Hair Salon

Industry data

There are currently 6,500 active hair salons and 12,000 active hairdressers in Israel. Of them approximately 3,000 are home based hair salons or provide service at the customer’s home, and therefore they cannot be grouped into areas. The hair salon industry in Israel runs over 2 billion NIS per year. In addition, beauty product peripherals are sold at hair salons throughout the country, and run approximately 50 million NIS per year. Hair coloring products, for home use and for hair salon use runs approximately 150 million NIS per year.

 

Industry Sub-division

The industry is divided to three types of business-

Luxury hair salons- These have modern equipment and design, a large team of hairdressers, usually include other services such as manicure, pedicure, cosmetician, massage, etc, and are located in prestigious areas.

Service level is high, and so is price level.

Medium sized hair salons- located in city centers, on or around main city streets, reasonable equipment, a small team, very limited additional services, if any.

Cheap hair salons- located in neighborhoods or private apartments, cheap, old equipment, there is usually no crew or additional services, low price level.

 

Market Characteristics

The hairdressing industry in Israel is not supervised. Aside from local authority licensing, there are no special requirements for the establishment of a hair salon.

Prices are a product of reputation, design, location, and services rendered.

 

Customers: Defining the Target Market and its Size, Market segmenting

Most hair salons do not have a specific target market. Some hair salons have clientele of various ages and socio-economic statuses. This criterion is reflected mainly in prestigious hair salons, as hair salon services are characterized in affinity to the customer’s self-image, and therefore factors such as socio-economic status are not important or significant in the personal care area.

Some hair salons may be classified according to specialization such as hair straightening, bridal hair design, modern hair design, men’s haircuts, etc. In addition, a number of hair salons are operated by hairdressing schools and offer cheaper services; they attract a young and/or low-income crowd.

 

 

Competition

The market is comprised of large, familiar chains, a number of small chains, and mostly small to medium sized hair salons. This is one of the most salient industries in Israel. The entrance barriers (see below) are not especially problematic, and therefore there are thousands of private businesses.

 

Vendors

Recognized vendors for the hair product industry are L’Oreal, Wella, and Indola. Indola has recently purchased franchise rights for the importation of Paul Mitchell products. IntroCosma manufactures, imports, and sells hair salon products and equipment; The company’s primary activity is production and marketing of hair products under the brand name Wella, according to a long-term exclusiveness agreement with the German Wella company. Additional companies are Kadosh and Galzette, whose Israeli representatives are gradually increasing activity in Israel. Most companies not only supply materials, but equipment, tools, and furniture.

There are various vendors and wholesalers in Israel that function both as small import businesses and as intermediaries between large importers and small businesses, as large importers are not interested in reaching every small hair salon.

 

Marketing resources

Most customers arrive to a hair salon following a recommendation from family and friends; this is especially true for neighborhood hair salons. Large chains channel large resources for advertising. One chain, for example, has recently launched a promotional campaign that includes billboards and print advertisement in women’s magazines, local newspapers and special edition magazines that accompany women’s magazines and are delivered to customers.

 

Factors Affecting Success:

Dedicated customer service - customers visiting a hair salon expect more than just a haircut. They are interested in receiving personal treatment.

Expansion- in order to expand and grow in the hair salon industry, a hairdresser must have business and management skills, in addition to his hairdressing skills.  In order to manage the business side of the hair salon a hairdresser may decide to hire or establish a partnership with another person.

Location-appropriating the hair salon’s location to its target market.

Hygiene- the hair salon and employees should retain a clean, hygienic look.

Price- reasonable price range (in relation to the hair salon’s prestige and target market).

 

 

Human Resources:

Human resources are hired in proportion to the hair salon’s level. More human resources and higher professionalism are required for high-end salons. In addition, non-professional employees are required for cleaning, administration, etc. If peripheral services are offered, an appropriate professional is required.

Employee payment is either in a monthly/ daily salary, or as commission.

 

Financing:

Industry Revenue and Profitability

Revenue:

The average proceeds for a regular hair salon in Israel is approximately 40,000 NIS per month.

The average number of customers per hairdresser ranges between 12-16 customers per workday.

Average customer’s expense at a neighborhood hair salon is approximately 50-75 NIS per visit, and approximately 150-250 NIS per visit at prestigious facilities.

 

Hair salons defined as men’s facilities:

Yearly revenue per hairdresser in 2003:

Prestigious hair salon- 216,000-268,000 NIS

Average hair salon- 162,000-214,000 NIS

Cheap hair salon- 134,000-161,000 NIS

(Note that these are only ballpark figures)

Material usage cost percentages range between 1-3% of revenue.

 

Hair salons defined as women’s facilities:

Yearly revenue per hairdresser in 2003:

Prestigious hair salon- 751,000 NIS.

Average hair salon- 654-000 NIS.

Cheap hair salon- 522,000 NIS.

Home-based salon- 360,000 NIS.

(Note that these are only ballpark figures)

Material usage cost percentages range between 5-10% of revenue.

 

Typical Terms of Payment

Customers primarily pay in cash or credit cards.

Vendors- EOM+30 to EOM+120.

 

Risk Level:

The hair salon industry is characterized by many new businesses alongside many business closures.

It is recommended to seek consultation and guidance by professionals.

 

Licenses and Certifications:

Local authority licensing and professional licensing. A professional hairdresser's certificate can be acquired in Israel, as well as other professional courses, but this issue is not regulated.

Ministry of Health authorization and supervision regarding the facility’s hygiene. Each facility is required to sterilize equipment, although this is not enforced. Notwithstanding, there is no official Ministry of Health licensing requirement in order to establish a business. Hygiene conditions are inspected once during the local authorities licensing process.

 

Insurances:

Business insurance (for premises, content, and inventory), third party insurance, employer’s liability insurance, professional insurance, and loss of income insurance. In addition to the above, an insurance agent should be consulted in regards to the need for additional insurance.

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