Why Sally Beauty Is Investing in Free Services for Frugal Customers

Beauty retailer Sally Beauty has introduced Licensed Colorist OnDemand, a digital consultation service allowing individuals to confidently color their hair with recommendations from licensed professionals. The service, available for free, aims to address the education gap surrounding at-home hair color.

But why invest in free services during a time when shoppers are hesitant to spend?

On-Demand Expertise Move

The initiative is supported by an assortment of over 1,300 hair color shades and connects consumers with certified, licensed colorists in real time. The retailer reportedly developed the service based on insights from an in-store pilot program, prioritizing convenience and user experience.

“Hair color is not a one-size-fits-all approach, and consumers are looking for a personalized regimen based on their goals,” said John Goss, president of Sally Beauty in a statement.

“We are proud to provide a service that meets them where they are, at no cost, to help them achieve the hair color of their dreams. Through services like Licensed Colorist OnDemand, we’re making hair color education more accessible and breaking down barriers so consumers can color with confidence guided by a licensed professional each step of the way.”

Licensed colorists offer free one-on-one virtual appointments lasting about 15 minutes. Consumers can choose between video consultations or on-the-go chat sessions. The colorists address at-home hair coloring questions and provide product recommendations through a clickable link that populates their online shopping cart.

Launched in two states in August, Licensed Colorist OnDemand expanded to all 50 states by October. This initiative has reportedly attracted new customers, achieving conversion rates of about 45%. By the conclusion of fiscal 2024, the company anticipates having close to 100 colorists on the platform.

Why Lean Into Expertise

According to Sally Beauty’s latest earnings report, consumers are becoming more budget-conscious in the beauty aisle. So, again, why invest in complimentary services?

“We certainly see a little shift in behavior from what we had seen earlier in the year about a little bit more frugality. The trend that’s persistent from the beginning of the year is people not buying things that they don’t need,” said Denise Paulonis, president and CEO of Sally Beauty, during the Q&A segment of the call.

Supporting this notion are findings from PYMNTS, revealing that 10% of individuals living paycheck to paycheck—amounting to 16 million people in the United States — cite nonessential expenses as the primary factor exacerbating their financial difficulties.

Read more: Nearly 30% of High Earners Cite Nonessential Spending as Reason for Paycheck-to-Paycheck Lifestyle

For example, the beauty products chain has noted a trend wherein items like styling tools decline in demand.

“So, a general sense of frugality, but not much more than that in terms of new trend or new behavior,” Paulonis said.

The company announced during its latest earnings call that it had plans to implement strategies aimed at motivating shoppers to boost their expenditures.

The company launched Studio by Sally in fiscal 2023, in pilot phase in six locations. Paulonis said the company is pleased with the level of customer engagement and outlined plans to incorporate insights into expansion strategies for fiscal 2024. The company intends to relocate or remodel 30 existing stores to align with the studio concept, with the goal of scaling to over 100 Studio locations.