How The Salon Business Model Is Adapting To Change

Chances are the salon your mother patronized is very different from the one you work in today. It’s not just the evolution of style—the sunset of the wash-and-set, the rise and fall of the perm, the mania for straight, or blonde or ombré—but the way we work, manage and market that's evolved into something your mom’s hairdresser wouldn't recognize. 

Current changes in the beauty business reflect the larger economy: growth at the upper and lower ends, resulting in a shrinking middle ground; stagnant wages; conditions perceived as favoring independent contractors over employees and less disposable income to go around. In order to succeed, salon owners and beauty professionals have to bring all their creativity to bear to evolve in ways that answer these needs. 

The good news: This business is made up of very creative people. 

The following are the major trends in salon ownership, organization and management that are on the ascendency right now. Whether you choose to hop on one of these bandwagons or buck the trends to compete, combining your natural creativity with a drive to succeed is the key to success.

Renters vs. Employees
A move toward chair rental is the biggest trend in the salon business today. According to Cyrus Bulsara, beauty industry analyst with Professional Consultants & Resources, “The major movement is the move toward chair rental and suite salons and away from independent, artistic salons with a commission- or fee-based structure.” The reasons have to do with overall shifts in workplace economy. Salon owners stressed by a sluggish recovery are looking for ways to cut costs. On the flip side, individual stylists have more choices than ever before, and many don’t want to accept the strictures of the traditional employment model.

Stylists who are fortunate enough to be employed by a salon that provides education, mentorship, support and a team culture should think twice about going solo; you’ll most likely forgo those benefits. Salon owners who find themselves losing talent to chair or suite rental situations should proactively work to create the kind of supportive environment stylists value to keep them from straying.

One increasingly popular solution to the renter/employee dilemma is the hybrid salon: having some chairs that are staffed by employees and others by renters. For some, this model offers the best of both worlds and gives management a shot at attracting the area’s best talent. It also provides more flexibility in staffing and scheduling, since staffed chairs can be shared by two or more stylists who can work part-time or on different days. 

Salon Suites

A unique type of rental, salon suites are one of the fastest-growing trends in the business. They offer stylists the opportunity to own their own business by renting a fully-equipped, turnkey space that’s ready for business on Day One. Owner/operators can make their own hours, choose their own retail lines and build a business with lower overhead and less inherent risk than the traditional salon model. See “The Suite Life” (previous page) for more on the fastest-growing salon suite franchise in the country.

Luxury and Value Salons
Sport Clips, the value-priced men's franchise, was the nation's fastest-growing chain salon last year. At the same time, luxury salons are also on the rise. What’s going on here? Blame the influence of the income gap. The growing disparity between high and low is being played out in every market in the country, and salons are no exception. Whichever lane you're in, you need to understand your target customers and give them what they want. The value crowd is after price and convenience (walk-ins rule in this segment); the middle of the market is typically looking for service, professional advice and a relationship with a stylist (but with price limits to their loyalty); and the luxury segment is all about creating an "experience."

Niche Salons
Another way to win in a fractured market is to carve out a niche that no one else is exploiting. Niche salons —businesses that specialize in one thing, or one type of client—have been on the rise for years, and the trend shows no signs of stopping. The key is identifying unmet needs in your market. Relying on trends can be tricky, because what’s hot today won’t necessarily have longevity. Some businesses competing with niche salons in their markets find ways to integrate those services in a way that will keep clients from straying. Fueled by the same economic factors, some salons are choosing to branch out rather than specialize. One result is that boutique salons, offering everything from coffee to bespoke fashions in addition to cuts and color, are also on the rise. 

Multi-Location Salons
The same factors contributing to the rise of luxury and niche salons are prompting successful salon owners to branch out to new locations in search of new business. The other side of this coin is that many independents who expanded in the boom times are now consolidating and streamlining in the face of what is, for some, still a tough economy. See “Rebel Rebel” (next spread) for the story of one salon owner’s journey.

Men’s Grooming and Barbershops
Barbershops and salons catering to men’s grooming are among the fastest-growing segment of salon businesses. The trend is fueled not just by the move toward specialization, but by the fashion aesthetic of the day, with many men opting for shorter hair and a more groomed cut, which requires both upkeep and products. If you’d like to capture some of that business for your salon, make sure you’re offering the services men are looking for. Think about dedicating a chair, and perhaps even hiring a barber. (In most states, that’s a separate license.) At the very least, make sure the environment isn’t too girly to attract male clients; go for a more unisex décor. And make sure all staffers are educated and trained on the latest techniques for male cutting and styling.