SmartMoney.com:
What customers need to know to get their fair shear at the salon.
1. "Money grows on you."
Hairdressing is often described as "recession-proof" because it is one of the last purchases consumers give up during tough economic times. People will wear old clothes but find it difficult to skimp on a good haircut, says Nick Arrojo, owner of Arrojo Studio in New York and former star of TV's "What Not To Wear." Indeed, despite the recession of 2008, the number of mom-and-pop hair salons increased by nearly 8% between 2008 and 2009, according to the most recent data available from the U.S. Census Bureau. And, although the U.S. economy lost 1.6 million jobs between January 2000 and 2011, salons and spas added 75,000 jobs, according to the Professional Beauty Association."It's a very resilient industry," Arrojo says.
Consumers may cut back on their haircuts but they aren't likely to stop visiting the salon altogether, says Kathryn Hawkins, a consultant for small businesses. "Someone who might have splurged on $200 hair color in the past might switch to a do-it-yourself option, but they are still likely to come in for a haircut, which most people view as an essential service." Indeed, hairstylists say most clients view their treatments as essentials -- not luxuries. "A woman is not going to go on a date if her dark roots are showing," says Michael Duenas, CEO and founder of hairstyling service HairRoomService.com. The Bureau of Labor Statistics estimates that consumers will need nearly 16% more hairdressers and beauty salons by 2020.
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2. "Your hairline may be receding, but our prices aren't..."
The Federal Reserve has worked to keep inflation low over the past year, but Chairman Ben Bernanke -- who probably doesn't need many haircuts -- doesn't seem to be having much luck with the salon industry. The cost of a men's haircut and blow dry jumped 46%, to $42, in 2011, according to an online survey of salons published by American Salon Magazine. A women's cut rose 29%, to $56. In comparison, U.S. consumer prices rose only 1.9% overall. What gives? Duenas says the costs of commercial rents and raw materials for dyes and other treatments have been increasing in recent years. Others point out that despite the rising prices, most hairstylists aren't raking in the dough. The average hairdresser makes an annual salary of only $22,700, including reported tips, according to the Bureau of Labor Statistics. Hairstylists also point to the rising popularity of big hair -- curls and waves -- over straightened styles. While prices on straightening inched up only 2% last year, adding body through treatments jumped: blow-drying soared an average of 38% for men and women, while permanent waving (for women) rose 29%. Hair extensions and weaves spiked 18%, the survey said.
3. "...except when we feel like negotiating."
Some hairdressers will advertise a high price to make them look like they're in demand, but when pressed will charge a lower fee. Even hair stylists that aren't doing a brisk business may start advertising and charging higher prices to make up for low volume, Arrojo says. When it comes to styles, industry experts say consumers typically believe they're getting a better cut, from a more established stylist, when they pay more, he says.
There's good reason to negotiate, especially in a neighborhood salon, experts say. These businesses want you back again and again. According to a recent survey by Atlanta, Ga.-based direct mailing company Welcomemat Services, hair salons are the third most patronized local businesses after pizza restaurants and car washes. The typical woman client will spend between $800 and $900 a year on cuts, styles and the occasional dye job, reports Welcomemat. There may be room to negotiate at fancier hair salons too. Many contract with independent hairstylists who charge their own rates, then give a percentage to the salon owner, according to Hair-Salons.com. They may have more flexibility to give a discount than hairstylists who work for salons with set prices.
Others say salons keep a strict control of their pricing policies. "There is room for some maneuverability from time-to-time, but we can't do a bunch of free services," says Carlos Rogers, owner of Hush Salon in Philadelphia. Brad Masterson, spokesman for the Professional Beauty Association, says stylists may be able to alter their prices, but says most would be put off by the notion.
4. "The hair products are the real moneymaker."
That pyramid of shampoos, conditioners and hot oil treatments most consumers must dodge before leaving the salon aren't there for decoration -- that's where salons earn the big bucks. And hairstylists and barbers are pushing them at an increasing rate: Around 57% of salon/spa owners reported higher retail sales between the first quarters of 2010 and 2011, according to the latest industry report by the Professional Beauty Association. The sale of hair-care products hit $1.9 billion in 2010, up 2.3% on the previous year. "It's a big part of revenue," says Jennifer Loprete, master colorist and creative director at Vito Mazza Salon & Spa in Woodbridge, N.J. "But it's also about educating clients in aftercare." Clients who buy the products, she says, are twice as likely to remain loyal customers for six years or more.
Bottles of conditioner and shampoo are obviously one way for a salon to boost the bottom line, especially when they charge more for the products than bigger retailers. But experts say says there's another reason the fancy shampoos are important -- when the bottles are empty, customers will have extra incentive to make an appointment. Some salon products do contain a higher concentration of expensive ingredients like Vitamin B and avocado not found in typical drugstore shampoos and conditioners, the Professional Beauty Association's Masterson says. And the steep discounts at big box stores do prevent salons for adding too high a markup.
5."A cosmetology license doesn't really cut it."
Cosmetology licenses are given out based on hours spent cutting hair, and in some states, a written examination. Skill, and style, are not required. "It's a piece of paper that gives you the opportunity to practice legally, but after that you have to find your way in the business yourself whether it's a $10 haircut or a fancy place," Rogers say. That someone has a license is no guarantee they won't mangle your hair, Masterson says: "Experience definitely weighs more over licensing." The hours required for licensing also vary from state to state. New York requires 1,000 hours of practice, while California requires 1,600 hours. Those hours are just a fraction of what's needed for someone to have a clue when they cut, experts say. Some states also require continuing education for hairstylists. A licensed stylist may have no sense of the latest fashions and technologies, Rogers says.
To be fair, Masterson says each state sets their own licensing rules and a graduate generally works as an assistant for one to two years. But licenses are also needed so people understand other issues like health and safety and, for barbers, the proper use of blades, he says. Some states also require hairstylists to make their education an ongoing program in order to renew their licenses after a certain amount of years. "There is a lot of passion and education to learn more about your craft," Rogers say, "but it's up to the individual."
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SmartMoney | By Quentin Fottrell Posted: 04/30/2012 4:07 pm