Hairdressing: the ups and downs of the beauty industry

Hairdressing is a resilient industry, but it still has its challenges.

Thanks to the laws of nature, hairdressing is a recurring revenue stream and requires ongoing maintenance; basically a necessary treat. Sure it’s a discretionary service, which means industry revenue will always be sensitive to movements in household disposable income, but generally people take pride in their appearance and if they can, will pay for someone else’s expertise to help them look their best.

Loyalty to brand vs hairdresser

The name Franck Provost is behind the success of 650 salons across 30 countries, with a collective mission to enhance natural beauty with the latest techniques, styles and trends from Paris. Jean-François Carré, master franchisor for Franck Provost Paris Hair in Australia, believes the principal challenge in hairdressing today is securing customers’ loyalty to the salon and brand, rather than to an individual hairdresser.

“The key advantage of a branded business like Franck Provost Paris, with a concept, standards and recognition, is to make the clients loyal to the business and not to the operators,” says Carré. “We provide proven and powerful commercial and marketing tools to recruit new clients and develop loyalty and visit frequency.”

Hairhouse Warehouse, 2011 winner of the Established Franchisor of the Year in the Westpac FCA Excellence in Franchising Awards, prides itself on individualising every consultation. That way, customers realise each visit means a stylist spends time with them, understanding how they feel about their hair. A loyalty program that rewards customers for ongoing business also assists with repeat business.

Specialty services

A trip to the hairdresser can result in a big shock when it comes to paying when there are separate charges for shampooing and conditioning, cutting, colouring, treatments and blow-drying.

Just Cuts Franchising and Blow Dry Bar are two franchises that have built their clientele on initially offering one hairdressing service at a reasonable flat fee. As the name suggests, Just Cuts’ specialty is cutting hair; whether the client has a trim or a completely new hairstyle, the price is the same. Similarly, Blow Dry Bar’s forte is blow-drying any length of hair at a fixed cost. Even though the businesses incorporate other hair services and fixed price packages, their success seems to be largely due to concentrating on one main offering at a set charge.

“Before entering the hair industry I identified a need to differentiate our company from traditional hair salons, so Blow Dry Bar created a niche for ourselves, specialising in a particular service (blow-drying) and being the best at it,” says Nathan Cuneen, managing director. “Also, concentrating on volume and repeat business, rather than higher profit margins per service is key,” he adds.

Denis McFadden, CEO and founder of Just Cuts Franchising explains, “Just Cuts offers our clients the convenience of being everywhere, a quality style-cut at an affordable price with no appointment necessary.” He says this includes a written satisfaction guarantee. “Human beings are creatures of habit and most of all they get consistency with no surprises at Just Cuts.”

Mobile services and DIY

Mobile hairdressing businesses and at-home products can be viewed as a cheaper alternative but do they pose a real threat to hair salons? McFadden reveals, “Latest industry reports claim only 15 percent of people colour their hair in a chemical salon; we were stunned by the number who colour at home.” Many Just Cuts salons choose to stock home hair colour Crema for this very reason.

He agrees that people are time poor and want better value for money. “Colouring at home is a great saving for families and individuals. I believe the stigma has changed and people happily colour at home.” However, McFadden points out mobile services do not harm Just Cuts. “With about 80 percent of their business being colour services, it does not really affect us as much as [it would] a full-service chemical salon.”

Carré stresses that neither are a threat but that they are two different markets. “At Franck Provost, guests don’t only come to have their hair done but also for the service, the atmosphere and the experience they will have in the salon.”

Franck Provost

Cuneen agrees, “We have not noticed a drop off, we make the entire experience of visiting a Blow Dry Bar salon memorable.” He says it’s not just about great hair, “Most women enjoy some down time in a salon; a glass of complimentary champagne and some girly magazines.”

Hairhouse Warehouse says industry data indicates more customers are stretching the time periods between visits but that even in tough economic times, they still want great looking, healthy hair, and value for money. Each customer experience is tailored to their specifics needs, so they walk away feeling and looking their best.

Staff retention and expertise

Customer loyalty continues to be adversely impacted by the high rate of staff turnover in hairdressing, and it’s a global issue. “At Franck Provost, hairdressers are part of an aspirational brand, receive ongoing training on the concept, latest collections and techniques from Europe, and work in a fun and friendly environment, which is at the core of the Franck Provost culture,” Carré explains. “So the staff retention rate is much higher at Franck Provost than the Australian average.”

Offering unique skills across a brand assists greatly in this regard. “At Franck Provost, the brand image and recognition around the world attracts good hairdressers, many of them French or European and mastering specific techniques.” says Carré. “There is also ongoing training on the latest techniques from Europe so they keep improving all the time.”

“Recruitment and retention of staff is only an issue if our franchise owners fail to grasp the fundamentals of managing teams,” says Dean Salomone, franchise manager, Hairhouse Warehouse. “Our recently launched leadership program has a dedicated HR component to it and we are already seeing the benefits of this type of ongoing education.”

Site rentals

McFadden says that once the rent is known, Just Cuts understands what is required for the rest of the business model to work in a shopping centre. “We have the formula and measure the numbers; at times we have moved out of shopping centres because the demographic has changed or the number of visits to the centre has changed for various reasons.” He says even though shopping centres in Australia have low vacancies and people are prepared to sign a five-year lease, rents remained high compared with the rest of the world.

Blow Dry Bar tends to stay away from “ridiculously high” shopping centre rentals, although recently just designed its first kiosk style outlet. It is only 25 square metres, but still can produce extremely high turnover, with lower asking rents, says Cuneen.

James Mariani, national leasing manager, Hairhouse Warehouse, explains it’s always a balancing act between sourcing quality sites with rents that fit within the financial constraints of its business model but Hairhouse Warehouse is in a fortunate position. “With our 130 plus stores we hold the head leases, which allows us much more bargaining power than an individual business owner.”