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SEARCHAs I was traveling to the International SalonSpa Business Network in Amelia Island, Florida, this week, I took a moment to identify seven mid-year trends that will continue to impact the beauty industry in the near future. As you begin your planning for the end of 2011 and into 2012, keep these top trends in mind:
As I was traveling to the International SalonSpa Business Network in Amelia Island, Florida, this week, I took a moment to identify seven mid-year trends that will continue to impact the beauty industry in the near future. As you begin your planning for the end of 2011 and into 2012, keep these top trends in mind:
The sputtering economy, driven by global political and economic dynamics, is creating new realities. Three major factors will continue to impact the beauty industry for the rest of this year.
First, unemployment continues to hover at 9% and does not factor in what we call under-employment (people who have had hours and wages/benefits cut). We do not see any quick fix to this, especially as technology erodes new job creation. We wonder how long the government can afford to prop up benefits.
Second, high-energy costs are going to continue to dampen consumer spending and while we doubt there will be an inflationary spiral, there will be inflationary pressures in both energy and food prices that account for a large portion of consumer disposable income. This will have an impact on beauty industry spending.
Finally, personal finances will continue to be pressured as local taxes will undoubtedly rise and more services will be reduced across all levels of government. We see foreclosures continuing and depression in the home buying and building market. We see a small return to credit card usage but the frugal consumer that arose from the Great Recession will still factor into spending decision-making. Savings and credit expansion may happen but we expect the idea of stretching a dollar to continue and that makes marketing the business of beauty even more important for the balance of 2011.
The "Lipstick Effect" is definitely impacting consumers. A consumer may not be able to afford a new pair of shoes but will spring for a tube of lipstick with a lower price point. Salons and professional brands have to learn how to turn the lipstick effect into more sales for salons. High-value salons are at a greater risk to lose guests compared to value-priced salons. Color services will be stretched unless salons develop new ways to offer lower cost services. Professional beauty brands need to find new ways to promote themselves in this new economic landscape.
Social media (Facebook) is the hot new marketing trend. No one has found the magic key to create effective content to influence sales. It is good to stay connected with guests, but the goal is to create new guests and increase sales. Salons and brands should embrace social media and mobile technologies, but not at the expense of reducing other proven marketing tactics to grow the business.
The hot category is MEN. Numerous surveys have shown that men are placing more emphasis on personal appearance as competition for jobs and job interviews has increased. In addition, the younger male demographic puts an emphasis on grooming and this could be having a trickle up effect on older guys. Salons have a huge marketing opportunity to grow this category and expand it from just haircuts to personal grooming. Established men's brands need to rebrand their positioning and the new entries need to be very aggressive. Salons need to create men's islands for men's products and change their attitudes toward male guests. This is a huge growth opportunity.
Pockets of consumer spending are increasing. We see it in casual dining as consumers open up their stretched pocketbooks a little. Personal spending is up marginally (retail sales in April only increased 0.5%) and thanks to retailers like Macy's and Wal-Mart, who are discounting heavily, we are seeing greater foot traffic in stores, but only small sales gains. The beauty industry has to react positively to these changes through aggressive marketing.
New Guest retention is declining. According to salon owners we have polled in the last month. We visited with three large salon owners in the last month across the country and all raised concerns over Guest retention. This has always been a concern for value-priced salons and now we see this in all salons. Without an impactful Guest Loyalty program, a salon is at risk.
Declining average tickets at all levels of business is a major concern. Group 3 Marketing tracks sales at the manufacturer, distributor and salon levels. All the data we evaluate points to a reduction in the average transaction and that should be of concern to the entire beauty industry.
To learn more about Group 3 Marketing, visit www.group3marketing.com.
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