Are Discount Salons Threatening Our Industry?

Karen Johnson is the kind of client who gives you nightmares. She isn’t unpleasant or demanding or negligent in caring for her nails; in fact, she is friendly and appreciative and comes in for a fill every two weeks like clockwork. What frightens you is that she stopped going to the salon she frequented for years after a low-cost salon opened nearby. She figured she could save a lot of money getting her nails done at the discount salon.

“It got to be too expensive,” says Johnson, a secretary in Los Angeles. “A fill at my regular salon was $25 every two weeks. But at this new place it’s only $12, and to tell you the truth, I can’t tell the difference.”

Johnson is like a lot of clients who would rather switch salons to save money than give up having beautiful nails. She is also like a lot of consumers, who are more concerned with price than with service, atmosphere, amenities, or even long-standing business relationships.

Discount salons – defined in this article as those whose average service prices are at least 50% below the national average – are as common today in the nail industry as broken nails. They predominate in New York, Nevada, Florida, and California – where, as everybody knows, there’s a nail salon on every corner. However, the increasing proliferation of discount salons isn’t limited to those states. Texas, Georgia, Maryland, and Arizona as well have seen an increase in the number of low-cost salons as the lure of low-priced nail care spreads.

MORE NAIL SALONS THAN EVER

The number of nail salons in the United States stands at a whopping 189,017, and this number does not include nail care operations within full-service salons.

Especially in Southern California, New York, and Florida, much of this growth is a result of the influx of immigrant business owners, who tend to open up lower-priced salons. There are many other factors that contributed to the growth of nail care in general and discount salons in particular. Says an industry insider, “There were so many factors that created the environment for the growth of the discount salons: the economy, the wave of wholesale marketing that created the notion that everything could be had cheaper, the birth of warehouse shopping. Most people were used to buying everything at retail prices, but these new businesses introduced the idea that you could buy wholesale if you gave up a few amenities.”

THE EFFECT ON THE INDUSRY’S IMAGE

Every industry has its share of low-end and high-end marketers. Nail technicians say they are less concerned about losing business to low-end salons than they are about whether these salons are damaging the overall image of the nail profession. Says Debbie Graf, owner of Talk of the Town in Grand Prairie, Texas, “These cut-rate salons do sloppy work and give the rest of us a bad reputation. A client who has her nails ruined at a cheap shop may stop getting her nails done altogether. Nail technicians who do good work have to overcome the reputation of bad nail technicians.”

“The most frightening thing about these low-cost salons,” says Texas salon owner Kathy Haller, “is that if a client has a bad nail experience she’ll simply quit having her nails done. She’ll blame the bad experience on the product instead of the person who applied it. It’s funny: If you get a bad haircut, you don’t stop getting your hair cut, you just go to someone else. But that’s not what happens with nail care.”

THE IMPACT ON THE NAIL PROFESSION

A little-cited effect of discount nail service prices is their impact on nail care as a career. In California, where the average price for a full set of extensions is $36.73, the nail industry peaked in 1987, when, according to the California State Board, an estimated 8,600 manicure licenses were granted. A slow but steady decline in the number of licenses began the following year, but the scene had been set in that state for the price war.

“Nail techs used to be able to make $25,000-$40,000, a year,” says a Los Angeles-based industry consultant, “but today they’re lucky to break $30,000. Low-cost salons blew out the low end of the market and made it tough for women to get into a nail career.”

Without the promise of a profitable professional career, high-caliber individuals who might have selected a career in nails have chosen other career paths. Ask any salon owner what her biggest problem today is and it’s unlikely she’ll cite discount salons. Her problem is finding and keeping high-quality nail technicians.

THE HEALTH SCARE

As the number of nail salons in the United States increased, the salon-going public, and more importantly, the media, became concerned about salon sanitization. The specter of AIDS loomed large and clients grew fearful about the possibility of becoming infected during a nail service. A pivotal moment in professional nail care history was the airing of the infamous “America West” episode that showed a California nail salon owner cooking chicken in the back room of her salon. Suddenly, nail salon safety was making its way onto every local news show and into every beauty magazine in the country. “It starts with a tiny green spot – like a dot of ink under the fingernail – but soon blackens and spreads. As the infection swells, the nail is pushed up and off its bed. The intense pain ends only with the surgical removal of the nail,” went a 1991 article in the Los Angeles Times that warned consumers about the conditions often found in nail salons.

Although not only discount salons commit the infractions of poor sanitization practices and operating without a license, discount salons found themselves at center stage of these media reports. And although no one disputes that there are plenty of discount salons operating within the letter of state board regulations, many of them, with their low profit margins, simply cannot afford to operate within the law.

Nail technician after nail technician interviewed for this article could recite a litany of horrors they had seen come out of discount shops. Says Graf, “I had one client tell me that when she got a mold under her nail, the nail technician [at the discount shop] told her it was a beauty mark!” from the common complaints of drill misuse, unkempt work areas, and an inability to communicate with clients, to the more grievous infractions of destroying nail plates when drilling into nail beds and infecting clients by using dirty implements, the industry has seen it all.

However, the spotlight on poor sanitation has been a call to action to all professionals to clean up their act. Says Sandra Kipp of Kipp’s Kreations in Davison, Mich., “If a client sees one technician in a shop cleaning up her area and talking about sanitation but the client’s own technician isn’t doing the same thing, she’ll begin to wonder if she’s safe. So when one technician starts paying attention to sanitation, everybody else has to.”

The Nail Manufacturers Council also responded to the problem of poor sanitation habits in the salon industry and wrote its Guidelines for Salon Sanitation, which has become the de facto standard for all salons.

THE NEW CONSUMER

Nail technicians who blame discount salons for their own business woes are ignoring a fundamental principle of business: Give customers what they want. There are plenty of customers who want low-cost nail services and don’t care at all whether the nail technician is disinfecting her implements, whether the business pays its taxes, or whether there’s fancy soap in the bathroom. If she frequents a discount salon, she does so to save money.

As the Los Angeles Times wrote recently, “… [there is] a new wave of shoppers whose obsession with getting the best possible buy is remaking the marketplace. With the economy stuck in the doldrums and the conspicuous consumption of the 1980s fading, value has become the new mantra for shoppers.” Consumers aren’t buying automatically the brand names they were once so loyal to. They demand quality and low prices. In fact, the availability of quality nail care at low prices has actually brought more clients to the salon who had never had their nails done before.

Explains David Shaw, owner of Dallas-based Nails Express, “Every industry is going through a trend where people are looking for value. With our low-cost salons we’re trying to fill a niche in the market. We’re trying to get people who aren’t getting nails or are getting them very infrequently. There are plenty of less expensive salons, but they don’t have the full package of quality products, capable nail technicians, cleanliness, convenient location, and shop presentation.”

At Personal F/X in Hermosa Beach, Calif., you can get a fill for $9.99 and a manicure/pedicure service for just $15. But owner Connie Nyguyen defies the stereo type of a discount salon owner. Her manicure service lasts 30-40 minutes and includes a hand and arm massage. She would win no awards for sanitation practices, but she is no more deficient in that area than many other salons.

Salon owner Ira Bloom explains why he opened his Nails Now! salons in the Dallas/Ft. Worth area, where a full set is $25.95: “I knew there was a way to offer low-cost nail services in a comfortable, clean environment.” Bloom says his technicians are earning more money than they were making on their own and that he has devised a system that allows both the technician and the owner to profit by keeping salon costs low and volume high.

FEW LOST CLIENTS

Many nail technicians and salon owners fret about losing customers to discount salons, yet most say that many of their clients return to them after having tried a discount salon. Says Graf, “I have had a lot of clients who had been going to the cheap salons before they started coming to my shop. Then they met one of my clients and saw how good her nails looked and that her nails stayed on longer and didn’t lift, and they came in to my shop.”

Graf says the only clients she loses permanently to the discount salons are younger clients, teenagers who cannot afford the extra couple of dollars. “I used to have a lot of high school students, but not anymore. They can’t afford it, and they don’t know anyone who has had her nails done right so they don’t get referred.” Graf says that she would just as soon let go of the customers she loses who only care about price anyway.

“They go there simply because of the price. They don’t care about infections; they don’t care how long the nails last. In fact, some of them will go to those salons regularly and then come to me every third or fourth time for a really good fill.”

Says Haller, “Lots of clients at least try the cheaper places. Some never come back, but if they’re serious about their nails we usually get them back.”

CONCENTRATE ON SERVICE

A good salon can probably withstand losing a few clients who care only about low cost. It can also keep its reputation intact no matter how bad a rap artificial nails get in the press if it is a clean and professionally run shop. Where salons lose their footing is by trying to compete directly with discounts salons, either by lowering their prices or by not raising them often enough.

Nail care service prices have remained nearly unchanged since NAILS began tracking them in 1989. The average price for a full set in 1989 was $42.02, and if fell to $41.83 in 1993, according to NAILS’ 1993 Fact Book. The price of a basic manicure has increased from $10.43 to only $10.97. Many attribute the slow price growth to the intensely competitive market.

“I haven’t raised my prices in 2⅟2 years,” says Graf. “I cannot raise my prices and stay competitive. I might lose my clients altogether.”

Haller, who charges $27.50 for a fill, encourages nail technicians to try to divert attention from price by emphasizing service. “Those discount salons are really doing an entirely different kind of service. They don’t do a lot of pampering, so clients may pay less but they’re also getting less service.

“You’ll find that a lot of discount salons charge a base price for a service, say a fill, but then add on for polish, top coat, repairs, a French manicure, things like that. I’ve even heard of them charging 50 cents to repair a crack. At out salon, a fill, which we call a touch-up, is $27.50 – for everything. We promote our service and we feel that that’s what sets us apart. Even at that price, we’re still competitive.”

Nail technician Kym Lee rejects the notion that price stagnation has anything to do with market saturation. “For one, you have to realize that the profit on a set of nails is enormous, so you can afford to raise prices in small increments. But you also need to realize that if you’re currently charging $25 for a fill and you raise your price to $27, your client isn’t going to start going to the $12 salon. She wasn’t a $12 salon customer in the first place. Now, if you go up too much, you may lose her, but you’ll probably lose her to a $20 salon, not to a $12 one.”

Setting service prices can be confusing and complex, but you can’t raise prices on an uninformed clientele. If nail technicians cannot make clients understand why prices are going up – either because you are fully booked, you’ve improved your skills, or you’ve improved conditions in the salon – you cannot expect to hold onto those clients through the price increase.

No salon can be all things to all clients, so you may lose some clients to discount salons. However, you can stem the flow of clients out of your salon. Most salons that thrive in a hotly competitive climate manage to do so by offering superior customer service and unique products.

Haller says her business hasn’t suffered from the growth of discount salons because she focuses so intently on service. She explains, “I see some of these discount salons making classic customer-service mistakes, like double-booking and missing appointments. That doesn’t sit well with clients, even if they’re only trying out a place because of its low price.”

Haller is acting president of the Nails Industry Association and is frequently asked by salon owners how she manages to keep her business so strong. “I always tell them: Concentrate on service. At our salon the only advertising we do is referrals, and we really push referrals. A referral client will become a regular and will stay with you forever. When you make a great impression, even if you’re charging $2.50 or $5 more than other salons, your clients will feel like it’s worth it.”

LEVELING THE PLAYING FIELD

Professional nail care has changed and discount salons are here to stay. The salons that feel the impact of discount salons most are probably the mid-price salons. They don’t charge enough to offer all the super-luxuries that the high-end salons do, and they cannot operate at a high enough volume or low enough overhead to allow them to compete with low-cost salons. In order to compete, which comes down to survival, salons are going to have take a long, hard look at the way they operate an make some changes. In the current competitive climate, nail technicians have to do a superior job of educating clients on sanitation, quality products, and professional service. Clients need constant overt and subtle reminders of why they’re paying the price they are for your services. You must make it crystal clear to clients what separates your service from the rest.

Says Haller, “As business gets more competitive, you have to be an all-around professional. You have to offer something other salons don’t. Always have a positive attitude. You need to let your client know that you feel privileged to serve her and privileged that she has chosen your salon.”

Says Lee, “People like to say all the problems with their businesses are because of discount salons, but they’re really just trying to find a scapegoat. People want something to blame instead of looking at themselves and asking themselves what they’re doing wrong and why they’re losing business.”

Despite the reputation many discount salons have earned for shoddy work and poor customer service, low-priced salons have helped redefine nail care in the United States. Because of the accessibility of inexpensive nail care in the United States. Because of the accessibility of inexpensive nail care, more women than ever before are having their nails done. The nail industry had its biggest year ever in 1992, with service income at $4.7 billion. The figures aren’t in for 1993 yet, but nail care, once a rich woman’s luxury, is now as much of a beauty necessity for women as a haircut.

As for its tarnished image, the nail industry has responded with calls to action from every major nail technicians’ association and nail product manufacturer to improve its standards in every area from education to sanitation. And there is evidence that the low-cost salon faction is working to improve its reputations, enhance customer service, improve the earning potential of its working technicians, and finally, clean up its act.

COMPETING WITH DISCOUNT SALONS WITHOUT BECOMING ONE

You would have to have your hands over your ears and your eyes shut to avoid the message being sent by discount salons – customers don’t care that you haven’t been able to raise your prices in years, they want better value for their money. How can you compete with a $10-$15 fill without lowering your prices? We asked a couple of salon owners to provide some creative options that would appeal to the value-minded customer and keep you from losing your shirt.

Prepayment Discounts. Offer a discount to regular customers if they pay for a group of services in advance. For example, if you charge $20 for a fill, offer the fill at $17 if the client pays for 10 services in advance. A client who has paid in advance isn’t going to go off and try another salon. Many salons have had good luck with a “Buy 9, get 1 free” option for regular clients.

No-Frills Options. Instead of lowering the price of a service staple, offer options with escalating prices. For example, offer a no-frills 20-minute manicure for $7-$8 for the cost-conscious customer and several manicure options all the way up to a deluxe manicure, which could be an hour-long service that includes a paraffin dip and take-home goodie bag. You will be surprised at how many clients opt for the higher-priced options when given a choice.

Bargain Night. Select one evening a week when customers can get their nails done for deep discounts. Although everyone in the salon can participate, you might choose to use that evening to try out new products or do technical training with technicians.

Value Added. Sometimes customers leave not because your prices are too high or another salon’s are low, but because they don’t feel they are getting value for the money they spend. You can compete with low-cost salons even with higher prices if clients feel they’re getting their money’s worth with you. Try including a maintenance kit with all new full sets; give a small gift to first time clients or clients who refer others; create handouts that describe nail services and home care and give them to clients. Make coming to your salon a treat: Put fancy liquid soaps in the bathroom, keep a fresh pot of coffee at the ready, always do something that reminds them at every visit why they should patronize your salon.

Reward Referrals. Some nail technicians recommend that you reward a client for every referral. That way a client gets an immediate reward and has a great incentive to bring you new customers. If they get a regular free fill from their referrals to you, they won’t be in need of a discount salon.

Focus on Increasing Clientele.  Running a price special will bring in new clients, but in order to keep them when your prices return to normal, you’ll have to wow them with your service and your salon. Go out of your way to make a first timer feel like a queen. Roll out the red carpet and make your best first impression.

Convenience. Discount salons thrive on walk-ins, not standing appointments. They make a business of being convenient. Your salon can do this easily by making it clear to clients that you are available, whether it’s for an early morning fill or a late night manicure. Says salon owner Kathy Haller, “Do whatever your clients need whenever they need it.”

Be unique. There is one surefire way to hold a customer: offer her something she simply cannot get elsewhere. This uniqueness can take many forms and doesn’t have to be service-related. It could be the unique way you decorate your salon, the infinite variety of polish colors you offer, your personality, the fancy coffees you always prepare. Do something to stand out from the crowd; be memorable and you will keep the business.