Let Your Hair Down

• $31.171M Market Capitalization

Regis Corporation (RGS.NYSE) announced on June 9, 2022, that it has partnered with Zenoti, a software provider in the beauty and wellness sector. Through this partnership, Zenoti will assist Regis in delivering a “modern, digital experience to drive engagement.” Okay, so Regis hasn’t announced a new hair care routine, but the Company’s latest news is arguably just as important. Here’s why.

“We have a deep understanding of the specific, niche problems that beauty and wellness businesses face, and how to solve them with technology…The goal is to simplify operations but also to drive revenue consistently, from improving store sales to helping brands expand to more locations,” says Sudheer Koneru, Zenoti Co-Founder and CEO.

First, let’s talk about Regis since this is likely the first time you are hearing about them. Regis is a publicly-traded company situated in the beauty salon industry. With more than 66,858 companies in this industry, sales were as high as $23.2 billion in 2021. As a whole, the global spas and beauty salon market was estimated at USD$144.48 billion in 2019.

This market is expected to reach USD$217.25 billion by 2026, expanding at a compound annual growth rate (CAGR) of 6%. What is driving this market? Back in 2021, NielsenIQ released insights related to generational beauty trends in the United States (US). Interestingly, Millennials and Gen Z consumers were the two leading generational groups in the beauty and personal care industry.

To be more specific, Millennials have the highest beauty and personal care industry penetration, sitting at 77% of households. However, Gen Z isn’t too far behind with a penetration of 76% of households. While Millennials have a higher-order frequency and annual spending online compared to gen Gen Z, the latter is 1.4 times more likely to make impulse purchases and 2 times more likely to try new items.

With this in mind, 5,779 locations in the beauty salon industry are franchised, owned, or held by Regis. Some of these locations include recognizable brands such as Supercuts®, SmartStyle®, Cost Cutter®, Roosters®, and First Choice Haircutters®. Additionally, Regis holds an ownership interest in Empire Education Group, a school in the US educating prospective beauty professionals.

Regis has also developed its own Opensalon^® Pro software application. Through the Opensalon app, users can explore brands, choose from different hair services, check stylist availability, receive booking notifications, and create personal profiles for efficient appointment booking. Users can also book directly from Googe Maps and Google Search.

A Fabulous Tag Team

What does Zenoti bring to the table, or should I say salon? Zenoti is a privately held company powering more than 20,000 beauty, wellness, and fitness businesses across 50 countries. According to Zenoti, the company offers cloud-based, mobile-led solutions that are intended to enhance guest experiences, unify brands, and streamline operations. The company’s solutions are intended to provide businesses with:

• online appointment bookings
• point of sale
• customer relationship management
• employee management
• inventory management
• built-in marketing programs

Similar to Regis’ Opensalon, Zenoti’s mobile solution includes an application, including features like automated payments, business tools for marketing, employee training modules, and industry benchmarks to assist businesses in making decisions. In addition to the salon, Zenoti’s solutions can be applied to spas, medspas, and fitness.

“Our technology empowers businesses. First, by positioning service providers to earn more money via added services, tips, retail upsell, and more. Second, our business intelligence and automation enable business owners to free up staff from administrative work and give them time for what they love most – focusing on customers and becoming the best at their craft,” commented Koneru.

With this in mind, through its partnership with Regis, Zenoti will purchase the Company’s Opensalon platform. Furthermore, Zenoti will onboard Regis’ existing franchises to its existing platform. On the other hand, Regis will be joining an expansive network of enterprises that have partnered with Zenoti, including Bombshell, Epic Hair Designs, and Warren Tricomi, among many others.

Regis’ share price opened at $0.7901 today, up from a previous close of $0.5591. The Company’s shares were up 22.48% and were trading at $0.6848 as of 11:11 AM EST.