In an October 2022 Forbes article, “according to the general definition—two consecutive quarters of negative gross domestic product (GDP), the U.S. entered a recession in the summer of 2022.”
All the signs are there: people are tightening their budgets, being more cautious about where they spend their money, and the price of just about everything is skyrocketing.
And in the salon, many clients are leaning away from more luxurious services like hand-tied extensions, luxury color services, and more.
Which leads a lot of stylists and salon owners to ask whether luxury salon services are in trouble in 2023…but are they?
Let’s dig in.
This recession will not be like any we’ve had before.
Here’s the thing: indicators are showing this won’t be like the recessions we’ve had before. It won’t be like in 2008 where we were preparing for the worst. Not like in 2009 where Groupon reigned supreme, or like in 2011 where it felt like survival skills were necessary.
The difference? As of October 2021, there was $20+ trillion in the economy. 80% of U.S. currency has been printed in the last three years.
In short, while the price of things has gone up, people, generally speaking, have more cash and they’re holding onto it tighter than ever.
What does that mean for luxury services?
It means that your clients might cut back on your more expensive services unless you can showcase your perceived value (we’ll get to that in a moment). Stylists and salon owners across the industry report that clients are spacing out their appointments or shifting their more luxury services to something more low maintenance.
Does that mean you need to pivot your entire luxury salon business?
Not necessarily! Each business is unique and in a different situation. But, generally speaking, you need to increase your perceived value to keep your clients coming in and paying for those services.
What exactly is perceived value? Glad you asked! Perceived value is the difference between a prospective customer’s evaluation of the benefits and costs of one business/opportunity when compared with other businesses/opportunities.
In other words, it’s how a potential or current client perceives your business’s value when compared to another stylist or salon.
And to not only survive but thrive in a recession, you need to boost yours ASAP.
So how do you actually do that? We broke it down in this blog post, or, if you’d like to hear it straight from Britt, join Thrivers Society today to watch the replay of her Training & Development (T&D) session on perceived value!
Lean into the Lipstick Effect
The term “lipstick effect” has been buzzing around the industry lately, but what does it really mean? We break it down more here, but basically, it means that when the economy hits a rough patch, people seek out other ways to find joy. Instead of expensive makeovers, consumers might pick up a lipstick. Instead of a fancy meal out, they might stop in for a nice coffee.
How does that translate to your business? Take a look at your services and consider if there’s a way that you can offer that tangible treat that your target market craves.
In 2023, luxury services can still be sustained, but know that consumers are choosing different. Take a look at your target market’s pain points, your perceived value, and your current offerings to determine a plan to help you thrive in 2023.
Need some help? Thrivers Society has all the resources you need to build and grow your business, no matter the economic climate. Click here to learn more and join now.
