unemployment numbers and a downtrodden housing market had many consumers cutting corners during the past several years, and their penny-pinching strategies can include prolonging a trip to the salon or investing in sharp scissors or a Wahl device to cut their kid’s hair at home. That’s cause for concern—not just for little Timmy—for salon owners and their suppliers, too.

Take, for example, areas such as hair coloring. Lured by improved delivery methods and promises of foolproof, perfect results—not to mention less strain on the pocket book—more consumers appear to be coloring their tresses from the comforts of home.

Salon chain Sports Clips Haircuts has put an athletic spin on the haircut experience.
According to data from a consumer survey conducted by Mintel (released in Nov. 2011), six in ten respondents reported temporarily switching from a salon to a home brand to save money during the recession. The market research firm reports that the US home hair coloring and permanent products market, which was estimated at $1.9 billion in 2011, is set to grow nearly 16% between 2011 and 2016.

But as Cyrus Bulsara, president of Professional Consultants & Resources (PCR), points out, not all consumers have been taking matters into their own hands.

“There are pockets of good economy and pockets of bad economy in the US. In the bad pockets are the states with high employment where disposable incomes are low—and that is where these situations are taking place,” he said, referring to less frequent trips to get color treatments or increasing trends toward home hair cutting. However, overall the salon industry’s hair color services are growing very well. The pockets of good growth outnumber those of bad growth.”

Economic recovery, easier credit and higher disposable incomes all combined to increase salon visits and frequencies for services, which resulted in better products sales to salons and clients, noted Bulsara. In fact, according to PCR, manufacturer/brand sales of styling products grew a robust 6% in 2011—that’s up from 4.4% in 2010 and just 1.5% in 2009.

With more consumers opting to style at home, there’s been an 8.1% overall increase in blow dryers, flat/curling irons, trimmers/clippers and shears, noted Bulsara. Shorter, straighter, sleek easy-to-wear styles like the mop, the bob, the peek-a-boo and the pixie are being popularized by leading Hollywood/TV and music stars, fueling a boom in home maintenance appliances and styling products, he said.

According to Bulsara, hair color, along with straightening/smoothing and basic cutting and styling services, were all major growth drivers, primarily at booth-rentals, family/economy chains and men’s barber shop chains.

That’s the trio of salon models to watch, say industry pundits, especially as some of the biggest players in the market aren’t faring so well. That is aside from independent artistic salons in major metropolitan areas that will always have their affluent clients who are often less affected by economic downtrends.
Regis Corporation—which owns, franchises or holds ownership interests in approximately 12,700 worldwide locations under names such as Supercuts, Sassoon Salon, Regis Salons, MasterCuts, Cost Cutters and Hair Club for Men and Women—has had a tough go of it.

The firm has reported 15 successive quarters of declines at most of its salons and is currently undergoing a major top-down reorganization, according to PCR.

Bulsara told Happi that he believes the “firm should emerge from reorganization as a better managed, well-run company and retain leadership after the extensive reorganization.”

Where They’re Cutting, They’re Growing
“Family economy chains like Great Clips and Sports Clips are doing extremely well and they are garnering share from older mid-tier salon chains like Regis, JCPenney and Hair Cuttery,” Bulsara said.
Sport Clips Haircuts, in fact, says 2011 was its best year to date, with retail sales hitting $250 million, no store closings and strong franchise sales, according to company officials.

“There are several [reasons] that I believe are major contributors to our success, the first being our values. Sport Clips built its success and continues to do so by running our company on strong values. It’s these values we hold each other accountable for, and we coach and train to these values in everything that we do,” said Julie Vargas, director of career opportunities at the Georgetown, TX-based company.

Vargas contends savvy operating standards have also contributed to Sports Clips’ success.

“We built Sport Clips with the intent of delivering more than just a service—but better yet, an experience—one our clients would perceive as an experience unlike anywhere else.”

Sebastian’s new Shine Crafter wax.
The salon’s design makes sports fans feel at home—there’s an ample supply of TVs showing sports games and locker room style fixtures—but founder and CEO Gordon Logan was really zeroing in on what men, in general, wanted. Through surveying his existing clientele, Logan (who owned and operated salons throughout Texas) was able to gain insight into what they liked and disliked about their current and past experiences before opening the first Sports Clips Haircuts in 1995.

“In doing so, it was obvious that the male population was not a fan of busy malls and fighting traffic for parking. Nor were they fond of noxious chemical odors from perms, colors and nails. They also expressed dislike for the inconvenience of having to make and keep an appointment and how the environment was not conducive to what they perceived as ideal or enjoyable. As a matter of fact, many said they really dreaded the experience,” Vargas said.

For Logan, there was an “opportunity to capture a niche market that really was not being targeted; the old barber shops were becoming fewer and farther between; and guys really did want a place where they could go and feel comfortable in knowing it was a place designed with them in mind. That was the beginning of the Sports Clips concept,” Vargas told Happi.

A stylist works inside her Salon Plaza booth.
At the Sports Clips salon, clients can come in for a haircut followed by a scalp massage, get a classic hot steamed towel treatment and a relaxing neck and shoulder massage—all in 20 minutes, according to the company, which currently has Paul Mitchell, American Crew and Nioxin products at the back bar and retail.

That approach appears to be working. With more than 860 stores in 39 states—with 91 opened last year—Sport Clips reported a 22% increase in sales last year, with 10% growth in same-store sales. Executives have high hopes for 2012 too, as they try to reach 1000 salon mark.

Yet Sports Clips Haircuts isn’t alone in the men’s salon category much less than the “sports” subset; one of Regis’ smaller salon chain brands is Pro-Cuts, which has an athletic atmosphere. Other male-oriented chains include Roosters Men’s Grooming Centers (a Warren, MI-based salon franchise of which Regis took a controlling stake last July), Floyd’s 99 and Knockouts. Each takes a specific approach—Roosters’ has an upscale yet old-world barber shop feel, Floyd’s has a rock and roll vibe, and boxing-themed Knockouts has earned the reputation of being the “Hooters of Haircuts.”

While men may seek out themed hair salons that cater to their various interests and desires, there’s another model gaining traction in the salon space—booth rentals.

According to PCR’s recent 2011 Booth Rental Study, booth rentals (where stylists lease individual salon units or space to work) currently constitute 35% of all salons in the US and will grow to nearly 50% in the next three years.

The concept is most popular from Texas to California and west of the Mississippi, but Bulsara contends it will slowly make its way to the northeast region.

Ratner Companies, the largest privately-held operator of chain hair salons in the US, is bringing the model to new territory with its Salon Plaza.

“The idea was born out of the understanding that there are many individual hair stylists out there who work on a part-time basis, sometimes out of a home, or who are not yet at point where they can afford or don’t want invest in their own salon,” said Diane Daly, a spokesperson for Ratner.

Ratner’s Salon Plaza properties are different size salon units that accommodate the need of the stylist who leases the space turnkey—everything in terms of set-up (think chairs, shampoo bowls) is included and there’s also a main reception area shared by all. The stylists bring in their own tools and product and book their own appointments.

Ratner—which has 800 salons in 16 states including Hair Cuttery, Bubbles and ColorWorks—opened its first Salon Plaza in 1997. Today, there 17 Salon Plazas in operation with some 550 stylists.

“We were at the forefront when we started this several years ago and it is a very successful venture,” said Daly.

By 2015, nearly 50% of all US salons will offer some form of the booth rental model, noted PCR.
The dynamics will affect salon hair care manufacturers’ distribution routes. For example, booth rental salons have different purchasing habits and inventory.

“They go in on Sunday and Monday and select products they need for next week. They don’t have space to stock,” said Bulsara.

As such, booth rental salons drive sales at places like Sally Beauty stores as well as Beauty System Group, Cosmoprof and Salon Centric stores, according to Bulsara, whose firm has published a special US Salon Booth Rental Market Study-2011 with detailed sections on the new dynamic of marketing to booth rentals.

In the long run, PCR predicts the better managed, large, private and corporate chains and booth rental salons combined will satisfy nearly 75% of all US salon consumer market needs.

“While independent artistic salons catering to high-end clients will always play an important role in the professional salon industry marketplace, this business model will continue to lose market share to booth rentals and chain salons,” said Bulsara. “The most likely outcome will be the evolution of new hybrids that combine the best client- and stylist-centric practices from all three business models.”

The Professional’s Arsenal
But unless you are talking about viewers of reality TV shows like “Jerseylicious,” consumers show little interest in the minutia of the hair salon industry. What matters to them are great service and great products.

As such, professional hair care manufacturers must be at ready with cutting-edge technologies that can be used at the back bar and in the chair and be placed at the point-of-sale to achieve the desired style, which this year ranges from braids to shine to movement to impactful color.

For Sebastian, shine is the big story. Its new Sebastian Professional End-to-End Shine System, launching in August, is all about shine “which is huge for spring and summer when hair tends to be dry and damaged from the seasonal elements,” said Sebastian Professional lead stylist design team member Janine Jarman.

Braids and braided up-dos were among the trends cited by Rodney Cutler, a brand ambassador for Redken, which has been rolling out a number of new products. According to Cutler, Redken’s new powder grip 03 mattifying hair powder can prep the hair to make braiding and updos easier to style.
“Creating looks that last really means using the right product from start to finish,” Cutler told Happi.

And knowing that color is often the launch pad for great style, this Spring, Redken rolled out its Chromatics Prismatic Permanent Haircolor.

“With an oil delivery system, zero ammonia and 100% gray coverage, Chromatics offers the next generation of hair color,” said Shae Kalyani, VP of integrated marketing communications for Redken and Pureology.

In 2012, hair color has moved far beyond basic blondes and brunettes to shades that are much more head turning—even if only for a short while.

Pureology Precious Oil is a versatile product and is the first product certified under Green Seal’s GS-50 Standard.
“A huge trend we are seeing with a variety of celebrities from Katy Perry to Nicki Minaj to Lauren Conrad is electric colors strategically placed in the hair to achieve a fun and funky look,” said Beth Bewley, co-founder of Eufora International, which has rolled out Creative Streak Collection, a range of temporary, vibrant hair color sprays that easily shampoo out.

“It speaks to a strong trend without the commitment,” she said.

At TIGI, the story centers on “Hair Reborn” and its new Hyper-Distillation technology (a super refined process offered by Croda). The firm contends it is the first in hair care to use the special distillation process, one typically used in high-end skin care products. The collection is broken into three “journeys” that address a level of hair damage (i.e., dry, frizz-prone and weak/damaged) via four products—an in-salon treatment, shampoo, conditioner and a take-home treatment.

Texture remains a hot topic in the salon sphere, and arming stylists with product and education is a must in this popular service area. Pravana, for example, now offers stylists the opportunity to become Perfection SmoothOut certified through the Pravana Pro Site. After watching a video, stylists must then pass an online exam.

Whether it is straight or curly, “women want their hair to be touchable and soft,” according to Wendy Balanger, Pureology Colour ambassador.

“Right now it’s about movement in hair,” continued Balanger, who pointed to Pureology’s New Precious Oil Versatile Caring Oil as a perfect match for the trend. Company officials contend it fills the gap in the color care market, and can be used in a multitude of ways. Plus, this 100% vegan and 100% biodegradable product is the debut product to be certified under Green Seal’s GS-50 Standard for Personal Care Products and Cosmetics.

In the end, stylists want products that unleash their creativity.

“Stylists want product that they can control,” said Balanger. “We are artists and want to decide how much hold or support we want. Like mad scientists, we create the perfect mix for each guest.”

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