Recession?  Hair today, gone tomorrow

As we enter a period dominated by “cuts”, here is a profile of an industry which thrives on cuts. Some great business lesson material here on market segmentation, adding value and the nature of demand for a product.

The industry concerned is hairdressing, and it seems that this is a market which has emerged relatively unscathed from the recession. The article contains some excellent research data that students can use in their essays.

I partcularly like the stat that fewer than 1 per cent of new hairdressing businesses that were startups in 2009 have subsequently closed down. That sounds so low I wonder whether it is true. It is a very low level of business failure for a startup, although there may be some good explanations that students can identify as possible reasons. The low barriers to entry to the market and relatively insignificant fixed costs of a simple hairdressing operation may be two.

The value of the market is estimated to be around £5bn, which equates to around £20k per hairdresser/staff member - an indicator of the relatively low revenues generated for each salon or barber shop.

Students might be encouraged to consider the nature of demand for hairdressing. The article makes the point that “in a recession, hair still grows”. Well of courses it does, but that doesn’t necessarily mean that customers will be prepared to spend as much on hairdressing. They may have their hair cut or styled less often, or opt for a value service rather than a premium option. So why are hairdressers doing so well? The article suggests that personal styling is one affordable luxury that we simply are not prepared to give up. Having your hair done is a way of handling the doom and gloom.

Lots of other good material in the article - i do encourage you to take a look.