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Overcompetition, demographics hitting beauty parlor trade hard

18 Comments
Photo: WIKIPEDIA

According to a survey conducted over the first 11 months of 2018 by Tokyo Shoko Research, 86 beauty parlors filed for bankruptcy last year, the highest figure over the previous decade.

In 90% of the above cases, which involved shops employing five people or fewer, the failure was blamed on business shortfalls, and it appears that smaller enterprises are suffering disproportionally. This goes against the once-common view that jobs involving working with one's hands are among the most resistant to hard times.

A person with knowledge of the industry told Shukan Jitsuwa (Feb 7), "The main cause of failure by beauty parlors is intensification of competition. And while the number of trained beauticians has been increasing, the decline in population means there are fewer customers to serve."

According to the Ministry of Health, Labour and Welfare, in 2017 some 245,578 such businesses were operating in Japan, an increase of 12% from 10 years previously. That figure, by the way, is more than fourfold the 55,664 convenience stores nationwide.

"Since the costs associated with starting up a beauty salon are comparatively low, it's an easy business to get into," the aforementioned expert is quoted as saying. "A person who works hard and puts away a reasonable amount of savings can probably open one."

Despite the larger number of shops, estimated annual revenues for the industry declined slightly, from 1.51 trillion yen in 2017 to 1.505 trillion yen last year, and are projected to drop below the 1.5 trillion yen baseline in 2019.

"While the number of shops has been increasing, customers are declining," the operator of a beauty parlor told the magazine. "The dankai no sedai (post-World War II baby boomers) and those above them are aging, and even if they come for a treatment, say, once a month, the numbers are going down."

Particularly in rural areas where the elderly make up a higher percentage of the population, growing numbers of customers are said to only visit a shop a few times a year.

"When we first opened around 20 years ago, we could rely on taking care of a fixed number of customers without much effort," said another beauty parlor operator. "But then from around 10 years ago, rival shops began opening one after the next, and customers declined. So we began handing out tickets entitling customers to 10% off on their next visit, but that failed to promote new business." 

"Recently we noticed shops posting discount coupons on a house in the neighborhood," she grimaced. "Other shops began doing the same, so we ran ads in a local free newspaper offering a discount. Not that it helped any."

Those in the know foresee a polarization of the business model.

"To survive will require using technologies to raise customer satisfaction," says an authority on the beauty industry. "The customers to aim for are affluent people who aren't affected by fluctuations in prices, and pampering them. But only a small percentage of shops are really capable of doing that. For the rest, we're going to see more chain franchises where a simple cut can be had for just 1,000 yen or so. Things are moving toward competition where it's just a matter of who can offer the cheapest prices."

© Japan Today

©2019 GPlusMedia Inc.

18 Comments
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Over supply and lack of demand and a coming tax increase-no guesses for what is going to happen!

0 ( +0 / -0 )

It's not demographics that killed this industry. You could see this coming 20 years ago. There are more hair salons than vending machines in my neighborhood. It is just about the last business anyone with a brain would want to get into now.

And kids with brains generally don't end up at beauty schools. Aside from a handful of serious young people wit ambition and business sense, 95% of the students at beauty schools are there because they weren't good at anything else. Their parents probably thought they would be better off with some kind of skill, so they send them to a school that will train them in a low paying industry with massive competition. A waste of time and money all around.

So all these 1000 yen cut shops of the future will have plenty of certified employees to choose from. And the pay will probably not be much better than a convenience store job.

0 ( +0 / -0 )

All I know is Ethyl and I love hair shops in Japan. Of course me being mostly bald, I don't really need it, but it's a real luxury I indulge in still. I don't like massages like in Thailand, but the way a good shop in Japan massages head, shoulders is very good. We will keep going. And paying a lot for it.

0 ( +0 / -0 )

The only thing is you can almost bet your last $ it will be a hair salon, masseuse, or convenience store opening.

I have 14.. FOURTEEN... tires shops within 3 miles of my house. None of them are chains like tire stores such as Yellow Hat, Autobacs..

I have no clue how they all survive. On any given day you MIGHT see 2 or 3 of them with a customer. Maybe.

1 ( +1 / -0 )

When one in three girls wants to be a nail artist, go figure!

1 ( +1 / -0 )

According to a survey conducted over the first 11 months of 2018 by Tokyo Shoko Research, 86 beauty parlors filed for bankruptcy last year, the highest figure over the previous decade.

Being beauticians can be really attractive to plenty of clueless young people, after high school these people usually will join beauty colleges to work in beauty parlor. Too bad they just have no clue about the reality of this industry will face.

2 ( +2 / -0 )

The customers to aim for are affluent people who aren't affected by fluctuations in prices, and pampering them. But only a small percentage of shops are really capable of doing that. For the rest, we're going to see more chain franchises where a simple cut can be had for just 1,000 yen or so.

kohakuebisu is spot on. Husband is noticing this trend in his business too which is quite unrelated to the beauty industry. Income gaps seem to be growing.

2 ( +2 / -0 )

*Aly Rustom:** Is there ANY industry not suffering due to the demographics here?*

Yes there is my friend, and it involves starting a mortuary!

Good point brother! I stand corrected!

Invest in death.

3 ( +3 / -0 )

Before QuikCuts the normal price was 3500 - 4,000 yen for a haircut and shave, shampoo and face massage. Now you can get a haircut for 1,000 yen. QuickCuts couldn't even buy barber chairs when they opened. The barber shops demanded the chair manufacturer not sell to them. So QC had to buy the same chairs they use in pachinko shops. They swivel and move up and down. Now old people can get cheap haircuts from old barbers and young people get expensive haircuts from young barbers. Too many young hairdressers/barbers doesn't lower the price. There is no supply/demand market in Japan.

1 ( +1 / -0 )

The low-end is dominated by chains, possibly because they can be ruthless enough to make it work. There's only so much service you can provide for 1000 yen, and I wouldn't be surprised if well-intentioned hairdressers would feel embarrassed at cutting back their service to that level. 

Fair enough but don't you think hairdressers & co have been overcharging/taking the p for far too long? 3,000-4,000 yen (or equiv) for a bloke's haircut (15-20min job) is often the norm in the west, x3 or 4 if you're a woman, same at most nail/beauty salons etc. Don't want to sound patronising - but i know i will- but they're hairdressers, nail 'artists' etc not docs/lawyers etc.

I pay 1,500 yen at my local hairdresser's and i think it's about right.

2 ( +2 / -0 )

@Aly Rustom: Is there ANY industry not suffering due to the demographics here?

Yes there is my friend, and it involves starting a mortuary!

6 ( +6 / -0 )

The competition has increased a lot. There are way too many beauty shops in a small radius. Also, I think the recent surge of youtube in Japan is partially to blame. Many people are now into "Do it yourself" videos. Whether it is watching them or creating them, everyone wants to be a viral sensation or learn from the people that are going viral. At the University I work, around 80% of the students all want to be a youtuber. Many of the women often state makeup, fashion, hair, or nails as to what they will showcase on youtube.

2 ( +2 / -0 )

@Knik, spot on, but also a clinic of some sort. Regardless, its something not for me.

3 ( +3 / -0 )

At least empty shops seem to get re-let fairly quickly here, at least in my neighbourhood anyway. The only thing is you can almost bet your last $ it will be a hair salon, masseuse, or convenience store opening. ZzZzz

3 ( +3 / -0 )

Government jobs seem to be doing alright. But then again, they aren't really producing anything are they?

In terms of % of workers doing full-time hours on non-seishain contracts, local governments can be worse than the private sector. This link in Japanese says its hit 20% across the country for town hall workers. In other sectors, day care staff, librarians etc., it's over 50%. The only seishain will be veterans hanging on to what they have.

https://news.yahoo.co.jp/feature/1134

3 ( +3 / -0 )

The story reads as a classic example of "kudouka", hollowing out. It refers to the middle of the economy being lost, leaving few high-end customers, the ones the article says need "pampering", and the low-end world of 1000 yen cuts.

The low-end is dominated by chains, possibly because they can be ruthless enough to make it work. There's only so much service you can provide for 1000 yen, and I wouldn't be surprised if well-intentioned hairdressers would feel embarrassed at cutting back their service to that level. They need a boss above them insisting on it. Likewise, I doubt many self-respecting sushi chefs would slice the fish as thinly as some of the 100 yen chains do.

7 ( +7 / -0 )

Government jobs seem to be doing alright. But then again, they aren't really producing anything are they?

7 ( +8 / -1 )

Is there ANY industry not suffering due to the demographics here?

7 ( +8 / -1 )

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