The American Beauty Salon Industry in 2008 (A)

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/

1. Hair (Beauty) salon industry has long been existed and it is growing further as people’s aspiration for looking good and being pampered has grown more. The hair salon industry is a classic example of fragmented industry where thousands of small players offer similar products and services. They all essentially competed on the same factors. Locked in the conventional strategic logic, they had to make a tradeoff between differentiation and low costs. 2. Drybar, on the other hand, defied conventional strategy logic and created a new market space for specialized blowout service. It captured a blue ocean opportunity in blowout service, which had been largely ignored by existing hair salons. By identifying key pain points of existing, refusing, and unexplored customers of salon blowouts, Drybar created a new concept of blowout service through which all women enjoy their me-time and feel good. It made professional blowouts an affordable habit. Here, Drybar broke the tradeoff between differentiation and low costs by eliminating and reducing over-served or irrelevant offerings while creating unprecedented value to buyers.