The beauty salon market - Belgium

1.2 The global market is growing

Global market for beauty salons and spas World, ****-*****, in $US billion Source: ****

The global market for beauty salons and spas is expected to register strong growth going forward; between **** and ****, the market is set to expand at a CAGR of *.**% to reach $US ***.* billion.

Several reasons contribute to this growth, including higher purchasing power amongst consumers and a larger demand for personal care. 

In ****, the market will contract amid COVID-**.

1.3 Domestic market

The cosmetics sector had a turnover of more than €*.* billion in ****, steadily increasing with a consumption of €***/inhabitant. [***]

Below, the revenue of the cosmetics sector is depicted. 

Revenue cosmetics sector Belgium, **** & **** & ****, in € million Source: ****

In ****, the revenue of the sector was €*** million. In ****, it was €*** million, an increase of some **.*%.

1.4 COVID-19's impact on the beauty institute market

COVID-**'s impact on Belgium is disastrous. According to Johns Hopkins, the leading North American institution on the research on the Corona virus, Belgium as of December **th had the highest mortality rate in the world, with *,*** deaths per million inhabitants.

The economic consequences are detrimental for many players in this industry. At Elise, one of the prominent beauty institutes in Belgium, daily revenues have dropped by **% from €*,*** per day to €***. In parallel monthly revenue have decreased from some €**,*** on average to €**,*** reports RTL in the month of October. This comes as clients are forced to stay at home amid lockdowns and rules on quarantining, or because they have been in contact to someone with the virus. In a pre-COVID area, it took two to three weeks to get an appointment with the institute, whilst today clients' are cancelling at high rates. 

Problems began already during the first lockdown; Elise's Beauty Institute had to close from March until the **th of May. Upon the re-opening, health measures including hydroalcoholic gel, disinfectant, plexiglas, masks, etc. had to be inforced. The institute's two founders have benefited from two Walloon grants for the self-employed during the health crisis, equal to a €*,*** grant, and more ...

2.1 Economic analysis: Belgian households

The beauty institute market in Belgium is dependant on several aspects, one of them being the spending power of the population. This follows the logic that more spending power results in a higher attendance with beauty instutes, as consumers' affordability increases. 

With this in mind, below we look at some macroeconomic factors which impact the Belgian consumers demand for beauty institutes.

  Real GDP growth forecast Belgium, ****-****, in % Source: IMF Up until ****, the Belgian economy was in positive momentum. Between **** and ****, every year saw a positive growth of the Real GDP. The average growth rate (***) was *.**%.  Due to COVID-**, the economy is expected to contract sharply with some *.**%. However, it is expected to rebound again in ****, and then continue on its positive growth path. For the cosmetics industry, and beauty institutes in particular, this is positive news, as an increase in the spending power of consumers also increases the likelihood of spending a larger proportion of household budget on this activity. Households spending Belgium, ****, in % Source: statbel The chart above shows the household spending per item in Belgium. We can see that around a quarter of expenditures (***) is attributed to costs related to accomodation.  Personal care represented *.**% of total expenditures ...

2.2 Belgians & cosmetics

In the last section we looked at data which drives consumption for Belgian households. Here, we analyse the relationship between these same households and the world of cosmetics.

What percentage are you willing to pay extra for local cosmetics, beauty and hygiene products? Belgium, ****, in % Source: ****

In ****, the spending degree of Belgian consumers with regards to cosmetics and beauty remained relatively low, with only **% of respondents feeling that they could marginally increase consumption. In other words, from this graph we learn that Belgian consumers are price sensitive with regards to cosmteics and beauty products, which also translates to beauty institutes as it is related to expenditure on personal care.

Meanwhile, *% of consumers were willing to marginally increase their spending by a lot (***).

Distribution of revenue, by category France, ****, in % Source: ****

In the broader category of cosmetics and personal care, we find that personal hygiene has the highest amount of revenue (***). Meanwhile, a quarter of revenue stems from skin care, **% perfumes and **% on beauty products. 

This distribution is relevant as it provides a cue on what type of beauty activity Belgian households seek. From this, we can assume that it is on average more probable that they visit a beauty institute for ...

3.1 Market Overview

According to Eurostat, *.*% of the total labour force in Belgium were hairdressers or beauticians. In ****, there were around *.** million people working. [***] In other words, around **,*** people worked in this sector. Of these, a large number is included in the beauty salons.

According to data.be there are around *,*** companies registered under the NACE code ***** "Beauty care".

Adding to this, the sale of cosmetics (***) accounts for *,*** jobs in Belgium, of which **% in Brussels, **% in Flanders and **% in Wallonia. [***] We can roughly apply the same distribution to overall demand for beauty salons, as the two are correlated.

Indeed, the market for beauty salons is very fragmented in Belgium, with well over a thousand clinics. Smaller salons require a niche in order to differentiate. For example, it is possible to offer beauty treatments with vegan products. This is an action which responds to a general consumer demand in Belgium; in ****, vegan cosmetics sales increased by *% and "Made in Belgium" by *%. [***] Meanwhile, large players such as Body Minute or Yves Rocher and the development of the sale of their own brand products continues to represent an important edge in competition for institutes.

Location is important in this market: shopping centres have been a target for ...

3.2 Distribution analysis

Proportion of shoppers that bought cosmetics, skincare, and/or hair care products online Europe, ****, in % Source: ****

In ****, Belgium had one of Europe's lowest share of cosmetic goods being sold online. Only **% of shoppers bought such goods online. 

This is favourable for the beauty salon industry, based on the implicit assumption that since Belgian consumers prefer to buy their cosmetics and beauty related products in physical form, it is also more probable that they visit beauty salons in person, since they place value to this.

Distribution of revenue of beauty and cosmetics products, by category Belgium, ****, in % Source: ****

Adding to the previous analysis, we find that over half (***) of beauty products in Belgium are distributed through mass market. **% occured through selective distribution, **% in pharmacies and *% were professional products.

Products sold with regards to beauty salons, in a "bundling" manner, belong to the selective distribution category.

3.3 Cosmetics related stores

Leading drugstores and perfumeries, by number of stores Belgium, ****, in number of stores Source: ****

The data above provides an insight on which type of cosmetics are most sought after by Belgians, based on which stores have the highest number of units. 

Kruidvat was the leading brand in January **** with *** stores. Here, consumers can obtain medecines, creams and other DIY cosmetics products. On top of this, DI had *** stores and was third most in demand.

Perfumery also makes up a large part of demand, with Ici Paris XL and Yves Rocher.  

4.1 Service overview

In general, services offered by beauty salons are distinguished between facials, body care, hair removal for women, hair removal for men and finally the beauty. There are also institutes specialized in hair removal or manicure.

Beauty institutes offer several services within each category, including the following:

Facial care: duration is on average ** minutes. In the course of this time, treatments including anti-wrinkle, anti-ageing, purifying, etc. are executed.  Body care: includes several services such as scrubs and modelling, application of lotions, skin cream, skin oils, etc.  Hair removal: the process is waxing can occur anywhere on the body where hair exists. Common areas for women include eyebrows, legs, lips, etc. For men the back, stomach, shoulders, etc. are common areas where hair removal is wished for Beauty preparation: this includes preparation for events such as birthdays, marriages, evenings etc. where treatments such as dyeing, enhancement and restructuring of eyebrows are popular. Beauty for hands and feet: here, the customer often requests manicure, varnish application, and other treatments including exfoliation, modelling, application of skin care etc. Other: finally, this point of action often includes electronical devices, and executes services such as cellulite treatment, tanning, special waxing etc.

4.2 Price Analysis

The price proposed for the same service by the institutes varies significantly depending on the duration of the treatment, but also between institutes.

In addition, the customers' subscription system also varies rates; they are higher (***) for non-subscribed customers. Below we list a price overview based on a sample of prices from different beauty institutes in Belgium.

Source: ****

5.1 Current Regulation

Belgium is part of the European Union and thus is subject to EU directives and regulations. Several regulations apply for beauty institutes.

For example, Regulation (***) N° ****/**** on cosmetic products is the main regulatory framework for finished cosmetic products when placed on the EU market. It strengthens the safety of cosmetic products and streamlines the framework for all operators in the sector. The regulation simplifies procedures to the extent that the internal market of cosmetic products is now a reality.

The regulation replaces Directive **/***/EC, which was adopted in **** and had been substantially revised on numerous occasions. It provides a robust, internationally recognised regime, which reinforces product safety while taking into consideration the latest technological developments, including the possible use of nanomaterials. The previous rules on the ban of animal testing were not modified.

Moreover, to enhance the status as a legitimate beautician, a test can be written. It includes ** questions and upon passing, students can obtain the status of beauticians which can help them in opening a beauty salon.

6.1 Segmentation

• Pierre Fabre
• Louis Widmer Belgium
• Insituut Daphnys
• Institut Cinyhia
• Emotion
• Groupe Rocher (Yves Rocher)