The Top 250 Report
Recapping The Selection Process And Evaluating The Industry
by Judie Bizzozero
Since 2000, LOOKING FIT® has published this special issue congratulating the nation’s Top 250 Salons. Every year the field of potential winners increases, which is a testament to the growth and professionalism of the $5 billion indoor tanning industry. This year marks our eighth Top 250 Salon issue, and once again the judging process was difficult. It was a record year for entries, perhaps in part due to the fact that salons could enter their information online or send it in via fax or mail as in years past. Overall, we were pleased with the online entry process and will be tweaking the process for next year’s submission process. We thank salons for their suggestions and input on the new system.
The Market
Before we get to the Top 250 Salons, let’s take a look at the industry as a whole. Nearly 30 years after being labeled a passing fad, the U.S. indoor tanning industry is providing golden tans to approximately 30 million Americans each year. There are roughly 25,000 professional indoor tanning salons and another 20,000 locations such as health clubs, spas, video stores and beauty salons that have one or two tanning units. The highest number of tanning salons per capita are found in the Midwest and Southeast, with Ohio, North Carolina, Michigan, South Carolina, Illinois, Indiana and Florida having the most salons.
The majority of indoor tanning facilities in the United States are small businesses, and more than 50 percent of them have female ownership, compared to 25 percent of businesses in other industries, according to the U.S. Census. Indoor tanning also provides jobs for approximately 160,000 employees annually.
Last year brought an increase in proposed tanning legislations and anti-tanning campaigns, and it looks like 2007 will be no different. In fact, salons reported that anti-tanning campaigns affected their 2006 season by 16 percent. This number is up from 10 percent the previous year.
Depending on location, the majority of freestanding tanning salons have at least 10 rooms on average with three to five levels of tanning and a sunless unit. A typical 10-unit salon may feature one big bed, two mid-range or premium beds, a UV standup, five entry-level beds and a sunless unit. Survey statistics reveal that 63 percent of salons reported an average single-session price of $7 or more compared to 60 percent last year; only 3 percent charged $5 or less.
Lotion sales in 2006 saw a dramatic shift to the mid-range price-points with 80 percent of salons reporting that lotion salons accounted for 10 percent to 30 percent of their monthly revenues. Only 14 percent of salons reported that lotions accounted for 30 percent or more of monthly revenues. This number is down from 45 percent the previous year and confirms the fact that consumers are looking for more affordable deals. However, only 6 percent of salons reported that lotion sales accounted for less than 10 percent. This number is down from 35 percent in 2005.
We believe this year’s Top 250 Salons are some of the nation’s most innovative, professionally committed and fastest-growing tanning salons. It seems as though the 2007 tanning season started in December 2006 and remained strong during the first few months thanks to a number of factors including mild to balmy weather in December and January. Many salons we spoke to—especially on the East Coast—were thrilled at the amount of traffic they were seeing at the beginning of the year. Many salon owners also reported an increase in dollars-per-customer ratios and said customers are buying more lotions, upgrades and packages than in years past.
Finally, the majority of salon owners we spoke with have solid business plans in place and are trying new marketing ideas to drive more people into the tanning salons. Overall, everyone agrees that 2007 is shaping up to be the year that helps salons start climbing out of the valley and up the profit peak. In fact, statistics reveal that 83 percent of salons are planning expansions in 2007. This number is up from 77 percent last year.
The Top 250 List
It cannot be stressed enough that the selection process was not taken lightly. Salons were chosen from surveys submitted from June through Nov. 10, 2006. Salons also were required to be in operation for one year by Nov. 3, 2006 so the judging committee could gauge its overall business health. Forms submitted after the deadline were not eligible.
Nominations came from industry manufacturers, distributors and industry veterans as well as salons themselves. Once the field was narrowed, the judging committee conducted hundreds of phone interviews to gather and verify information for the most accurate information possible. Extra care was taken to inform participants how important it was to provide accurate information about their tanning facilities and the kind of business they do within a typical year—both during the busy season and off-season.
The panel also included the National Tanning Training Institute, and a salon’s participation in certification programs and ongoing training and education was factored into the judging. This was especially important for salons in states where certification is voluntary. A salon’s involvement in its community, charities and other public-service activities also weighed into the judging as it demonstrates a professional commitment to the business community. Another judging factor was whether a salon carries liability insurance. Salons that do not carry insurance did not make it past the first round of judging.
After the committee narrowed the field to 300 potential winners, the editorial staff personally contacted each and every salon that made it to the final round. Every effort was made to gather precise information to lay an equal playing field for all of our respondents and we relied on the truthfulness of the salon owners who provided us with information.
Many variables contribute to a salon’s success, and we looked at each salon separately, judging on the caliber of business it does based on the kind of salon it runs. We also compared salons of similar size and within their respective regions. Therefore, an 8-bed salon in Idaho was not judged against a 40-bed salon in Florida.
The survey asked participants to provide in-depth information regarding their tanning businesses including the number of salons owned, how many years in business, types of services offered, total number of units at each salon, the types of tanning units, number of tanning levels, average price per session and the types of retail products carried in the salons.
Confidential statistics used in the selection process also included a salon’s 2006 gross revenue, percentage of growth or decline over 2005 gross revenue, projected revenue for 2007, and percentages of monthly revenue generated from lotion sales, tanning and other services. We also factored in whether a salon participated in certification training, took part in ongoing education, provided educational materials to customers, offered incentives or bonuses to employees, etc. We also weighed if salons skin typed clients prior to initial exposure. We also asked salons about specific factors that affected their overall business. All these variables were judged on an even playing field to rank the salons.
The Top 250 Salons listing is alphabetized by state in five regions: Northeast; East and Southeast; Central and Southern U.S.; Northern and Upper Midwest; and Midwest and Western U.S. The chart is broken down into number of tanning salons owned, years in business, total number of units and brands of units. Log on to www.lookingfit.com/feb15 to see the complete listing that includes services offered and average session price.
The total number of units section reflects the total number of pieces of tanning equipment and sunless stand-up equipment for all locations. For example, if a salon has two locations—each with 20 tanning units and two sunless standups—then the total number of units equals 44.
For additional facts and figures regarding the growth of the industry, please refer to page 14. The statistics were calculated from the overall Top 250 Salons survey responses across the country. These numbers were gleaned from approximately 1,000 confidential surveys gathered between June and Nov. 10, 2006.
Congratulations to the thousands of tanning facilities nationwide that contribute to the professionalism and education in the indoor tanning industry. We realize this listing is not necessarily inclusive of every salon that would merit a listing; however, we feel it is an accurate listing of those who participated in the survey.
Due to the competitive nature of our industry, it is sometimes difficult to get salons to participate and share their success; in other cases, they are more than cooperative. We believe it is important to continue to publish this list, since no other association or magazine tracks this information within the indoor tanning industry.
