The beauty supply business generates $10 billion in sales each year. 75% of these sales are made by the top 50 major retailers such as Sally Beauty Supply, Ulta, Sephora, and Walmart. Despite competition from large retailers, small businesses still have a place in the industry. So, if you are considering buying a beauty supply store, it is necessary to study the competition, review the financials and check the following areas:
Target market and location
I cannot stress enough the importance of identifying your target market. Regarding la beauty supply stores, your target market may include industry professionals such as cosmetologists, nail techs, estheticians, salon owners, and even beauty school students, or a store may target consumers directly, or perhaps a store serves both industry professionals and consumers.
Regarding the location, check out the businesses around the store. Check to see how many salons or beauty schools are nearby and also other shopping destinations such as grocery stores and shopping malls near the store. The more conveniently located the greater the opportunity to build a loyal customer base. A hairstylist might stop by on her lunch break to pick up some essential products or someone doing their grocery shopping might stop by to pick up a shampoo that their grocery can’t carry.
Inventory
Inventory is a beauty supply store’s largest operating expense. From what I’ve seen in the past, the most successful beauty supply stores keep up to date on trends and stock popular items accordingly. Customers want to buy the latest beauty products. For example, blue nail polish may be hot for spring but won’t stay in style during summer. Don’t pay full price for items that won’t be popular in a few months. If you can’t get rid of it, sell the old inventory at a discount. Also, employees must manage and keep track of inventory to ensure it is not stolen.
Product knowledge
Product knowledge is paramount in the beauty supply business. Customers will ask questions and want your input. This is a great opportunity to make referrals and increase your sales. Knowing what you’re talking about will make you an expert in your industry and will in turn build your trust and credibility with customers. Providing exceptional customer service is essential as well. Product knowledge combined with more personal customer service will help you compete against larger retailers.
Market expansion
Beauty supply stores that target industry professionals are generating additional income by selling salon equipment and designs. Check if the store you are interested in caters to this market. If so, you need to educate yourself about the trend. If not, you may want to consider this option when taking over.
Marketing
Check the current owner’s marketing plan. Does the business use any social media (blogs, YouTube) or participate in any social networking (Facebook, Twitter, Pinterest)? If not, then you need to add social media to your marketing strategy. Social media is a valuable tool that allows you to not only sell your products but also show yourself to be an expert in your field.
Outlook
According to IBISWorld, la beauty supply store owners will need to rely on new product launches to stimulate store sales over the next five years. Competition from discount stores such as Walmart and drugstores is increasing so while earnings are strong. The company expects competition in the beauty supply store market to increase.
In addition to examining the competition and financials alone, paying attention to the target market, location, inventory, product, potential market and use of social media will be useful in thinking about buying your beauty supply store.
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