Competing With Discount Salons

The question most asked by nail techs in today’s beauty business climate is: "How do I compete with the discount salons that charge as little as $25 for a full set and $12 for a fill?

The Answer:

RAISE YOUR PRICES! Stop "competing" on price altogether! If you compete with someone, then they become your "equal" in a customers eyes.

The nail industry has plenty of room and clients for all level and price service providers. Each type of salon will appeal to certain types of clients. The key is to identify and target your client market. You cannot be all things to all clients, so find your niche!

High end customers will not go to a salon or store that they perceive as competing with a discount salon. If they compete, they are "equals". High-end customers who choose high-end salons do so for many reasons, and low prices are not part of the high-end profile. While a high-end client loves a bargain as much as the next person, she also more readily realizes that "you get what you pay for": If you pay too little, then youget too little. Charge low prices for your services, and you will be lumped in with the "discount salons" category based on that one characteristic. Sell on quality first and not on price.

Consider This Example:

Nieman Marcus does not consider K-Mart a "competitor"*. While a Nieman Marcus customer may shop at K-Mart occasionally; she is not buying the SAME items from both stores, hence they do NOT compete. This customer may buy Saran Wrap and some other misc items at K-Mart, but she does not buy her business suits and cocktail dresses and shoes and purses and jewelry at K-Mart, she buys those at Nieman Marucs (or Bloomies or Harrods, etc. :) When looking for a new dress or shoes, you look for the quality (what you like)first and then the price, don't you?

There are an entire class of clients who equate price with quality. Low prices equal low quality. High prices equal high quality. These clients want the BEST. The BEST costs money. You don't have to explain or justify anything to these clients. These are the clients to cultivate long-term. Not only will they pay more, they can afford to be there in the first place. They will still be around getting services next year and five years from now. Maybe it will be you, maybe someone else. But they will be AVAILABLE as clients, and that is key.

Clients without money fall in and out of the picture depending on small fluctuations in their income. Not a very reliable client base for a nail tech. Leave them to the discount salons! Focus on cultivating the client who can afford you now AND in the future. (Sales to entice them in the door are fine, but cultivate/cater to the ones who can afford the regular prices you plan to set in the future!)

The middle range of any market is hard in all industries. What does well in today’s economy? High end and low end! The middle is forced to compete on price with the low-end salons. Then the middle range salons that also choose to compete with the high end salons end up giving away more in add-on services than they can afford to so they can compete with the high-end salons. They loose in both instances ultimately and go out of business. (Example from the retail world: Montgomery Wards Department Stores recently going out of business. They were mid-range stores, with pricing higher than a Mart store, but less than a high-end store such as Nieman's. They were trying to compete on price with the Mart stores and on quality with the high-end stores; an impossible task that ultimately drove them out of business.) Competeing in the middle-range is very hard, if CEO's of major corporations can't do it successfully, it should be pause for thought for our industry and a warning sign to re-evaluate our market positioning.

In today’s economy, there is NO real middle market. Choose between discount or high end, and stick to it. For new techs this can be difficult; since their skills and experience don't dictate higher rates, what are they to do? The answer: Set high-end prices, but run constant "sales" to lure clients in and gain your experience. They will know that when the "sale" is over that your "real" prices go into effect. Sure, the "sale seekers" will leave, butyou'll be better off for the experience you gained while they were clients. The clients who do stay are the real keepers! And then you build from that client base at your regular prices--- again, with occassional sales to fill your book. (Afterall, Nieman Marcus does run sales too!)

An Interesting Bit of History That Nail Techs Need To Remember To Keep Perspective:

Discount hair salons did NOT destroy the middle or high-end hair salon industry. Fantastic Sam’s, Cost Cutters, and the myriad of other similar discount hair salons (some as low as $2.99 for a cut recently!) didn't drive any of the higher end beauty salons out of business, (nor any of the mid-range salons either as far as I can tell either---which is an interesting point to consider and evaluate further). I don't recall ANY hairdressers that I know of lowering their prices to compete with the new "discount hair salons". If anything, I remember them raising their prices! So there is a HUGE lesson to be learned there that we need to look at and explore and learn from. Pause for thought isn't it?