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Re: Is The Tanning Salon Industry Over Saturated?
Saturation is an interesting term. Depending on your perspective you could say, because there is a fast food facility or restaurant on every corner in town that the food service industry is saturated.
Now, lets look at population. Small towns of 50K to 60K can support a 'saturated' food service market, because out of the total population 100% of that population eats. Chances are that out of that 100% probably 95% of the population will eat out at least once a week (lets not mention happy hour at Chilli's).
So, it would not be as great a risk to open a franchise fast food or restaurant next door to another such business. There are enough dollars set aside in the community to eat at a variety of restaurants and fast food joints to support many such establishments. As a matter of fact it is a business model for one franchise to purposely open across from or next to their competitior, thus you find restaurant rows in most cities.
Now, out of that 100% of total population of 50 to 60K lets say only 5% and that may be high, visit tanning salons. When a new salon opens across the street from a successful salon that has been in the same location for lets say 20 years and has stayed on top of industry changes and constantly upgraded their beds and services and, because they have a low overhead and own their equipment outright they are pretty well entrenched in the local community. The new salon will hurt the older salon, because people will go to check the new salon out and if the new place devalues the product and offers low priced unlimited tanning some clients will leave the old salon and start tanning at the new place.
BUT, the new salon will not take all, only a small percentage of the older salon's clients, thus hurting themselves, because they have now diluted the small tanning population and limited the amount of money they can make. Remember, there are only a limited amount of dollars set aside for the luxury of tanning and now the new salon has split that money up and no matter what business model they use, it they are up against a competitive, very knowlegable long time tanning pro, they are now in a limited market, not saturated yet, but limited by the smaller tanning population being divided.
Next, the gym puts in three or four beds, the nail place adds a laydown and standup, the hair/nail/aesthetic salon adds two or three beds, and to top it off two more salons a franchise and a licenced salon open all within a three mile radius. Now we have not only a saturated market, but we have diluted the tanning population even more and after a few years someone is going to realize there isn't enough money to go around and their overhead is killing them, they can't relamp their beds as often, and we see salons closing.
This is the way of business as someone stated above. A cycle that happens in a relatively 'new' industry. Eventually, hopefully, prayerfully, prospective tanning salon owners will do more research, be more aware of the market and realize they aren't going to corner the market and find a location far from the madding crowd and keep all the money in their pockets and don't go on line and tell everyone where they are and how successfull they are, because they might as well just post a map of their place and put the welcome mat out for The Competition.
Satuation and limitation, no matter your business plan equals everyone down from potiential and someone leaving the scene ( to the delight of the other competitors).
Have a successful day, check your figures, define your market, factor your competitor's share of that market and see where you stand in your town.
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