This is free marketing research on the Beauty Salon industry and can include information on the background, market structure, definitions, competitors, trends and developments of beauty salons and is related to other topics such as health, hair, cosmetics and spa.

Table of Contents

[edit] Background

A beauty salon is a business dealing with cosmetic treatments for men and women. The distinction between a beauty salon and a hair salon, although many small businesses offer both, beauty salons are based more on the face and body treatments. Over half of all personal appearance workers are self-employed, and while many own and operate small “mom and pop” stores, others work out of their homes, boutiques, rent chairs, or space from salons, or market themselves as willing and able to go to the clients preferred location.

[edit] Market Structure

Client retention is the name of the game when it comes to the beauty industry. That's because repeat customers generate a higher return on every dollar spent getting them in the door. Most salons keep an eye out for those looking for color treatments: These clients tend to come in more often (about every six weeks) and shell out around $100 to $125 per visit, versus just $35 to $45 for a haircut.

Customers are more likely to develop a bond with their stylist than with the salon or the salon's brand. That's why employee retention is also so important: If your stylist leaves, his customers leave with him. Employee turnover rates can run as high as 40% annually. That means more than a third of the staff might leave during the course of the year.

The typical salon is a small full service salon with 5 stations, 3 full-time professionals and 2 part-time professional. Salon owners report an average of 155 clients per week.

There has been notable growth in the industry since 1999: • The total number of salon professionals is up 26% • The total number of salons is up by 5.8% • The number of chairs or workstations is up by 5% • The number of employees leaving their positions is down 12% • The number of new hires is up 37% since 1999

The actual salon industry is a job-seekers market. Approximately 56% of US salon owners reported that they had job openings. Over 572,000 open positions were filled in 2002 with both experienced salon professions changing positions (73% of the new hires) and with inexperienced professionals with less than one year’s experience (27% of the new hires).

The supply does not appear to be keeping up with demand. Approximately 3 out of every 4 salon owners who looked for new employees in 2002 reported difficulty in finding qualified personnel.

Other key findings

•	59% of salon owners classified their salon as a full-service salon
•	18% as a haircutting salon
•	4% as a nail salon and 5% as a barber shop
•	57% of salon employees work full time
•	33% are part time (20-35 hours), and 10% are low time (less than 20 hours)

The average salon income, including tips, is about $30,000 - 50,000/year. While manicurists are currently only 13% of the current industry employees, some 16% of the anticipated vacancies are for professionals with those skills.

[edit] Industry Definitions

• Massage – for the body – a popular beauty treatment with various techniques offering benefits to the skin and for mental well being and relaxation.

• Facial treatments – stimulates the skin, relaxes the client and also energizes the face back into condition after exposure to the daily weather

• Manicure – a treatment for the hands, includes the finger nail

• Pedicure – a treatment for the feet, includes the toe-nail

[edit] Market Metrics

The beauty industry includes color cosmetics, skin care products, fragrances and hair care products. The beauty industry worldwide and within the U.S. represented over $230.9 billion and $46.6 billion, respectively, in retail sales in 2004.

The five largest markets in the beauty care industry 

United States 		$45.6B
Japan 			$30.7B
France  		$14.0B
Germany 		$12.4B
UK			$11.6B

The U.S. color cosmetics market, which includes facial makeup, eye makeup and lip products, is estimated to have had retail sales of $8.1 billion in 2005. The market for facial makeup is the largest segment of the U.S. cosmetics market, with estimated retail sales of $2.8 billion in 2005. In addition, the markets for eye, lip, and nail products are estimated to have had retail sales of $2.5 billion, $2.2 billion, and $0.6 billion, respectively, in 2005. U.S. retail sales of skin care products which include facial care, body care, and hand care were an estimated $7.6 billion in 2005. The facial care market, the largest segment of the skin care market, was estimated at $5.7 billion in 2005 with approximately 88% of sales in this segment derived from facial moisturizers, anti-aging products, and cleansers.

The international color cosmetics market is estimated to have had retail sales of $32.7 billion in 2004. The market for facial makeup is the largest segment of the international cosmetics market, with estimated sales of $11.6 billion in 2004. In addition, there are estimates that the markets for eye, lip, and nail products had retail sales of $8.3 billion, $9.4 billion, and $3.4 billion, respectively, in 2004. International retail sales of skin care products were an estimated $50.2 billion in 2004. The 2004 estimates for the international facial care market, the largest segment of the skin care market, had retail sales of $39.9 billion.

In the US the professional beauty services market is a $62B industry. Salon revenue comes from two sources: services and retail sales. Per square foot, the footage devoted to selling products (like shampoo and hair gel) is more profitable than footage devoted to service.

[edit] Industry Players

When it comes down to key players in the industry there are no notable beauty salon service focused companies. There are, however, a few major players when it comes down to the product side of things.

Major Manufacturers and Suppliers		Location	Revenue	      Market Cap	

1. Neutrogena Corporation 1			US		$57.14B	       $182.93B
2. Avon					        US		$9.2B		$14.75B
3. Sally Beauty Holdings 2			US		$2.48B		 $1.5B
4. Revlon					US		$1.36B	       $577.43M
5. Elizabeth Arden				US		$1.13B	       $690.8M

1 Owned by Johnson and Johnson
2 Largest Beauty supply store chain in US

[edit] Recent Trends and Developments

It is suggested that salons should aim to generate about 20% of their revenue from product sales and 80% from services. That 20% is as profitable as the 80% coming in from services. Most salons don't realize that until later on, when they're busy but struggling. Of course, like almost any market these days, Asia looks to be a fast growing opportunity with more women moving into the urban areas and a strong trend in women in their 30s and 40s to want to improve their appearance.

[edit] Sources

• Yahoo Finance
• Forbes.com
• Eurodata