Death by a Thousand Haircuts
Alexa, remind me to … never get layers again?
On April 20, 2021, e-commerce leader Amazon announced their latest venture: Amazon Salon, a two-story hair salon occupying more than 1,500 sq. ft. in London’s Spitalfields neighborhood. The salon will initially open exclusively for Amazon employees before accepting bookings from the general public. In a statement about the launch, the company’s United Kingdom Country manager, John Boumphrey, commented that, “We want this unique venue to bring us one step closer to customers, and it will be a place where we can collaborate with the industry and test new technologies.” However, Amazon’s attempt to magnify its presence in the beauty industry delivers the latest blow to independent salons.
In 2020, Amazon’s revenue was up 38% to a record $386 billion, an over $100 billion yearly increase, and net profit was up 84% from the previous year. While Amazon thrived as a result of the COVID-19 pandemic and an increased dependency on e-commerce retailers, adverse effects were inflicted on small businesses. According to the United States Chamber of Commerce, the economy is experiencing something similar to a “K-shaped” recovery, referring to the industries that emerge from a recession at different rates and magnitudes. The top of the “K” represents industries that are doing well, while those at the bottom struggle. Currently situated at the bottom is the service-providing industry, which experienced 82% of the total job losses incurred since February of 2020. In mid-April of 2020, foot traffic to hair salons and barber shops declined by 60%, primarily because of social distancing guidelines and the forced shutdown of non-essential businesses. By the second quarter of 2020, year-over-year revenue for small businesses plummeted by 52%. Hair salon owners throughout the U.S. furloughed employees with the presumption that workers would file for unemployment benefits, which became possible for independent contractors and gig-workers through the CARES Act.
In an effort to establish itself as a force within the salon industry, Amazon recruited Elena Lavagni of Neville Hair and Beauty, an independent salon located in London, and her team to provide hair care and styling services. The press release acknowledges Elena’s credible past as a stylist for London Fashion Week and Cannes Film Festival, a necessary reassurance in part because Amazon’s inexperience within the industry may cause hesitation among prospective clients.
Recognizing the need to differentiate itself from others in the highly competitive salon industry, Amazon’s diversification strategy consists of using augmented reality technology in services. Clients will be able to visualize and experiment with different hair colors prior to receiving services. Another feature is “point-and-learn” tech, which will enable consumers to point at hair care products available for purchase, and subsequently receive relevant information and educational content based on their selection. Amazon Salon puts itself in the unique position of cross-promoting Amazon products and technology. In fact, the inclusion of Fire tablets at each styling station makes online purchasing nearly unavoidable. Although there are “no current plans” to establish Amazon Salon locations outside of London, should Amazon decide to expand their experiential venture, small businesses within the salon industry could be forced out of business. With current restrictions of 50% capacity in states like New York, salons’ revenue as it stands is completely insufficient to cover stylists’ salaries, let alone enough to compete with an e-commerce mega-giant.
Photo Caption: Alexa, remind me to… never get layers again?
Photo Credit: Pixabay