The recession challenged the industry, with consumers cutting back on
discretionary purchases like manicures and hair services. With the
economy on the mend, salons will experience growth again, aided by a
rise in disposable income and consumer sentiment. Hair and nail salons
can benefit by taking advantage of growing interest in eco-friendly
products and abiding by new regulations The Hair and Nail Salons industry has a low level of capital intensity.
This is similar to other personal service industries, which are
labor-intensive. In 2012, for every $1 spent on wages, operators will
typically require an estimated $0.04 of capital investment. As a
personal service industry, the industry relies heavily on labor, and
there are not many opportunities for increased mechanization. Capital
intensity declined over the past five years, when $0.05 of capital
investment was required for every $1 spent on labor. The change has
mainly occurred because companies decreased their capital expenditures
during the recession to cut operating costs.
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