Increasingly, people are taking a more holistic view of their health. Today’s beauty rituals now include massages, a full-day trip to the spa where we can relax and unwind, or spoiling ourselves with a luxury high-end product. Beauty rituals are seen as an escape from the hustle and bustle of life in the information age. The demands of work and family have in many ways contributed to the ongoing development of the industry and to the diversification of personal services on offer. For the entrepreneur this continuing growth and evolution offers a varied menu of opportunity.
Products and Services
Beauty industry opportunities can be broadly separated between products and services, though many providers offer both. Within both products and services, there exists a wide range of business models based on target market, production processes and location.
From exfoliating soaps and volumising shampoos to anti-wrinkle creams, the beauty industry provides us with choices galore that fuel our drive to keep looking youthful, attractive and healthy. Cosmetics exist for every style and taste, as well as every skin tone, texture and even allergy. Certain businesses also distinguish themselves through manufacturing processes such as using all natural ingredients or a refusal to test products on animals.
Indeed, it’s in the product or retail division that face and body treatment franchise Sorbet, which launched in 2005, has seen the biggest growth. “Development in the industry has been consistent, but where we have seen the most amazing growth is on the retail side,” says Jade Kirkel, brand manager at Sorbet. “Where once our business was 60% treatments and 40% retail, those figures have changed. Today, at least 60% of our business is selling products.”
Sorbet products include the Dermalogica and Environ skincare ranges, OPI, Essie and Incoco nail care, and Sorbet’s own range of nail and body care products.
“Our focus on retail has seen Sorbet perform extremely well in the last two years and we will be opening our 40th branch this month. Around half our branches are owned by franchisees, and the plan is to open another four before the end of 2012.”
Beauty Industry Trends
Diversity and innovation exists because consumers demand it. The beauty industry continues to expand globally, with some projections claiming 8,5% growth by 2014.
Several trends support this expansion and promise continued profitability into the future.
Globally, rising per capita incomes and greater access to international markets are increasing spending on discretionary items such as perfumes and cosmetics. Though the recent economic turmoil had decreased spending on some discretionary products, purchasing of beauty products has remained strong.
Targeting Male Customers
Unsurprisingly, one of the fastest growing segments of the beauty industry is the range of products and services aimed at men. Where once the beauty industry targeted female consumers, metrosexuals (usually urban males who pay attention to their personal appearance and style) are gaining increasing attention from the industry. Men are being targeted for body sprays, specialised hair products, lotions and even nail care. Salons offer a menu of pampering services for men, including massages, facials, manicures and pedicures.
“We’ve definitely seen our male customer database grow rapidly,” says Kirkel. “The way to attract men to beauty salons is to ensure that the décor is not ‘girly’ or too feminine. Sorbet salons are gender-neutral and our colours and store layouts are designed to be attractive and comfortable for both men and women. We’ve also seen that it takes quite a lot to get male customers into a store, but once they are there and they feel comfortable, the level of customer loyalty is high.”
Brand Loyalty
Kirkel notes that women, who are very experienced consumers of beauty products, tend to be more fickle than their male counterparts when it comes to brand loyalty and they are often more likely to shop around. However, when they find a salon or product that they like, they share what works for them with their friends.
An international survey shows that personal recommendations weigh more heavily than celebrity marketing, and only 44% of consumers buy a particular product because of its claimed attributes. Like many things, beauty products gain a level of familiarity and comfort for the consumer, and switching to a new product often takes some extra incentive.
Loyalty Programmes
Popular marketing campaigns in the beauty industry often include a free sample and discounts for referrals to lure new customers in, and loyalty programmes to keep them.
“In Sorbet’s case, one of the most successful marketing initiatives we have undertaken was the creation of our loyalty programme,” says Kirkel. “It has 70 000 members and is growing every month.”
Hair Care
“Hair care is one area we are very keen to expand into,” says Kirkel. “One of the major trends in the industry is the move to the ‘one-stop beauty shop’. Time-pressed consumers are increasingly keen on salons that offer all aspects of personal care, from hair styling and massages to all the traditional beauty treatments such as facials, hair removal and manicures.”
Express Services
Kirkel notes that the demand for quick services has led to ‘express’ innovations such as 20-minute facials and manicures. “We have definitely seen an increase in the demand for shorter, quicker treatments’ and we are responding by offering an increasing range of these.”
As we can see, the beauty industry encompasses a wide range of products and services, and franchising plays a major part in bringing them to the consumer. As the industry continues to grow and evolve, profitable opportunities are plentiful.
Sales trends
Beauty industry sees growth at its fingertips
Nail varnish has become the top-selling fashion accessory, replacing lipstick as an affordable indulgence in austere times and leading to a boom in sales as consumers flock to buy bright-coloured bottles.
Industry insiders predict nail colour will be the fastest-growing beauty business in the next few years, providing a small yet promising pocket of growth for beauty groups such as Coty and L’Oreal which have led the rush to snap up independent brands.
In France, over the whole of 2010, perfume sales in department stores rose 2%. Over the same period nail colour jumped 42%, according to global market research company NPD.
Nail polish is still a small sub-sector of the global beauty industry compared to other make-up items such as lipstick, and looks even smaller when compared to perfume, but it is on its way to becoming an important business, analysts say.
“We are seeing an explosion in many countries,” said Karen Grant, senior global analyst and vice-president of NPD’s beauty division.
She likened the trajectory of nail varnish sales to that of lip gloss, a niche business which saw sales grow tenfold over the past decade. “If the nail polish market continues to grow, it could also become a big category,” Grant said.
Nail bars, which have mushroomed in many big cities, target women seeking a small morale boost at a small price.