Three new data points explain why salon retail is suffering.
Kristina Welzien, the fabulous owner of the gorgeous, new, shampoo-free salon called Wabi Sabi Beauty in the Mission District of San Francisco, forwarded this article to me just this morning. It blew my mind. I’ve been talking about the risks Amazon poses to salon retail for a while now, but it was incredible to read them boasting about their progress – and their results have indeed been impressive! Here are the highlights I learned:
- Professional salon products represent the largest category for the “indie beauty category” on Amazon, generating $50 million of sales ahead of skincare ($40 million), tools ($30 million) and cosmetics ($20 million).
- Professional salon products also have shown the fastest growth, up almost 100% compared to last year.
- Amazon supposedly only charges brands 15% of sales to be part of the Indie Beauty Shop and only 25% of sales to sell on the Amazon Luxury Beauty Shop, which has brands like Oribe, R&Co, and Phyto. You can see why brands would want to sell to them.
- Customers can use free shipping with Prime.
What does this mean? It means Amazon already sells more professional hair care than all the Bumble salons combined. Maybe even more than all the Oribe salons combined too.
Meanwhile, in the latest Estee Lauder earnings release the company said that “softness in the salon channel in North America” hurt sales at both Bumble and Aveda, but that weakness was offset at Bumble thanks to “the success of the brand in Ulta Beauty,” and Aveda had “solid performance” in online sales. Overall, sales and profits were up for the hair care division, so their strategy of shifting from supporting salons to selling directly to consumers is working – for them.
And, finally, a report out recently by Kline Research said salon retail in 2017 was down 7.8%, a number I suspect is actually much worse in reality because many salons are embarrassed to share their real sales.
The future is here now, folks. Time to change your retail model. The old model is just going to get worse, continuing to implode. Learn more about the Hairstory model today.