Retail:
Hero or Villain?
Blog > Retail: Hero or Villain?
RETAIL: WHAT THE DATA ACTUALLY SAYS
We made the case for retail. We made the case against it. Now let's stop arguing and look at the numbers.
Retail is the hero.
Retail is the villain.
Both make a compelling case.
So what happens when we compare retail sales with the profitability of actual salon businesses?
This is where the conversation gets interesting.
The most profitable salons have healthy retail businesses.
In the Qnity Salon Profit & Loss Study, the most profitable salons generated an average of
12.2% of total revenue from retail.
None of the top performers fell below 7%, and most generated between 9% and 15% of total revenue from retail.
That gives the hero side of the argument some support.
Healthy retail appears to have a place inside a profitable salon model.
Then we looked at the least profitable businesses.
More retail did not equal more profit.
The least profitable salons averaged 16.4% of total revenue from retail. That's higher than the 12.2% average among the most profitable salons.
Read that again.
The salons generating the highest percentage of revenue from retail were not the salons generating the highest profit.
That directly challenges one of the industry's longest-held assumptions:
More retail = more profit.
The data says it's more complicated.
So what was happening?
The difference wasn't retail itself.
Lower-performing salons often carried larger inventories, devoted more space to retail and absorbed higher occupancy and product costs. In some businesses, strong retail sales appeared to compensate for weaker service performance rather than contributing to stronger overall profitability.
Product costs also deserve attention.
The Qnity study found the average cost of retail products was closer to 54%, higher than some previous industry benchmarks. Shipping, shrinkage, discounting and other costs can further affect the economics of retail.
Retail revenue alone doesn't tell the whole story.
So should salons sell less retail?
That's not what the data says either.
At the other end of the spectrum, salons with very little retail may be leaving revenue and client education opportunities untapped.
The most profitable businesses weren't abandoning retail.
They were doing something much more interesting.
They weren't choosing between services and retail. They were building businesses where both worked together.
Retail isn't the hero.
Retail isn't the villain.
It's one component of the business model.
Just like labor. Pricing. Occupancy. Product costs.
Service productivity. Operating expenses.
The better question isn't:
Should salons sell retail?
Or even:
How can we sell more retail?
The more useful question may be:
Is retail working in our business?
Is inventory turning?
Is the space productive? Are product costs controlled? Does retail complement strong service revenue? Are recommendations improving the client experience? Is the category contributing to the health of the whole business?
Those questions move the conversation beyond hero versus villain.
And that's exactly what we hoped the data would do.
Not tell the industry what to think.
Give it better information to think with.
Keep following the data.
The complete Retail: Hero or Villain? feature, Qnity Salon Profit & Loss Study insights, and more industry intelligence are inside Issue 01 of iQ.
For the Intelligent Beauty Professional.
Better data. Bigger conversations.
Image courtesy of Rescue Spa