STATE OF THE INDUSTRY. Most indoor
tanning salons recognize the fact that many of the tanning units
they carry and products they sell are also sold by competing salons
as well as other businesses that offer tanning services. Local
Yellow Page display ads promote commonalities while salon websites
possess almost interchangeable messages. The lack of exclusivity in
product mix has led to “salon homogeneity”, sameness from one salon
to the next.
Indoor tanning salons, similar to many retail
businesses have generally engaged in strategies that place them into
one of three categories in the market spectrum:
- Discounter
- Middle/Market Average
- High End/Luxury
The effect of decreased differentiation has resulted
in severe market pressures and a thinning of the Middle segment,
creating a polarization to either end of the market spectrum. Value
conscious customers who have difficultly perceiving the difference
between salons in the Discounter and Middle segments will most often
opt for the lower priced salon. The trend of severe price
competition, deflationary retail prices and eroding profit margins
will continue as more and more salons find themselves having to
compete on price.
For those wanting to position themselves in the High
End/Luxury segment, there is a clear need to create salon
differentiation. Salons that are seen as destinations and viewed as
brands themselves will be able to build the equity necessary to
attract and retain customers and to profitably compete.
This dynamic is affecting the entire industry supply
chain. Currently, every company that operates as a general supply
house to salons is suffering severe profit margin erosion due to the
continued need to compete solely on discounting. Pressured by their
own eroding margins, salon operators negotiate with numerous
distributors of the same identical goods, pitting each against the
next in a contest to match discounts.
With little operating margin left, distributors are in
poor position to provide any value-added services to the salons. In
an effort to maintain profit margins through increased sales volume,
many distributors have begun to seek out alternate points of sale
for products including retail outlets unrelated to the tanning
industry as well as direct sales to tanning customers. This is
evident by the fact that every leading brand-name tanning lotion is
readily available for purchase through online catalogs and
electronic marketplaces. While these sales aid in sustaining the
distributors, the dollars lost by tanning salons when their
customers purchase diverted products severely impacts their
profitability.
Distributors have also started to use their leverage
in negotiating pricing structures with the tanning industry’s
product manufacturers, in particular indoor tanning lotion
companies. With a warehouse full of lotions from competing
manufactures and an abundance of new brands emerging each year,
distributors understand that they are in a position to demand
increased margins from lotion manufacturers. These pricing pressures
have forced manufacturers to reevaluate their operating costs in an
effort to recoup the additional margins that they are forced to
provide to distributors.
In an effort to keep their situation transparent to
salons and tanning customers, leading lotion manufactures have
chosen to maintain their costs related to marketing, promotion and
packaging. Instead, all have opted to reduce cost related to the
ingredients that are used to manufacture their products. A review of
the ingredient list on the product label of any name brand tanning
lotion reveals the fact that manufacturers are reaching into the
product’s bottle, pulling out the expensive performance ingredients
and replacing them with cheaper alternatives such as water,
synthetic moisturizers and artificial sunless tanners.
This decrease in product quality is directly
contributing to the eroding profitability of the entire industry.
Value-driven customers that overpay for underperforming products
that fail to deliver on promises will adjust purchasing habits
accordingly. This often will include not only changing the product
they purchase, but also the retailer/service-provider from whom they
purchase as well. Customers that are repeatedly disappointed may opt
to discontinue consuming products and services all together.
These trends are the direct result of an industry that
has experienced a period of hyper-growth over the last decade. Now
entering late adolescence, the tanning industry will begin to
develop a different complexion that will reflect the competitive
marketplace that it has become. These dynamics create a significant
opportunity for new industry leadership. Forward-thinking companies
with emerging strategies have the potential to reshape the market
and significantly benefit those that are first to adopt.
SALON PARTNER NETWORK.
Your salon has never before encountered a company like
ours. We are not just another manufacturer or distributor
passing along a liability at a discount. TANOLOGY is a true
partner to the tanning salons with whom we do business.
Our organization is 100% loyal to our partners. We are
the only leading manufacturer that sells directly to and exclusively
through a limited network of indoor tanning salons. You will
not find our products for sale by third-party distributors,
on the Internet, in beauty supply outlets or any place other
than at an TANOLOGY Salon Partner’s sales counter.
Our focus is not only on manufacturing the finest
skincare products, but also on providing your salon with significant
value-added services and an effective means to differentiate
from the competition.
SHARED SUCCESS. We
have built our business on the founding principal of shared
success. We are able to offer your tanning salon the ability
to increase sales, improve customer service, build loyalty,
preserve profit margins and maintain a significant competitive
advantage in your local market.
REQUEST INFO &
SAMPLES. If you
are a tanning salon operator that is interested in learning
more about TANOLOGY and would like to receive samples of our
line of prestige tanning lotions, please send an email to
info@tanology.net,
or call 866.724.8267. Be sure to include the following information:
- Name of tanning salon
- Salon mailing address
- Salon phone number
- Name of the person responsible for salon’s
profitability