Ten years ago, just when the industry was making real headway with retail, the arrival of online shops didn’t sound any alarm bells. Five per cent a year lost to Amazon and others wasn’t such a big deal. But a decade later, the stats show that online retail sales are exploding while salon sales collapse. Online sales of beauty products now account for 15 per cent of the entire annual revenue for the health and beauty industry. So what can the industry do to take back their revenue?
Late last year, ISBN brought together some key names in the industry for a webinar entitled Coping with Virtual Competition. ISBN vice-president Pat Neville from Beauty First and Paradigm Consulting Group was moderator with speakers Jerret Shaar, COO of Peninsula Beauty; Sean Maney, president of Salon Spa Ultimate; and Amin Harari, senior brand liaison of Clean Boutique and Brand Forward. The one main takeaway from the event was that integrating e-commerce with bricks and mortar locations is a virtual opportunity that ISBN members must embrace.
‘The majority of the population is purchasing products online so that means if you are not online, you are not allowing your customers to purchase from you when they are not in the salon or spa,’ said Sean, a POS specialist with 17 years’ experience in the industry. ‘A salon or spa is getting its customers back on average every five weeks, so there are 34-35 days in between where your customer is not in your location. If they need a product two weeks in, are they going to wait until they come back or are they going to buy it somewhere more convenient?’
For most consumers, their go-to site is Amazon, which has 50 per cent of all online sales. A staggering 60 per cent of Americans across all age groups are now shopping online consistently, and a quarter of those prefer it to any other form of commerce. Seventy per cent of those favor purchasing from retailers rather than brand sites, suggesting they value choice and objectivity.
Salons, spas and barber shops can use this to their advantage. They have a captive audience who can’t have their latest haircut delivered by a digital marketplace giant. They must go to a bricks and mortar location, where their individual service provider gives them their look. They trust their stylist and so and it’s there – in the chair – that the selling of online can begin, offering personal recommendations for individuals in a way the big players simply can’t and making it easy to buy products from their online store.
Peninsula Beauty has a thriving online store and 13 bricks and mortar locations, and Jerret argues that embracing e-commerce is the only way to guarantee brand credibility.
‘In this day and age customers expect it. If you don’t provide, they look down on your brand,’ he adds.
But the panel argued that members must get into e-commerce for even more reasons. It can also:
- Increase choice by allowing salons to carry more lines on their site than would be possible in their bricks and mortar locations. Pat noted that a single Office Depot carried 1,600 skus in the physical store compared to 4m online.
- Act as a cost-effective test bed for new products, allowing salons and spas to add one or two products into their online stores to see how they do before rolling them out to multiple locations.
- Provide an extension of the POS system, enabling capture of customer information for the database.
- Encourage traffic into the bricks and mortar locations, linking online loyalty systems to the salon and enabling points earned on purchases to be redeemed on services in salon or at the spa.
- Drive replenishment between visits and thereby retain loyalty rather than drive customers to other convenient sellers.
The panel was unanimous: e-commerce isn’t just about beating Amazon and others at their own game, it’s about recognizing the rapid changes in the way we shop and making sure salons and spas stay viable in this new marketplace.
If you’d like to listen to the entire webinar go to https://salonspanetwork.org/coping-with-virtual-competition/