Hair Care Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 76,600 hair care service companies in the US, including beauty shops, hair salons, and barber shops, provide hair cutting, coloring, and styling services. Hair salons may also provide skin and nail care services. Barber shops may shave or trim men’s beards. Companies often sell hair care products. The vast majority of hair care service providers (95%) are beauty salons.

Competition For Ancillary Services

Beauty parlors compete with spas, nail salons, and physician’s offices for ancillary services related to skin and nail care.

Dependence On Skilled Labor

The reputation and success of an individual hair care establishment is highly dependent on the quality of service and staff.

Industry size & Structure

The average hair care service provider operates out of a single location, employs about five workers, and generates about $376,000 annually.

    • The hair care services industry consists of about 76,600 establishments that employ 402,000 workers and generate about $28.8 billion annually.
    • The vast majority of hair care service providers (95%) are beauty salons.
    • The industry is highly fragmented; the top 50 salon firms account for 13.6% of total revenue.
    • The hair care services industry includes national chains, franchises, and independent operators.
                                Industry Forecast
                                Hair Care Services Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Jun 17, 2024 - More States Add Textured Hair Training Requirements
                                • Minnesota and Connecticut have added new regulations requiring hair education training, education, and testing on all hair types and textures to earn a cosmetology license, according to recent reports. Minnesota Senate President Bobby Joe Champion, who sponsored the legislation, said the new law will increase the knowledge base and cultural competence of the cosmetology industry and introduce stylists to new clientele populations and make it easier for black, indigenous, and other people of color (BIPOC) to get the services they need, per Mpls-St. Paul Magazine. Other states enacting similar requirements are New York (2022) and Louisiana (2021). Historically, cosmetology schools have not featured textured hair education as part of their curriculum, and students who desired it needed to pursue additional training.
                                • Consumer confidence levels increased in May 2024 following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index was 102 in May 2024 from 97.5 in April 2024. Dana Peterson, chief economist at The Conference Board, noted that confidence improved among consumers of all age groups, and those in the income category of over $100,000 had the largest rise in confidence. Plans for auto and large appliance purchases rose on a six-month basis.
                                • More salons and spas are incorporating “Buy Now Pay Later” (BNPL) payment options to give customers additional flexibility to pay for high-priced services such as extensions and color treatments, according to Modern Salon. The BNPL option allows customers to pay for purchases in installment-based payments over a fixed period interest free. The option lets salons consider expanding their current prices or adding higher-priced premium services, knowing that clients have payment flexibility. Younger shoppers are also comfortable using the BNPL plans. According to a new report from PYMNTS Intelligence and Splitit titled “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans,” 65% of Gen Z and millennials used pay later plans in the past year.
                                • The US hair care services industry is projected to grow at a CAGR of 6.2% between 2024 and 2028, according to a forecast from Inforum and the Interindustry Economic Research Fund, Inc. The expected growth rate is faster than the overall economy's anticipated growth. The report noted that consumer confidence levels have improved, which bodes well for other services industries, which include hair care services. Additionally, consumer sentiment has seen a degree of improvement following sustained lower levels. A broad recovery is underway for many in-person services that were affected when consumers were largely limited to their homes in 2020 and 2021. Factors that continue to limit spending are higher price levels and interest rates, though both are expected to improve in 2024. Post-pandemic, consumer spending has shown slower gains of 2.5% in 2022 and 2.2% in 2023, supported in part by savings amassed by households from federal pandemic relief programs.
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