In the last 10 years, the salon industry has undergone rapid changes; annual profit is increasing exponentially each year, employment has increased a huge amount, and it’s almost easier to find a nail salon than a subway station in NYC. This change has come about due to the change in perception of salon treatments. Previously nail treatments, facials, massages etc. were regarded as treats that happened once in a blue moon, but now what was a luxury has become a necessity! But what effect has this had on the economics of the nail industry? I’ve rounded up some data from the past 10 years to give you clear picture of the economics of the US nail industry.
Firstly, Nails Magazine tracked the prices for different services at nail salons from 1992 to 2012, and the results can be seen below:
In 2003, a job demand survey found that in the previous year, the average total income (including tips) for salon owners was $53,150, although they noted that it was possible to earn more depending on where and how you conduct your business. In 2005 the annual profit made by the salon industry was $3.4 billion.
During the recession women tended to be frugal with their money on everyday luxuries, but splash out for those once-in-a-while at home spa treatments. With most polishes costing less than $10 in the US, it offered women the option to experiment with new colors and brands for much less than going to the salon. Because of the 3.2% decrease in disposable income per capita in 2009, the polish industry revenue decreased approximately 0.6%, caused by the shift away from salon manicures to at home manicures using cheaper drugstore polishes. This shift from purchasing higher quality polishes to drugstore ones caused a decrease in profit margins for the polish manufacturers, from 10.8% to 9.2% during 2009. As the effects of the recession are no longer being felt as much, consumers are going back to purchasing higher priced polishes (hello, $50 Christian Louboutin polish) and profitability is increasing, but profit margins are still lower than the pre-recession margins and are slowly increasing whilst the economy recovers.
In 2011, the annual profit of the salon industry rose to $7.3 billion and rose again in 2012 to $7.47 billion. In 2012, there were 16,335 registered nail technicians and 4,128 registered salons in New York state, putting it in the top 5 US states. In 2012, the nail polish industry made total revenue of $1.1 billion and a profit of $118.4 million, with an annual growth of 2.3% from 2007 to 2012. Across the US, in 2013, the salon industry employed 1,665,641 people and there were 1,264,012 registered salons and salon-related businesses.
As the industry profit margin and employment rate continues to rise, it makes me wonder will the industry continue to have such success or will these figures plateau? Let us know what you think!
– Mette Jorgensen