Marjorie Johnson has a point. She sent me a copy of a letter addressed to the trade publications expressing concern over what has been happening in the nail industry with the discount salon situation. Marjorie lives in and runs a salon in Southern California, the birthplace of discount salons. She tells of all the continuing education she has undertaken, the strict sanitation practices she follows, the high-quality products she uses, and the advertising and promotional events she does to support her community. To fully understand the appeal of the discount salons, she even went to one herself for a full set (at a price of $25), and, she says, “They look good and have not lifted, and they are three weeks old ... The shop was clean ... Manicures and pedicures were rushed and cheap but the clients kept coming in.” She asks, “Are the days of the relaxed and unhurried manicure/pedicure numbered?”

Marjorie sent a copy of her letter to Jim Nordstrom, CEO of Creative Nail Design Systems, who wrote her back with some valuable ideas. He says the nail professionals who first faced the low-priced competition years ago “did nothing to respond — they did not adjust prices or increase service levels ... and they lost.” He called Marjorie to action with some harsh realities: “You must be the best ... in the technical sense ... market your services ... so customers understand why your service is premium ... your pricing must be competitive within your marketplace ... The person who competes the smartest will win the biggest prize.” He concluded that, “If you truly understand that it is the customer who determines who competes the smartest, you are halfway to finding your answers to success.”

There is no pat answer to how salons can respond to discount salons and sustain their businesses. But a strong and flexible business can survive by putting the customers’ needs (including their need for lower prices) first and foremost. Take a lesson from what has happened in other industries: Many new industries start out as high-profit enterprises because they are new and novel, and the supply of providers is relatively small. However, as the supply of providers (nail salons, in this case) increases and develops a competitive edge, the pioneers of the industry have to adapt to the changing industry they helped create. In some cases that means pushing your business to a higher level by increasing the value; in others, it means taking it to a lower level by decreasing your prices and profit margin. But the final key to survival is to really, really know your customers and their needs, and to fulfill them.

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