Galerie de Beaute

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Retail Property Sub-leasing Business Plan

Market Analysis Summary

Ourstate has approximately 4,800 licensed cosmetologists, barbers, nail technicians, and aestheticians.  

Per the Encyclopedia of American Industries, Third Edition, Volume Two: Service and Non-Manufacturing Industries, p110: “Hairdressing services have proven to be virtually recession proof, as consumers traditionally cut back on other discretionary expenses before decreasing their spending on personal grooming.”

Entities have concentrated on capturing market share through densely populated communities.  Ourcounty, Ourstate fits that description.  Approximately 64% of Ourstate’s population reside in Ourcounty, per the 2000 U.S. Census.

According to the 1998-1999 Occupational Outlook Handbook, approximately 586,000 hairdressers, hair stylists and cosmetologists were employed in the U.S. in 1996, with 43,000 jobs held by manicurists.  The Occupational Outlook Handbook expects employment in the cosmetology industry to increase as fast as the national average for all professions through 2006.  Manicurists are expected to experience the fastest growth, as are other such specialists as aestheticians and electrologists. 

4.1 Market Segmentation

Galerie de Beaute is making suites available by the following segmentation. The suites are segmented by potential use. Because there are approximately 2,300 licensed cosmetologists in Ourcounty, 18 suites were devoted to hairstylists. With nail technicians growing at a faster rate, we will look to devote more salons to nail technicians in the future. Currently there are approximately 237 nail technicians in Ourcounty, 202 barbers and 123 aestheticians.

Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5
Potential Customers Growth CAGR
Hair Stylist 5% 2,300 2,415 2,536 2,663 2,796 5.00%
Manicurist 12% 237 265 297 333 373 12.01%
Aestheticians 10% 123 135 149 164 180 9.99%
Massage Therapist 5% 390 410 431 453 476 5.11%
Barbers 1% 202 204 206 208 210 0.98%
Total 5.54% 3,252 3,429 3,619 3,821 4,035 5.54%

4.2 Target Market Segment Strategy

Based on the growth rate of potential customers, Galerie de Beaute will need to investigate the opportunity to open a second location to service potential customers by year 2008.

4.3 Service Business Analysis

Although Ourcounty, Ourstate has many barber shops, beauty shops, spas and nail salons; the concept of a salon mall is new to Ourstate. There are no hair stylist or nail salons on the half mile heavily travelled route 13/40 from route 141 to the 13/40 split. The closest establishment is located on route 141 in the Sell-O-Mart on route 273.

Ourstate code does not address booth rental, but the advantage of Galerie de Beaute is the privacy of secure, individual leased unit mini-salon versus 'booth' rental. Nearbystate does not permit booth rental as an alternative to salon ownership, a point for Galerie de Beaute to consider in future expansion.

4.3.1 Competition and Buying Patterns

The driving factor in choosing one type of arrangement over the other will undoubtedly be cost. Owners of traditional salons face many challenges when starting a new business. Purchasing equipment and finding a location in a high traffic area with reasonable rent is often difficult. Although 40% of beauty professionals own their own business, 60% are employed in a privately owned shop.

In a traditional salon environment employees are paid 50% commission. These employees are often charged for supplies and products utilized. These issues sometimes lead to high turnover in the industry. Because of these challenges, salon owners have resorted to booth rental in those states in which it is legal.

The Solution is Galerie de Beaute

Galerie de BeauteTraditional Salon
Weekly Sales $800Weekly Sales $800
Weekly Rent $225Weekly Commission

$400

Telephone$10Telephone

$0

Supplies $40Supply Charge-back $80
Income Before Taxes$525 Income Before Taxes $320

If a salon professional can increase earnings by making 55% commission rather than 50% commission the income difference will be the determining factor when choosing employment at one salon over another. We can offer an alternative to the commission environment. The qualities of salon ownership with less paperwork will be appealing. In the scenario presented above the potential income is 64% before taxes.