III. Industry Analysis
Last year, according to IBISworld.com, Barber Shops brought in revenues of $4.8 billion and employed 150,000 people in the United States.
The Barber Shop industry is traditionally a very stable industry, rarely affected significantly by macroeconomic events. Over the past five years, industry profit has remained relatively stable and over the next five years, the Barber Shops industry is expected to continue to grow, with revenue forecast to increase at an annualized rate of 1.2%.
The Barber Shops industry exhibits a low level of market share concentration. No individual business is expected to hold a market share greater than 5.0%. Non Employing businesses in the industry represent an estimated 95.7% of establishments and generate an estimated 95.7% of industry revenue.
The key industry drivers include:
- Number of adults aged 20 to 64-The industry’s core market is adults between the age of 20 and 64 years old. Changes in this demographic affect the industry through the size of its customer base.
- Number of households-Given the essential nature of the industry, revenue growth is strongly tied to its customer base. As the number of households increases, the customer base for industry services also increases.
- Per capita disposable income-Per capita disposable income measures an individual’s ability to purchase goods or services. As per capita disposable income increases, industry customers may be inclined to spend more money on specialized services.
- Prime rate-The prime rate refers to the interest rate charged by banks to their most creditworthy customers. As the interest rate increases, businesses may slow expansion plans, while entrepreneurs may wait to open a new barber shop.
- Business sentiment index- The business sentiment index measures the overall health of the business environment in the United States. High or rising sentiment may compel barbershops to expand or new operators to enter the industry.