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WHY IS AMAZON OPENING A HAIR SALON?

April 26, 2021
April 26, 2021
Amazon

Amazon’s latest push into the brick-and-mortar world is a 1,500-square-foot two-floor tech-enabled hair salon in London’s Spitalfields neighborhood. The salon is the latest initiative designed to support the launch of professional beauty, selling supplies to local spas and salons on Amazon’s UK website.

This is not the titan’s first foray into the salon world. In 2019, the company launched the Amazon Professional Beauty Store, and celebrity stylist Ted Gibson opened his tech-enabled Starring Salon, which he described as “powered by Alexa and Amazon.” Individual stations feature an Amazon Fire Tablet, Amazon Prime Video, and Sonos speakers for personalized entertainment programming and music options. The entire salon is voice activated through Amazon’s Alexa, and a state-of-the-art entertainment lounge welcomes guests instead of a traditional salon waiting area. Retail is also powered through Amazon removing the capital needed to hold inventory.

It’s not clear if Amazon has ambitions to be in the salon business—it could be a marketing stunt in an effort to gain credibility in the professional market or simply a way to test new technology and capture data on customer behavior to support its beauty initiatives. Like other Amazon physical stores, the salon will open to Amazon employees first before offering bookings to the public.

John Boumphrey, UK Country Manager, Amazon, said, “We have designed this salon for customers to come and experience some of the best technology, haircare products and stylists in the industry. We want this unique venue to bring us one step closer to customers, and it will be a place where we can collaborate with the industry and test new technologies.”

In the Spitalfields Amazon Salon, customers are able to experiment with virtual hair color using augmented-reality technology, enjoy entertainment on Fire tablets at each styling station, and capture their new look in a dedicated creative area. The retail area is merchandised with bestselling professional haircare products and supported with new point-and-learn technology Amazon is testing where customers can simply point at a product, and the relevant information, including brand videos and educational content, will appear on a display screen. To order products, customers scan the relevant QR code on the shelf, which will direct them to the product detail page on Amazon.co.uk to purchase, with delivery direct to their home.

“Every part of the experience is layered in with some transaction that is going to help Amazon.”
By Elaine Kwon, Managing Partner, Kwontified

The haircare and styling services at Amazon Salon will be provided by Elena Lavagni and her team of stylists. Elena is the owner of the highly regarded Neville Hair & Beauty Salon, which has been based in London for 20 years and is known for cutting-edge hair and beauty treatments. Amazon Salon will offer a full range of hairdressing services for adults and children, including cut and blow dry, full head highlights, balayage, texturizer treatments, and braids.

“I am delighted to be part of this project—the salon combines classic hairdressing services with technology to deliver a completely unique experience for clients,” said Lavagni. “Our creative team of stylists, whose flair for hair is as intrinsic as their love for technology, will put the client at the heart of everything they do. I feel proud to use our 40 years’ experience in the industry to help bring this salon to life.”

Amazon says they have no current plans to open any Amazon Salon location, and that this London outpost will be an experiential venue to showcase new products and technology. At a minimum, it provides marketing for the Amazon Professional Beauty Store, where UK professionals can access more than 10,000 salon and spa products and supplies at wholesale pricing and invoicing with no minimum order value and fast delivery.

The salon could possibly serve as a testing ground for new technologies that Amazon could sell to other retail clients in the future or implement in its own stores. In the case of AR and the tech-enabled retail assortment, Amazon can collect data on customers’ experiences and behavior that can be applied to its own shopping site.

What the experts are saying:

William Tunstall-Pedoe, an entrepreneur who sold his AI start-up to Amazon, wrote on Twitter: “I’m beginning to believe there’s no business Amazon will not enter.”

Jan Mercan, who runs Hair Therapy in Blackfen, south-east London, feels Amazon’s move could damage small independent salons. She told the BBC, “Amazon should stick to their online shopping trade. Salons have been struggling over the past year and Amazon has made a lot of money in lockdown. It shouldn’t be about faceless technology—getting your hair done is about human interaction.”

“Every part of the experience is layered in with some transaction that is going to help Amazon,” Elaine Kwon, Managing Partner at e-commerce consulting firm Kwontified, told Modern Retail. “I think this type of launch is really Amazon saying we’re serious about B-to-B, we’re serious about expanding the B-to-B and wholesale part of our transactions grow.” Kwon noted that, despite tracking Amazon’s B-to-B beauty efforts for years, “This is my first time saying, okay, they’re getting serious now. They want to make sure that this segment of their business is valued and growing.”

Stephanie Wissink, an equity analyst at Jefferies, wrote in a report that the new Amazon Salon appeared to be an extension of Amazon’s B-to-B push. She wrote that the Professional Beauty Store has kept sustained interest since its launch, and “the company continues to adds brands” across several segments within the salon space. Across the salon industry, product sales that are bundled with services make up 20% of overall revenue, making salons a potentially lucrative market for Amazon to capture.

This endeavor is a bit “baffling,” Sucharita Kodali, a principal analyst at Forrester, told The Washington Post. Hairstyling is highly personal—not Amazon’s strength, she said. And artisan industries do not always lend themselves to becoming high tech. She added that it’s possible Amazon sees this as a way to sell similar technology to independent salons. Enterprise retail tends to be wary of Amazon’s competitive power, but smaller stores do not always have that fear.

“Service-heavy businesses don’t tend to scale as well as those in the technology sector, given their reliance on labor,” Jason Goldberg, Chief Commerce Strategy Officer at Publicis Groupe SA, told The Wall Street Journal. “So my immediate knee-jerk reaction is that the professional services aspect is kind of a necessary evil for them, and that they’re doing this to establish some credibility and a foothold” in the professional beauty space. “But Amazon has surprised us before, and I certainly wouldn’t take it to the bank that they don’t have aspirations to make money on this.”

Leon Alexander, president of the salon consulting firm Eurisko, told Modern Retail that he sees bigger ambitions. “For what reason would you do a test salon?” and nothing more, he asked. “If they get this right, which I think they probably will, it will be a game-changer for the industry.”

He speculated that if the Amazon Salon gains traction in Europe, Amazon could potentially launch its own private-label salon brand, as well as expand its physical footprint. “I think what they’ll do for example, in the States is they’ll open in New York, Seattle, Chicago, those kinds of key areas.”

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