Industry Analysis and Trends
Size and Growth
The United States hair care services industry includes about 86,000 establishments (82,000 beauty salons; 4,000 barber shops) with combined annual revenue of about $20 billion. Demand is driven by demographics and population growth and small companies can compete against larger companies through technical excellence and location. Revenue growth is expected to continue on a growth pattern with an average annual rate of 3.3% to $49.3 billion by 2017. This figure is based on an increase per capita of disposable income and declining unemployment at the end of the five-year period. Unemployment plays a factor in the figure due to more people wanting to be presentable for job interviews. However this doesn’t mean the figures will go down after the client get a job, they will continue to seek professional hair care (SBDCNet.2014).
The United States Bureau of Labor Statistics projects that the employment of barbers, hairdressers, and cosmetologists is projected to grow 13 percent from 2012 to 2022. These figures are an increase from what SBDCNet predicted. U.S. Bureau of Labor further states that the trends for hair coloring, straightening and other advanced hair treatments has risen in the recent years and will continue over the coming years. In part a large number of the job opening are contributed to the need to replace workers who either transfer to another job, retired or just leave the occupation. Beauty Salon are classified as being part of the Hairdressers, hairstylists, and cosmetologists industry as per the North American Industry Classification System (NAICS), code 812112 (see Table 1.1 below,) and the Standard Industrial Classification (SIC) codes 7231,7241 (Bureau of Labor Statistics, 2014).
Employment projections data for barbers, hairdressers, and cosmetologists, 2012-22
SOURCE: U.S. Bureau of Labor Statistics, Employment Projections program
Occupational Title SOC Code NAICS Code Employment, 2012 Projected Employment, 2022 Change, 2012-22
Barbers, hairdressers, hairstylists and cosmetologists 39-5010 812112 663,300 746,600 13 83,300
Barbers 39-5011 812111 52,100 57,900 11 5,800
Hairdressers, hairstylists, and cosmetologists 39-5012 812112 611,200 688,700 13 77,600
Table 1.1: Employment projections data for barbers, hairdressers, and cosmetologists, 2012-22
Sensitivity to Economic Cycles
Industry profit is also expected to grow encouraging more new businesses to enter the industry, according to IBISWorld and posted to SBDCNet’s site. IBISWorld projects profits to increase from 5.5% in 2012 to 5.9% by 2017. Improving market conditions and increasing numbers of industry operators at an average annual rate of 3.7% by 2017. With the increase of employment growth and improving market there will be a continued growth in enrollment at cosmetology schools. This combined with the growth in industry operators, is expected to drive beauty salon employment upwards at an...