Korean stylists join the sharing economy

Clockwise from top: Pallet H hair washing room; Salon Forest designer working on a customer; Shair Spot’s unmanned reservation system. [KIM JEONG-MIN]

In an industry associated with high maintenance costs and rent, hair stylists are turning to the sharing economy rather than opening their own salons.

At the Jan. 6 opening of Shair Spot in Gangnam, southern Seoul, stylists were putting the cost-saving idea to the test, each of them both a “master stylist” and a tenant chipping in on the new space. The salon lacks a receptionist; instead, customers use a tablet to peruse the schedules and portfolios of the salon’s four stylists before making a reservation.

One of the four tenants is Ko Geun-young, a 28-year-old hair designer who describes the place as “less restrictive” than working at a big salon chain.

“Now I have the freedom to choose which products and techniques I want to use for my customers,” he said.

Share-salons on the rise

The shared hair salon model allows hair stylists to do business in a prime location with little initial cost. Stylists pay a deposit and a monthly fee for sharing the space and equipment. Some salons may take an additional 15 to 20 percent fee from the designer’s profit.

But in a typical salon arrangement, a stylist would have to rent a station in a third party’s hair salon, pay credit card fees and tax, while receiving only a 22 to 35 percent cut of the revenue.

The first such business in Korea was Seven Avenue, founded by veteran hair stylist Shim Jae-hyeon in 2018. Shim now owns four branches nationwide, as the business model has begun to gain momentum.

In addition to Shair Spot, Salon Forest and Pallet H, founded by start-up Zero Ground, have also opened for business in the Gangnam area during the past month.

Zero Ground CEO Kim Young-wook hopes to provide a space that can help creative professionals who have the skills, but not the resources, to open their own business. The start-up is one of the participants of the Asan Nanum Foundation’s entrepreneurship program.

Stylists focus on individual brands

According to Statistics Korea, 118,000 hair salons are in business nationwide. Yet about 40 percent of newly opened salons close in less than three years, having failed to cover the high initial costs paid for rent and interior. One out of 10 salons closes each year.

Lee Chang-yeol, the CEO of Archive Corporation, one of Salon Forest’s operators, says the business model helps designers to focus solely on their service and lifts the burden of cost and marketing off their shoulders.

The business model also provides stylists with more control of their schedules and the service they provide to customers.

During an era in which individual brand drives profit, stylists are increasingly turning away from mega salons and opting for their own storefronts. Shair Spot is founded by Future Play, a seed accelerator for tech start-ups that aims to merge technology into the hair-styling industry. It hopes to provide innovations including customized style suggestions and unmanned store management, and is working to digitalize handwritten customer information into a database.

Changes in consumer behavior are also pushing the trend forth. More customers are willing to actively seek out individual stylists on social media than rely on the salon’s brand power.

Space designers jump on the trend

Salon Forest was created by a proptech start-up Archive Corporation, which focuses on using technology to transform spaces. As a resting place designated for young professional women, the salon aims to allow members to share common interests like traveling, weddings and wine. Hair designers who are famous on social media offer services to customers in private spaces.

The average price of a haircut for both men and women is similar to that of a high-end hair salon in the Gangnam area. Jeong Dae-hee, a customer of Salon Forest, felt the experience was worth the money.

“It feels like getting special treatment, because everyone had a private room,” she said.

Shared salons are not unique to Korea. Earlier examples including Japan’s Go Today Shaire Salon, a business that opened in 2016. Like the shared office space company We Work, it offers public space and equipment that hair stylists can rent whenever they like. In the United States, My Salon Suite opened in 2010 and supports up-and-coming hair stylists to start their own business at a lower cost. It currently operates in 29 U.S. states and Canada.

But as the industry is new to Korea, there are regulatory hurdles to overcome. For instance, under the current Public Health Act it may be illegal for multiple operators to share shampoo.

In response, Salon Forest and Palette H said they are considering applying for a regulatory sandbox, wherein a company can receive some leeway from regulators to experiment with a new business model under strict oversight. The two are also in discussions with the Ministry of Health and Welfare in the hopes of lifting outdated regulations.

“We hope that the old regulations created when the concept of sharing economy did not exist can change in line with the new trend,” Shair Spot’s CEO Song Ki-hyeon said.

BY KIM JEONG-MIN [kang.jaeeun@joongang.co.kr]