Our industry is a difficult one: the market is saturated with competition, profit margins are razor thin, regulation can be burdensome and overhead is very high. Often times a salon or spa’s ability to stay solvent and in the black is contingent on the success of the retail component of the business.
The retail side of the salon and spa industry has evolved … or regressed depending on your point of view. Traditionally, salons and spas would be approached by hair product companies offering exclusivity right to sell their products with the promise that they and they alone would be the only salon or spa in the area that would be afforded the opportunity to sell their products. It was believed that no other competitors would have access to said product and because of this, customers would flock to the salon for their services then leave with a bag of product that could only be purchased at that specific salon. But then a funny thing happened.
Product companies are trying to make money too and want to move as much product as possible so they started selling to other salons in the area with the same exclusivity promise; then they slowly but quietly started selling to retailers despite the “Sold in Professional Salons Only” label on their packaging.
Fast forward to 2017 and the jig is up, consumers have never been more informed as far as pricing goes and the market has never been more competitive. Target, Wal-Mart, CVS, Marshall’s, Ross, TJ Maxx, Nordstrom Rack and the giant elephant in the room that is Amazon now routinely sell the same “sold in professional salons only” products for less (sometimes dramatically less) than salons; A.K.A. diversion.
To combat this, salons and spas and have come to the realization that the only way to seize the reins of their retail operations is not to fight a price war with Amazon and mega retailers because that is a battle that will never be won. Instead, salons and spas are coming to the conclusion that the only way to dramatically increase profit margins and marketing efforts on the retail side is to create their own exclusive brand with private label. Private label products afford salons and spas the ability to sell a unique, customizable line of products that can only be found at the salon or spa complete with one-of-a-kind packaging and branding that is catered to the exact specifications of each business. The profit margins are far greater when selling private label and the products themselves serve as free advertising for the business. Consumers aren’t staring at a Matrix, Redken or Joico logo when they reach for their products, they are staring at the logo of the salon or spa they frequent.
Not all private label manufacturers are created equally but with the right company, spas and salons can find products with stellar formulations made from high quality ingredients that deliver results in eye catching, aesthetically pleasing packaging; ultimately allowing for salons and spas to take back control of their retail operations and increase their bottom line.