They'll have to figure out how to adapt if they want to stay afloat.
In December 2016, after 13 years in the business, celebrity hairstylist Ted Gibson shuttered his Fifth Avenue salon.
While Gibson's salon had launched with great fanfare and grown steadily for years (thanks to celebrity clients like Anne Hathaway and Zoe Saldana), the salon business had changed; first subtly, and then swiftly. A few years ago, services like Gilt, Groupon, and LifeBooker allowed smaller salons to offer steep discounts, taking business from higher-end salons. At the same time, clients began flocking to YouTube and Instagram — instead of high-end stylists — for guidance.
“With all the access to information, we began to realize that what it looks like to be a hairdresser, and a salon, was starting to shift,” Gibson says during a recent phone call. “We were starting to think the giant luxury salon was outdated and needed a change.”
A more recent change salons like Gibson’s began to notice was how boutique-esque the industry was getting. Instead of envisioning hair salons as one-stop shops for all beauty needs, customers were now headed to boutique “bars” that specialized in facials, brows, and lashes for a quarter of the price.
Perhaps the most noticeable and distressing change of them all was that clients were no longer coming to Gibson or other local salons for blowouts. Where were they headed? Unfortunately for the local salon community, there was a better, faster, and more affordable game in town: the blowout salon. Specifically, Drybar. A hairstyling startup founded in 2008 by stylist Alli Webb, Drybar launched in California and quickly expanded to 70 locations across the country; there are now 14 in Manhattan alone. Drybar rose to popularity with its affordable $40 (now $45) blowout, spawning plenty of knockoffs along the way. Its revenue swiftly grew from $20 million in 2012 to $70 million in 2015, and the business is currently on track to surpass $100 million.
Drybar wasn’t Gibson’s only competition, though. In January 2014, Gilt Groupe’s Alexandra Wilkis Wilson co-founded Glamsquad, an app and website for scheduling at-home hair and makeup services. Touted as the “Uber of beauty,” Glamsquad offers $50 blowouts, $75 makeup applications, and $35 manicures — salon-comparable prices without even leaving the living room. According to Forbes, Glamsquad drew in roughly $8 million in sales in its first year and has raised $24 million in funding to date; its services are available in New York, LA, Miami, and Washington, DC.
Gibson maintains his business was still turning a profit by the time he decided to call it quits. But while his salon was better known for cut and color services, he says the drought of blowouts — an easy and profitable service — was clearly having a ripple effect on the salon.
“A salon blowout would be $85, and regular customers, like the Ladies Who Lunch crowd, would come in twice a week for their blowouts. So the disappearance of those customers absolutely changed the game,” Gibson says. “It’s a significant amount of money to lose.”
When Gibson and his partner (and husband), Jason Backe, made the decision to close the business around Thanksgiving, Backe says they were met with a sense of relief. When the duo headed to California for the International Salon and Spa Expo at the end of January, they were surprised to be greeted with an outpouring of support and even envy from dozens of other salon owners who had locations across the country and didn’t feel confident about the industry anymore, given all the changes.
“We were bombarded with salon owners congratulating us for the decision and asking us for advice on what to do,” Backe says. “I don’t think the solution is one-size-fits-all and the changes are affecting some parts of the country more than others, but salon owners need to pay attention to what’s going on.”
The duo is now taking the next few months to conceptualize a new type of salon they will open later this year in New York City, but Backe says the model of the traditional salon “just doesn't make sense anymore.”
Meanwhile, just a few weeks after Gibson’s salon closed, a group of freelance hairstylists are gathered inside Glamsquad’s headquarters, just a few blocks away from Gibson’s old location. The space doubles as the company’s training grounds for Glamsquad stylists, which now boasts 700 beauty professionals.
At a beauty station, a master stylist named Bianca is gingerly taking an iron to a brunette model, curling each strand in a different direction to give her hair a textured, beach look — a looser and more tween version of the “Weekender” option on Glamsquad’s menu. “There’s a method to this madness, I promise,” Bianca laughs.
The four training stylists nod along. One who had just worked on a photoshoot for Urban Outfitters admits the brand demanded this hair style for all the models on set, but he hadn’t been able to successfully master the wave. Once Bianca is done demonstrating, the trainees move on to models of their own, eager to replicate what they just saw.
“I think the main reason why people love Glamsquad is because of its expediency,” CEO Amy Shecter, who joined the company back in June, says from a cheerfully wallpapered conference room a few steps away. “There is nothing out there that gives you time back — other than ordering Chinese food, which isn't necessarily great for you, and Glamsquad. Every aspect of what the customer experiences with us is a nod to luxury and intimacy.”
Reflecting on Glamsquad’s impact on other salons, Shecter says there are plenty of customers the company won’t get, like “those who are often from an older generation, are used to going to the same salon, and having that cappuccino while seeing their trusted stylist.” Glamsquad, however, is relying on a different sort of population — the one that is glued to services like Uber, Seamless, Netflix, and Amazon.
“A younger population is a very different consumer; they experience life through technology and expediency,” she says. “Today, there’s boutique fitness chains and boutique facial spots, and the model of these traditional salons feel outdated. If they are going into a place, it needs to have a different experience and offering — like a Drybar, or they just turn to technology, like a Glamsquad.”
Glamsquad’s growth is colossal. The company wouldn’t disclose finances, but did share that it was on track to hit 250,000 appointments this year. Glamsquad will expand into Boston this fall, and Shecter says 2018 will be the company’s year for “hyper growth.”
Glamsquad isn’t just looking to expand location-wise; it also plans to add to its roster of services. In April, Glamsquad will expand into mask treatments, and later on eyebrows and lashes. In the second quarter of this year, the company will begin to test branded beauty products — an obvious direction for the business, as beauty is where margins are highest. Further down the list, Glamsquad plans to roll out traditional salon services like cut and color, which will surely send the salon industry further into crisis mode.
As for Drybar, while Webb says her company doesn’t plan to expand into cut or color — “we try to focus on one thing and do it really well,” she says — it is planning on growth, with as many as 30 new Drybar locations opening this year. While Webb acknowledges Drybar has pretty much cornered the blowout market, grabbing that portion of a local salon’s business, she maintains that Drybar is good for local salons.
Further down the list, Glamsquad plans to roll out traditional salon services like cut and color, which will surely send the salon industry further into crisis mode.
“We are right next door to hundreds of salons, and it’s always been very friendly. I don’t think they want to waste an hour doing a blowout when they could be doing a haircut that’s double the cost,” Webb says.
Not everyone agrees, though. A hairstylist who used to work at one of Frederic Fekkai’s New York City locations (among other salons) and is now a Glamsquad stylist sees Drybar as a culprit for the salon industry’s struggles, mainly because it’s caused an identity crisis. If Drybar is known for easy, flawless blowouts and Glamsquad is reliable for fast, at-home services, what do the hundreds of local salons have left to offer customers? Many salons, the former Fekkai employee says, have realized there was “little to incentivize customers to come to salons that are expensive, impersonal, inconvenient, and poorly branded.” All of this, of course, must also be weighed in on top of the ever-pressing factor of rising real estate prices.
The former Fekkai stylists adds that it makes sense that legacy salons are struggling while beauty startups keep raking it in. The hair salon industry might be highly lucrative — it’s valued at a whopping $43 billio,n according to IBISWorld — but its model hasn’t changed all that much, especially when considering how much beauty startups have changed the landscape.
Roughly 60 percent of hairstylists are freelance, and the former Fekkai employee says local salons are notorious for being mismanaged and run poorly. Hairstylists themselves are often left to pay for things like education and tools, and local salons rarely invest in them. Meanwhile, startups like Drybar and Glamsquad continually invest in stylist education, as well as technology.
With the growth of a startup like Glamsquad, which offers stylists the ability to freelance as much or as little they want, Peter Mahoney, president of the Summit Salon Business Center, notes that “team retention will become more difficult, putting salons at risk of losing not just team members but their clientele,” and that the salon industry must offer workers more incentives to keep them on board. As Texas salon owner and hairstylist Lora Brown wrote in a blog post about the market’s struggles, “As an industry, we need to do better.”
While the salon industry isn’t going through a giant shake-out just yet, Gibson says the writing's on the wall, and there have been some preliminary signs. In early 2015, celebrity stylist Garren, who’s styled Madonna, Karlie Kloss, and Taylor Swift, abruptly shuttered his salon amid rumors of deep financial troubles. A few weeks later, the posh Kenneth salon at the Waldorf Astoria hotel met the same fate, with a salon stylist remarking to W magazine that “It’s like the old French restaurants: A lot of people just don’t go to the fancy salons anymore.” Then there was all the hubbub with John Barrett; the hairstylist had grand plans to expand his eponymous salon beyond its Bergdorf Goodman flagship with multiple New York City locations (including one in Elizabeth Taylor’s former mansion), and had even cut a deal with Saks Fifth Avenue. These grand plans never actually happened.
“It’s like the old French restaurants: A lot of people just don’t go to the fancy salons anymore.”
The way Gibson sees it, the industry is likely headed for more closures, but not necessarily the type that will kill traditional salons altogether. Adjustments will need to be made to combat Glamsquad once it does venture into cut and color, but first and foremost, he says, is a focus on experience.
“If a woman is leaving her house and is going to spend money, there needs to be a unique point of difference,” Gibson says. “The experience needs to be reinvented, and that’s what everyone in the industry is trying to wrap their heads around right now.”
To Maggie Mulhern, the beauty and fashion director at trade magazine Modern Salon, this means salons need to start offering some sort of Drybar alternative. As WWD predicted back in January, “forget full service salons. Any beauty service provider today is likely to want to do one of two things: Open a ‘bar’ or go the concierge route with an on-demand mobile app.”
Mulhern points to places that have successfully opened blow dry bar concepts inside their salons, like Adam Broderick in Connecticut and Rizzieri in New Jersey. Others are trying to get even more creative: Two months ago, Manuela Giannini and Fernanda Lacerda, the duo behind New York City’s Maria Bonita, opened MB45, an express manicure and blowout salon where customers pay $65 for both services to be completed in 45 minutes.
“This is the way the industry is going,” says Lacerda. “We got inspired by Drybar and those places, but we were also trying to think about ways to change it up, and so we added on manicure service. We know that the No. 1 thing customers want today is to save time.”
Ultimately, Mulhern says that no matter how much Glamsquad or Drybar grow, the traditional salon model isn’t destined for doom. The industry, she says “is one of those that will stay alive, regardless of the economy, because good hair is recessio- proof.” Those that don’t start adapting, though, will surely get left behind.
“The salon industry is changing for everybody, and so the best model salon has a blow dry bar, their own internal Glamsquad service, and is also a classic salon,” says Mulhern. “That’s the best model that will keep salons from dying. The most successful ones will be those that aren’t intimidated by these businesses, but instead tweak, morph, and learn from their success.”