Price Attack provides recession-resistant opportunity
A quick glance at any of the media reporting on the world’s current economic position, and anyone would be forgiven for concluding that things are looking bleak.
Not so for Australian hair retailer Price Attack and its franchisees who are continuing to enjoy significant growth despite the downturn.
So what is it about Price Attack which allows it to defy current market trends?
Managing Director of the retail franchise chain, Barry Jarred, believes it is a combination of factors including a well-designed model based on delivery of quality products at great value prices and Price Attack’s enviable position as leading retailer in an industry which is traditionally considered recession-resistant.
“When times get tough, seeking out great value becomes even more important for consumers”, Jarred explains, “but history has shown us that women are loathe to give up having beautiful hair – despite any economic pressure. That’s where Price Attack stands out. We are known in the market place for providing all the great quality professional haircare brands that women would never sacrifice, but at the best prices. Our value equation is very clear and well recognized.”
Recent consumer research from Mintel Beauty Innovation (27 April 2009) supports Jarred’s conclusions.
The research was conducted into female consumers’ reaction to beauty purchases in the current economic climate, and revealed that for most women, haircare is considered an essential purchase – not a luxury.
The research demonstrated that the beauty business as a whole is very resilient, with six out of ten women surveyed reporting no change to their beauty buying habits, despite the troubled economy. In addition, the research found that the haircare category was better able to weather the impact of the economy with women most likely to spend the same or more on “essential” products such as shampoo.
This is consistent with the conclusions of industry analysts such as DC Strategies and IbisWorld who predict significant growth in the haircare industry over the next five years, despite the current financial situation. Rod Young of DC Strategies believes we are only seeing the beginnings of the potential for the hair and beauty market which will continue to grow in response “to the spending power of independent women”. He argues that there will continue to be significant increases in the hair and beauty industry as a result of the “true financial emancipation of women, supporting themselves as individuals and choosing how to spend their money”.
The Mintel research also showed that consumers are adapting their spending patterns to wait until products are on sale or switching to DIY at home options such as hair colouring, blowdry, waxing and hair treatments. This customer focus on looking good for less has been termed “austerity chic” in the UK or “econo-chic” in the US where value-orientated providers are proving the real winners.
With Australia’s biggest range of professional waxing, tanning, hair colouring, and hot styling solutions inside every store and with a strong customer identification with value, Price Attack is ideally positioned to take advantage of this change in spending patterns.
“Price Attack identified the potential in the DIY beauty market very early on,” says Jarred. “Our stores provide a genuine solution for customers who want to save money whilst still achieving professional results.”
The cosmetics franchise has seen a steady increase in home beauty treatment sales over the past few years and as a result has made this category a key feature of its future growth strategy.
It is this ability to identify and adapt to changes in spending patterns and economic conditions which further supports Price Attack’s position as a preferred retailer (and franchise).
Price Attack’s Franchise Recruitment Manager, Kristy Ellis, has observed a large increase in franchising enquiries over the past six months. She says that savvy investors have identified Price Attack as being one of the few franchised businesses in a position to benefit from the changes to the economic climate.
“Many of the franchise applications we have received have named the resilience of the haircare industry as a primary reason for their interest.” Ellis says. “They choose Price Attack as the best opportunity within the haircare industry because of our strong brand recognition and national presence, focus on value and ability to adapt to market changes.”
These factors are frequently identified by industry analysts as key to operating a “winning” business during the current economic decline. When these factors are coupled with Price Attack’s already strong systems and leading market position, it is little wonder the franchise is receiving such high levels of attention from investors.
“Obviously there are no guarantees in business”, says Ellis. “However, there is an additional onus on investors at the moment to thoroughly analyse whether the business is in a strong position even in times of economic decline. Price Attack clearly offers a recession-resistant opportunity”.