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 85,000 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 $270,000 annually.

    • The hair care services industry consists of about 85,000 establishments that employ 445,000 workers and generate about $23 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

                                Feb 18, 2024 - Employment Costs, Consumer Spending Up
                                • According to data from the Bureau of Labor Statistics (BLS), the hair care services industry has experienced an increase in employment levels since 2020, but it has yet to return to its pre-pandemic levels. Employment levels have grown nearly 8% from December 2020 to December 2023. Employment costs have climbed significantly in a tight labor environment, with wages reaching $24 an hour in December 2023 and increasing more than 40% since December 2019, according to the BLS. Consumer spending levels grew in the last half of 2023, a 3.1% increase in the third quarter and 2.8% in the fourth quarter, according to Reuters.
                                • Consumer confidence levels rose in January 2024 for the third month in a row, following three consecutive months of declines, according to data from The Conference Board. The Conference Board’s consumer confidence index increased to 114.8 in January 2024 from 108 in December 2023. According to Dana Peterson, Chief Economist at The Conference Board, “January’s increase in consumer confidence likely reflected slower inflation, anticipation of lower interest rates ahead, and generally favorable employment conditions as companies continue to hoard labor.” Peterson added that the gains in consumer confidence were largest in householders aged over 55. Plans to purchase homes, autos, and large appliances declined slightly on a monthly and six-month basis.
                                • A new report by Payscale lists hair stylist as the second most in-demand job of 2023, ranked by fastest-growing wages. Hair stylists received a median pay of $34,300 in 2023, which reflected 22% year over year wage growth. The report noted that hair stylists also were in the top 10 in-demand jobs in 2021. According to the report, “During the early days of the COVID-19 pandemic when people couldn’t get their hair cut, many hairstylists were laid off and some abandoned the profession. However, that meant that in subsequent years, there has been a shortage of hairstylists.” Hair salons have also continued to be impacted by supply shortages stemming from the pandemic, which has increased prices and created tensions to keep prices reasonable for customers. The Payscale report projects that overall pay increases in 2024 will meet or exceed inflation for the first time in years.
                                • Hair salons will have to monitor minimum wage changes, as 22 states increased their minimum wages in January 2024, according to USA Today. About half of the increases are automatic adjustments linked to inflation. States that raised their minimum wages in January 2024 include Hawaii ($14), Maryland ($15), Nebraska ($12), and Washington ($16.28). Several states are set to boost their minimum wage levels later this year, including Florida (up to $13 in September) and Nevada (up to $12 in July). According to the Economic Policy Institute, nearly 40 US cities and counties will increase their minimum wage rates above state levels at the start of the new year. The federal minimum wage is $7.25 an hour, and more than 20 states, primarily located in the South and the Midwest, use the federal minimum as their wage floor.
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