June 2012

Charlene Abretske

Beyond Your Chair| Jayne Morehouse


Booth Rental Will Impact 50 Percent of Salons by 2015

This issue of The Stylist takes a look at the booth rental business model -- the fastest growing salon/spa business practice in the United States. This column examines booth rental from the big picture perspective.

How booth rental impacts your business directly might depend on where you live. For example, in California, most beauty professionals have been classifying themselves as booth renters, independent contractors, indies or studio stylists for almost 10 years.

In Ohio, where I live, it's a relatively new practice, with a dramatic influx of Salon Studio establishments over the past three years. In fact, causing quite a stir is a large new suite concept salon opening this month, and it sits right between a long-established hybrid rental/employee-based salon, a new Fantastic Sams, a medi-spa and several nails-only salons. In Pennsylvania and New Jersey, booth rental is illegal, with a very minimal impact on the salon and spa business.

Wherever you are, booth rental is attracting more discussion and more scrutiny from professional associations, state boards and the Internal Revenue Service, who all recognize that booth rental is here to stay -- and want to make sure it is practiced safely, legally and with all appropriate taxes paid.

It's also dramatically impacting the way that marketers and distributors provide their products and education to you, and has been one of the primary drivers of the growth of Sally Beauty Supply and distributors' professional-only beauty supply stores, like CosmoProf and SalonCentric, which make it easier for independent service providers to pick up the day's supplies on their way into work each day.

A new groundbreaking study released last month found that booth rentals represented about 35 percent of all U.S. salons last year, and that by 2015, nearly 50 percent of all U.S. salons will offer nearly some form of the booth rental model.

Those, combined with the large private and corporate chains, will together satisfy nearly 75 percent of all U.S. salon consumer market needs, according to the new Professional Salon Industry—2011, Booth Rental Study from Professional Consultants and Resources, the leading strategic consulting company and salon industry data source in the United States.

If you're the owner of a traditional, employee-based salon or spa or a stylist who likes the idea of focusing on your craft and artistry of hair, skin or nails—as opposed to business matters—don't be concerned, the independent salon is not going away.

"While independent artistic salons catering to high-end clients will always play an important role in the professional salon industry marketplace, this business model will continue to lose market share to booth rentals and chain salons," said Cyrus Bulsara, president of Professional Consultants and Resources. "The most likely outcome will be the evolution of new hybrids that combine the best client- and stylist-centric practices from all three business models."

In fact, the study defines five current operational models of booth rental -- Traditional Multi-Service Rental Salon, Salon Suites (salons within a salon), Blended Rental/ Commission Salon, Shared Chair Booth Rental and Luxury Salon Chair Rental. Each has evolved to meet the needs of the owners, the service providers and the clients.

Bulsara continued, "The U.S. booth rental system is a truly unique model of American ingenuity, where everyone gets to be the CEO of her own little business, chair, studio or room."

One important point to keep in mind: Consumers have little-to-no understanding of the inner workings and management of various types of salons and perceive little difference and/or value between the various salon types. They also don't care. What matters is that they receive a consistency of stylist, ambiance, services and products no matter what the business model.

Whatever type of business model you prefer, the keys to success remain the same -- focus on providing the experience, the services and the product that will delight your clients, continue your education every month and market your business in a manner that absolutely fascinates your clients. If you do opt for some type of booth rental model, find ways to interact and network with fellow stylists and renters to share war stories, best practices and new discoveries.

The salon industry's comprehensive study on the U.S. booth rental market provides a groundbreaking, in-depth look into all aspects of the fastest growing segment of salons. The study provides an accurate snapshot of booth rental and its impact on the entire salon landscape. For purchasing information/questions contact Cyrus Bulsara, president, Professional Consultants & Resources, at cbulsara@augustmail.com or visit www.ProConsultants.us

Jayne Morehouse is a columnist for Stylist Newspapers and the president of Jayne & company, a full-service brand communications agency for beauty companies and salons. Follow her on Twitter @JaynePR and @BeautyIQ and connect with her on facebook.com/jayneandco.