• products and services that address their individual needs
• speed and convenience
• top-quality products-the word "professional" adds to a product's appeal

To step up to those demands, beauty salons will have to embracetechnology on a broader scale; product distributors estimate that onlyabout 15 percent of single-location, low-profile salons arecomputerized. They will have to change to keep up with clientele who,for example, are beginning to want to text-message an appointment intothe salon.

Staffing

Recruiting and retaining staff have long been concerns for beautysalons. New stylists are becoming increasingly sophisticated and, withthe market still in their favor, can demand benefits such as healthinsurance, retirement planning and paid vacation, as well as continuingeducation opportunities.

"Now that we have better schools to inspire and educate futurestylists, salons need to offer more benefits," urges Steve Cohn,president of Illinois-based Premier Beauty Supply.

Sales growth

The impact of Katrina and a shrinking population in the key buying agegroup of 35-45 resulted in 2005's low growth of the hair care segmentin drugstores and superstores as well as in salons, which logged in a2.8% increase in service sales and a 2.4%, or $6 billion, increase inproduct sales over the previous year. This is slightly lower than inrecent years.

But there were some bright spots, chiefly in hair color, body care andnails. The hair color growth is especially significant, since sales ofhome hair color actually decreased during the same period. The decreasein perming and relaxing is a little misleading, since to some extentthose services were replaced by new straightening services-and thosewere included in the category of "specialty services," which actuallyclimbed 8.2%.

BEAUTY SERVICE CHART

BEAUTY RETAIL CHART

Greater presence

A boom in spas-both day spas and resort/hotel spas, but particularlymedi-spas-helped boost the total number of salons in 2004-2005 aboveprevious levels. Increased numbers of mega-salon/stores and nail salonscontributed to the growth as well.

Observers disagree whether the trend of recent years that saw anincrease of "booth rental" salons will continue. Already strong in thewest and south, rental operations are gaining momentum in the midwest.However, some industry observers speculate that highly motivated newgrads are shifting the balance back to well-established salons that canoffer them a large clientele and perks.

Peek at the future

Beauty salons will meet consumers' needs best in the months to come ifthey focus on personal and customized services and if they become moretechnology-savvy. They can do well by targeting a specific clientele,and they will benefit from creating some quick-service options thataddress clients' busy lifestyles.

Sources: two "State of the Industry" articles by Victoria Wurdinger,published in MODERN SALON June 2006 and May 2005; the Industry Study byProfessional Consultants and Resources (PCR); Information Resources,Inc. (IRI); International Spa Association (ISPA); Data for Development,Inc.