Forecast for the development of the market of beauty salons
The relevance of research
The beauty industry is a dynamically developing industry all over the world. The main factors of its growth are an increase in the standard of living of the population, a lack of time for self-service among residents of large cities, a cult of youth and external attractiveness, and an increase in the need for professional services.
Purpose of the study
Analysis of the state of the market of beauty salons, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market of beauty salons
Content
Chapter 1. Economic characteristics of the market of beauty salons
1.1. Market size
1.2. Market Growth Rate
1.3. Market trends
1.4. The main problems of the industry
1.5. Industry life cycle stage
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. The pace of technological change and product innovation
1.9. Sales channels. Customer Acquisition Channels
1.10. Compact location of industry companies in certain regions
Chapter 2. General economic environment
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Competition from substitute products
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
4.3.2. Scenario of two quarantines
4.4. Analysis of existing cases of business restructuring in the industry
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Part 1. Economic characteristics of the beauty salon market
1.1. Market size
The activity of beauty salons in the statistics database is recorded under the OKVED-2 code 96.02, which is called ""Provision of services by hairdressers and beauty salons.""
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Diagram 1. Geographical structure of the hairdressing and beauty salons market in India, 2019, % of the total market
The geographical structure of the market allows us to conclude that the volume of the market is influenced not only by the main factors (development of the consumer environment - the number and level of income of the population), but also by behavioral factors.
Thus, a significant volume of services is consumed during the period of rest, vacation.
1.2. Market Growth Rate
For the period from 2013 to 2019 gradual growth...
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Diagram 4. Growth rates of prices for beauty salons and household services in India, in 2013 - 2019, in % of the previous year
An analysis of price dynamics allows us to conclude that ...
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1.3. Market trends
The beauty industry is a dynamically developing industry all over the world. The main factors of its growth are an increase in the standard of living of the population, a lack of time for self-service among residents of large cities, a cult of youth and visual attractiveness, and an increase in the need for professional services.
During 2013-2019 The following main trends were observed in the industry:
The predominance of cosmetology services in the specific structure of the market ...
In addition, significant income is generated by the sale of cosmetics and other related products. Occupying a small area in the salons, these sales can bring, if effectively organized, up to 10-12% of the total share of the salon's income.
A variety of services provided within one salon:
The predominance of the middle price segment.
Development of various business formats, for example:
Franchise business development.
Organic beauty parlors, organic spas, organic hairdressers are all salons that rely heavily on organic cosmetics.
Originality. Clients like ""exceptional"" and ""extraordinary"". However, not everyone is ready to experience it for themselves, but everyone wants to receive information about new products.
Technology development.
Digitalization is another global trend that allows manufacturers to increase their audience.
1.4. The main problems of the industry
The analysis carried out allows us to identify the following main problems of the industry, including those that have arisen due to the influence of the covid factor:
The industry is one of the most sensitive to the income of the population and a crisis phenomenon in the economy. Accordingly, the decline in cash income during the crisis entails a sharp decline in visits to beauty salons and, accordingly, affects the profitability of the industry.
Changes in legislation (on tax issues) tighten business conditions for beauty salons:
The high level of competition entails a high level of company rotation: before the covid crisis, 10% of companies closed and the same number opened every year.
The beauty salon and hairdressing industry is a high current cost business: cosmetics, consumables, equipment, technology and work mechanics that constantly need to be updated to be attractive to the client. That is why the demand for automation has increased so much in recent years on the part of the “beautiful business” in order to improve the quality of service, and most importantly, to make clear accounting for consumables, cosmetics, warehouse replenishment processes, etc. Today, compliance with modern trends is a matter of the company's survival.
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The biggest problem for our industry is the churn of employees during the pandemic. Many masters have switched to home work, taking part of the client base with them.
Difficulties in obtaining state support:
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1.5. Industry life cycle stage
The life cycle of an industry is the period during which an industry goes through four stages: inception, growth, maturity, and decline. An industry, like a product, has its own life cycle, in which the stages of the industry's origin, its growth, maturity and decline are distinguished. In the early years, changes in the industry (innovation) are carried out dynamically, the life cycle of goods is short. As the industry develops, the rate of innovation decreases and growth is supported by increasing market share.
With maturity, market growth slows, competition increases, and profitability falls. Based on the model, the life cycle, all industries can be divided into three groups: innovative or developing, mature and recession industries. Firms in these industries have similar strategies, despite the fact that they may produce completely different goods.
Let's define the maturity stage of the beauty salon services industry.
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The market saturation stage is a turning point in the industry, when all battles for total market power are over and the search for a stable position in a stagnant segment begins.
The stage of market saturation is characterized by the following indicators: very low growth in market capacity, lack of product novelty, high competition and product variability, technological maturity of the market, a decrease in the overall profitability of the industry, a good level of consumer knowledge about product characteristics.
Such structural changes in the industry force each company in the segment to choose one of 3 alternatives (Porter's development strategies):
Focus on cost reduction and adopt a cost leadership strategy.
Focus on product quality and choose a differentiation strategy.
Focus on individual consumer needs and choose a niche leadership strategy.
1.6. Estimation of the number of buyers and their financial capabilities
Consumers of beauty salon services are the adult population of the country. In the framework of this study, the population (men and women) aged 15-69 is considered as the consumer environment.
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As for the monetary income of the population, consumers are the population with any income level, but depending on the level of income, distribution is carried out according to the price segments of the market for beauty salon services.
1.7. Estimated consumption per capita
According to GidMarket calculations, the consumption of beauty salon services for the period from 2014 to 2019 gradually increasing...
Diagram 9. The volume of consumption in the market of beauty salons per capita, 2014-2019
The growth in per capita consumption is associated with an increase in the number of services, but to a greater extent - with an increase in prices for services.
1.8. The pace of technological change and product innovation
In the industry of services of beauty salons, the following groups of technological innovations can be distinguished:
Changes in materials for the implementation of hairdressing and beauty services, for example: ...
Hardware changes...
Digitization of services, including: …
The rate of technological changes is high, new materials, products, apparatus methods are developed annually based on the latest achievements of science.
1.9. Sales channels. Customer Acquisition Channels
Customer Acquisition Channels - This is the placement of advertising. This is a very important point, because the effectiveness of an advertising campaign depends on the choice of channel.
The main channels for attracting customers to a beauty salon:
Outdoor advertising
Sarafan radio
Mailing list
Media
Internet media
Partners
Site
Social network
Over time, the importance of customer acquisition channels change their importance. At the moment, according to market participants, Internet channels and partner channels come out on top.
Internet
80% of new clients of beauty salons come through the Internet. Some salons use this channel as the only source of attraction. The advantage of the Internet is that it is relatively inexpensive and works around the clock.
Partners
Potential partners for beauty salons are determined based on a preliminary analysis of the target audience of the salon. These can be fitness centers, women's clothing stores, restaurants, photographers.
1.10. Compact location of industry companies in certain regions
If we consider the concentration of enterprises providing hairdressing and beauty salon services per 10 people. of the population, the highest concentration is observed in the Central Union Territories ...
Part 2. General economic environment
2.1. Economic components
GDP (gross domestic product) is used to determine the rate of economic development of any state. GDP is a macroeconomic indicator that reflects the total value of goods, works and services that were produced and provided in the country in a year. Gross domestic product is the main indicator on the basis of which the level and pace of the country's economic development are determined.
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Let's take a look at some experts' assessments:
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2.2. Social Components
During 2010-2018, there is an increase in the population.
Diagram 14. Population dynamics in India as of January 1, 2010-2020, million people, %
Changes in the behavior and living standards of the population, which, combined with an increase in the standard of living, means an influx of new potential customers, an increase in the level of their education, culture, and aesthetic needs.
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2.3. Technological components
The development of the beauty salon market is influenced by a combination of technological factors associated with the constant emergence of new trends, trends, materials, cosmetics and perfumes, equipment and tools.
A separate group of technological factors is associated with the penetration of IT technologies: administration, accounting, the use of mobile applications for interactive communication with customers and promotion, etc.
Development of the cosmetics market
2.4. Political Components
The tense political situation in interstate relations has a negative impact on all spheres of the Indian economy. The main activities of the state and the strategic tasks at present are the development of new models of cooperation with the US and the EU and the approval of India in the world monetary system. Anti-India sanctions and the generally sharp deterioration in relations between Western countries and India largely determine India's foreign policy.
Credit policy. Today it is quite difficult to imagine the progressive development of the economy without the active participation of the credit system. It should also be noted that the assessment of the availability of credit resources for both legal entities and individuals is a significant indicator that allows assessing not only the demand for credit funds, but can also serve as a reflection of the real economic situation both in the region and in the economy as a whole.
Due to the negative impact of the COVID factor, especially on the activities of SME states, the Government of India is taking additional measures to support SMEs: …
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At the same time, despite the measures taken, participants in the beauty salon market testify that state assistance is available to no more than …% of entrepreneurs in this area.
2.5. STEP-analysis of the market
Let's consider the main factors influencing the market and, accordingly, the demand in the beauty salons market in India.
Table 5. STEP-analysis of factors affecting the market of beauty salons
Of all the groups of macro-environmental factors, the group of economic factors has the most significant impact on the beauty salon services market. The negative impact of a group of economic factors is manifested as a result of another decline in GDP, devaluation of the rupee, a decrease in retail trade turnover due to a drop in the level of effective demand of the population, dependence on imports (materials, hardware).
Groups of political and demographic factors have a multidirectional influence on the development of the market. At the same time, it should be noted that the measures developed to support entrepreneurs in the context of covid are not always available to market participants. Technological factors contribute to the development of the industry with the accumulated world experience, the latest technologies, while at the same time forming a fairly high dependence on imported cosmetics, drugs, equipment, tools.
Part 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
global competition
Among the world's beauty salons (networks of beauty salons), according to various criteria, the following stand out:
The most media...
The most fashionable…
The largest network of salons ...
The most luxurious…
The cheapest""…
The most professional...
The best spa...
The most modern …
National competition
The analysis carried out allows us to conclude that India does not have a wide distribution of large chains. The trend of business scaling remains typical for large cities, for regional centers such a strategy is not justified, since there are not always opportunities for expansion. The pressure of realities and current legislation actually stagnates the industry.
3.2. Number of competitors and relative market shares of the largest competitors
The number of hairdressers and beauty salons, according to various sources, is estimated at 75 to 90 units. In the Rosstat database (resource Fira.ru), by type of activity, OKVED-2 code 96.02, which is called “Provision of services by hairdressers and beauty salons”, ... enterprises are registered.
...
The biggest competitors in the Indian market are chains such as...
Diagram 20. Dynamics of the total revenue of the largest beauty salon market operators (TOP-5) in India, 2015-2019
The volume of revenue of the largest market players increased from 746 million Rs. in 2015 to 1296 million Rs. in 2019. The largest growth was observed in 2016-2017. (117%) due to the growth in the number of salons in the networks (for example, the Persona network in 2017 increased by 12 salons).
Thus, the potential of beauty salon market players is associated mainly with the development of chains, including on a franchise basis.
3.3. Competition from substitute products
For companies engaged in the market of services of beauty salons, substitute services are services provided at home by stylists, cosmetologists, manicure and pedicure masters.
So, only on the site youdo.ru more than 1000 performers in this area are registered.
The main advantage of the ""home"" segment is the lower price level, the importance of the segment, respectively, increases during the crisis period.
When the economy (industry) emerges from the crisis, among consumers, the quality of services comes to the fore, which can only be guaranteed by proven beauty salons.
Part 4. Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
If we consider the relationship between India's GDP growth rates and the index of the volume of services of hairdressers and beauty salons, the correlation coefficient between the indicators is ...
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Over the entire period under review, the decline in the volume of hairdressing and beauty salon services was observed only in 2003 – …%, which is associated with the situation in the industry, in particular, with a significant increase in prices for services of hairdressing and beauty salons: …
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4.2. Analysis of the impact on the state aid industry at the current date
At the end of March 2020, the government identified 22 industries that will be the first to receive state support in the context of the economic crisis and the coronavirus pandemic: the government commission on improving the sustainability of the Indian economy, chaired by First Deputy Prime Minister Andrey Belousov, approved a list of sectors of the economy most affected by the deteriorating situation in in connection with the spread of a new coronavirus infection, to provide priority targeted support.
Based on the results of consultations with the business community, the Ministry of Economic Development of India submitted the following sectors for approval to the Commission: air transportation, airport activities, trucking; culture, organization of leisure and entertainment; physical culture and health-improving activities and sports; activities of travel agencies and other organizations in the field of tourism; hotel business; public catering, organizations of additional education and non-state educational institutions; organizing conferences and exhibitions; activities for the provision of personal services to the population (repair, laundry, dry cleaning, hairdressing and beauty salon services). The list of industries is approved by the Government of India Decree No. 3 dated April 2020, 434.…
4.3. Studying scenarios for the development of the industry in terms of quarantine in connection with covid-2019
According to Sberindex data, in July 2020 consumer activity of the population is recovering: …
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4.3.1. Single Quarantine Scenario (according to the Chinese release schedule)
Forecasting the development of the beauty salon market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken.
With the accepted initial data and assumptions, the volume of the beauty salon services market in 2020 will amount to … billion Rs., …
4.3.2. Scenario of two quarantines
The market for beauty salon services is one of the most sensitive to quarantine conditions, the market volume decline reaches …% of the previous year.
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4.4. Analysis of existing cases of business restructuring in the industry
Examples of successful cases in the beauty salon services market
Both in the world and in the Indian market there are examples of both the successful exit of beauty salons from the crisis, and the opening of salons in a crisis. At the same time, the following areas are distinguished: universal beauty salons, beauty salons with a budget level, as well as mono salons specializing in one service.
Universal salons - …
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Networks of budget beauty salons ""XXX""
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Monosalon...
Recommendations for overcoming the crisis in the market of beauty salons
The analysis allows us to conclude that after the quarantine is lifted, the market for beauty salon services is quickly recovering. At the same time, forced downtime for several months entails financial difficulties and the closure of a number of companies. In this situation, market participants recommend:
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Part 5. Forecasting methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and projected general economic situation in connection with the spread of the covid-19 virus.
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
Industry volume over the past 7-8 years
Industry dynamics in 2008-2009, in 2013-2019*
Dynamics of macroeconomic indicators over the past 8-9 years
Current public assistance plans
Databases of the State Statistics Committee of India
Indian Revenue Service databases
India Customs databases
Open sources (websites, portals)
Issuer reporting
Company websites
Media Archives
Regional and federal media
Insider sources
Specialized analytical portals
* Until October 2020 financial indicators for the main market operators and industry coefficients for 2019 - GidMarket forecast based on the dynamics for 2015-2018, except for cases when the operator discloses data on the results of financial 2019 publicly.
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2020-2024)
Diagrams
Diagram 1. Geographical structure of the hairdressing and beauty salons market in India, 2019, % of the total market
Diagram 2. Dynamics of the volume of the market of beauty salons in India, 2013 - 2019, billion Rs., in % of the previous year
Diagram 3. Index of the physical volume of services of beauty salons and personal services in India, in 2013 - 2019, in% of the previous year
Diagram 4. Growth rates of prices for beauty salons and household services in India, in 2013 - 2019, in % of the previous year
Diagram 5. Market structure of hairdressing and beauty salon services by types, %
Diagram 6. Market structure of beauty salons in India by prices in 2019
Diagram 7. Population of India aged 15-69 years (men and women) as of January 1, 2016-January 1, 2020, million people
Chart 8. Distribution by 20% quintile groups in India in 2014-2019, in % of the total population
Diagram 9. The volume of consumption in the market of beauty salons per capita, 2014-2019
Diagram 10. Compactness of location of companies in the industry in certain regions
Chart 11. Dynamics of India's GDP, 2007-2019, Q1 2020, % to the previous year
Chart 12. Monthly dynamics of the US dollar against the rupee, 2015-2020 (Jan.-June), Rs. for 1 US dollar
Diagram 13. Dynamics of retail trade turnover, 2013 - 2020 (Jan.-Mar.), % to the previous year
Diagram 14. Population dynamics in India as of January 1, 2010-2020, million people, %
Diagram 15. Population forecast in India for the period 2021-2024, million people
Diagram 16. Dynamics of real incomes of the population of India, 2014 - Q1 2020, % to the previous year
Chart 17. Dynamics of the average interest rate on loans, 2014-2020 (Jan-Feb.), %
Diagram 18. Share of TOP-5 beauty salon chains in the Indian market in 2019
Chart 19. The share of the largest competitors in the market of beauty salons in India, 2018
Diagram 20. Dynamics of the total revenue of the largest beauty salon market operators (TOP-5) in India, 2015-2019
Diagram 21. Forecast of the market volume of beauty salons in 2020 - 2024 – in case of a single quarantine scenario
Diagram 22. Forecast of the beauty salon market in 2020 - 2024 – in the scenario of two quarantines
Tables
Table 1. Defining the stage of maturity of the life cycle of the beauty services industry in India
Table 2. Business Concentration in the Beauty Salon Industry in India in 2019
Table 3. Expert forecasts for the decline in real GDP in India in 2020, %
Table 4. Weighted average interest rates of credit institutions on lending operations in rupees, excluding PJSC Sberbank (% per annum), 2015-2020 (Jan-Feb)
Table 5. STEP-analysis of factors affecting the market of beauty salons
Table 6. Number of establishments in the beauty services industry by Union Territories of India in 2019
Table 7. The main companies participating in the beauty salon market in 2019
Table 8. Index of the physical volume of GDP and services of hairdressers and beauty salons in India in 2000-2019
Table 9. Assessment of the impact of recent crises on the industry
Table 10. Analysis of the impact on the industry of the state aid proposed to date
Table 11. Forecast indicators for the basic and pessimistic scenarios for the development of the crisis, %
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