Harvard Case - Drybar (A): The American Beauty Salon Industry in 2008
"Drybar (A): The American Beauty Salon Industry in 2008" Harvard business case study is written by W. Chan Kim, Renee Mauborgne, Oh Young Koo. It deals with the challenges in the field of Strategy. The case study is 11 page(s) long and it was first published on : Aug 26, 2016
At Fern Fort University, we recommend Drybar pursue a focused growth strategy emphasizing business model innovation and strategic alliances to capitalize on the emerging trend of 'blowout bars' while mitigating the risks of rapid expansion. This strategy will leverage Drybar's core competencies in brand management, marketing, and customer experience to achieve sustainable competitive advantage within the fragmented beauty salon industry.
2. Background
Drybar, founded in 2010 by Alli Webb, disrupted the traditional beauty salon industry by offering a specialized, affordable, and convenient service: blowouts. The case study focuses on the company's early growth and its decision to expand beyond its initial Los Angeles location. Drybar faced several challenges, including competition from established salons, the need for skilled stylists, and the potential for rapid expansion to dilute its brand image.
The main protagonists are Alli Webb, the founder and CEO, and her team, who are tasked with developing a strategy to guide Drybar's growth and expansion.
3. Analysis of the Case Study
Industry Analysis:
- Porter's Five Forces:
- Threat of New Entrants: Moderate - The industry is relatively easy to enter, but building a strong brand and attracting skilled stylists poses challenges.
- Bargaining Power of Buyers: High - Consumers have numerous choices for hair care services, making them price-sensitive.
- Bargaining Power of Suppliers: Low - Stylists are generally not unionized, giving Drybar leverage in setting wages and conditions.
- Threat of Substitutes: High - Home hair care products and other beauty services offer alternatives to blowouts.
- Competitive Rivalry: High - The industry is fragmented, with numerous small and large players competing for market share.
SWOT Analysis:
- Strengths:
- Strong brand identity and customer loyalty
- Unique service offering focused on blowouts
- Experienced management team with a strong understanding of the beauty industry
- Effective marketing and social media presence
- Weaknesses:
- Limited geographic reach
- Potential for rapid expansion to dilute brand image
- Dependence on skilled stylists, which can be challenging to recruit and retain
- Opportunities:
- Growing demand for convenient and affordable beauty services
- Potential for expansion into new markets, including international locations
- Opportunity to develop complementary products and services
- Threats:
- Increased competition from established salons and new entrants
- Economic downturn impacting consumer spending on discretionary services
- Difficulty in maintaining consistent service quality across multiple locations
Value Chain Analysis:
Drybar's value chain is characterized by a strong focus on customer experience and brand management. Key activities include:
- Inbound logistics: Sourcing high-quality hair care products and equipment.
- Operations: Providing a consistent and efficient blowout service.
- Outbound logistics: Scheduling appointments and managing customer flow.
- Marketing and sales: Building brand awareness and attracting new customers.
- Customer service: Providing a positive and memorable experience.
Business Model Innovation:
Drybar's business model innovated by:
- Specialization: Focusing solely on blowouts, creating a unique value proposition.
- Convenience: Offering a fast and affordable service in a relaxed and welcoming environment.
- Brand building: Cultivating a strong brand identity through marketing and customer experience.
4. Recommendations
1. Focus on Strategic Alliances:
- Franchise Model: Implement a carefully controlled franchise model to accelerate expansion while maintaining brand consistency. This allows Drybar to leverage the expertise and resources of franchisees while ensuring adherence to its brand standards.
- Strategic Partnerships: Partner with existing salons or beauty retailers to offer Drybar services within their locations, increasing reach and brand visibility.
2. Leverage Technology and Analytics:
- Online Booking Platform: Develop a user-friendly online booking system to streamline appointments and enhance customer convenience.
- Data Analytics: Utilize data analytics to track customer preferences, service demand, and stylist performance, enabling informed decision-making and personalized marketing.
3. Implement a Gradual Expansion Strategy:
- Regional Expansion: Focus on expanding within specific regions to build brand awareness and customer loyalty before venturing into new markets.
- Market Research: Conduct thorough market research to identify promising locations based on demographics, competition, and potential customer demand.
4. Emphasize Brand Management:
- Consistent Service Quality: Implement rigorous training programs and quality control measures to ensure consistent service quality across all locations.
- Brand Ambassadors: Engage influential individuals and social media personalities to promote Drybar and its services.
5. Explore Diversification Opportunities:
- Product Development: Introduce complementary products, such as hair care products and styling tools, to enhance the Drybar experience and generate additional revenue streams.
- New Service Offerings: Explore offering additional services, such as hair styling for special occasions or hair extensions, to cater to a wider customer base.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies: Leverage Drybar's strengths in brand management, marketing, and customer experience to drive growth.
- External customers: Address the growing demand for convenient and affordable beauty services while maintaining a high-quality customer experience.
- Competitors: Differentiate Drybar from competitors by focusing on specialization, brand building, and customer convenience.
- Attractiveness: The recommendations are expected to generate strong returns on investment through increased revenue, market share, and brand value.
6. Conclusion
Drybar has a significant opportunity to capitalize on the emerging trend of 'blowout bars' by pursuing a focused growth strategy that leverages its core competencies, embraces business model innovation, and strategically expands its reach. By focusing on brand management, customer experience, and strategic alliances, Drybar can achieve sustainable competitive advantage and establish itself as a leading player in the beauty salon industry.
7. Discussion
Alternatives:
- Rapid Expansion: This approach carries a higher risk of diluting the brand image and compromising service quality.
- Vertical Integration: Acquiring hair care product manufacturers or distributors could offer control over supply chains but may be a costly and complex undertaking.
Risks and Key Assumptions:
- Competition: The emergence of new competitors could impact Drybar's market share.
- Economic Downturn: A recession could reduce consumer spending on discretionary services.
- Talent Acquisition: Recruiting and retaining skilled stylists remains a critical challenge.
Options Grid:
| Option | Advantages | Disadvantages | Risk |
|---|---|---|---|
| Strategic Alliances | Faster expansion, access to new markets, reduced risk | Potential for loss of control over brand image, dependence on partners | Brand dilution, partner conflicts |
| Technology and Analytics | Increased efficiency, improved customer experience, data-driven decision-making | High initial investment, potential for technical challenges | Data security breaches, reliance on technology |
| Gradual Expansion | Controlled growth, focus on quality, minimized risk | Slower expansion, potential for missed opportunities | Market saturation, competitor advantage |
| Brand Management | Strong brand identity, customer loyalty, premium pricing | High marketing costs, potential for brand fatigue | Negative publicity, changing consumer preferences |
| Diversification | Increased revenue streams, reduced reliance on single service | Potential for brand dilution, increased complexity | Product failure, market saturation |
8. Next Steps
- Develop a detailed franchise model: Define franchisee criteria, training programs, and operational guidelines.
- Identify strategic partners: Research potential partners and negotiate partnership agreements.
- Implement online booking platform: Develop and launch a user-friendly online booking system.
- Invest in data analytics: Implement data analytics tools and processes to track key metrics.
- Expand into new markets: Conduct market research and select promising locations for expansion.
- Develop new products and services: Explore opportunities for product and service diversification.
Timeline:
- Year 1: Implement franchise model, launch online booking platform, invest in data analytics, expand into one new region.
- Year 2: Expand into two new regions, develop complementary products, launch new service offerings.
- Year 3: Continue regional expansion, explore international markets, further develop product and service offerings.
By taking these steps, Drybar can effectively capitalize on the growing demand for blowout services and establish itself as a leading player in the beauty salon industry.
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Case Description
Drybar was launched in 2010 with the tagline "No cuts. No color. Just Blowouts!" by hair stylist Alli Webb and her brother Michael Landau. Blow-drying had long been provided in most hair salons, but was considered an add-on or infrequent stand-alone service that did not incur a significant and consistent revenue stream. Alli recognized an untapped business opportunity in blowout services and turned it into a US$70 million business with 55 locations across the United States in just five years. The case looks at how Drybar changed the concept of professional blow-drying and made it compelling to women regardless of age or background. The case is presented in two parts. Part A describes the industry landscape of the American beauty salon industry in 2008, before Drybar entered the scene. It reviews the nature of the industry throughout history, and the structure and competitive forces that shaped conventional practices. Part B illustrates how Drybar was conceived with a different strategic approach and what made Drybar stand out from conventional hair salons while achieving lower costs. Part B is presented in an innovative cartoon storybook format to help enhance participants' understanding of Drybar's offering through an entertaining experience that is both informative and emotionally engaging. Supplementary Video and Lecture Slides can be obtained at https://www.blueoceanstrategy.com/teaching-materials/drybar/
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