Business Management

Will Beauty Superstores Hurt Salon Retail?

All-in-one retailers complete with salons and professional products are popping up left and right. Should smaller salons take coven or is there something the beauty industry can learn from these salon superstores?

By now, most of us have either heard of or visited a Sephora. The chain, which has locations throughout the world and prefers not to bill itself as a beauty superstore, but rather as a unique concept, is chock fall of beauty products. Call it what you like, Sephora has plenty to keep many a customer occupied.

“Sephora has changed the way cosmetics and fragrances are sold,” says Larry Gaynor, president and CEO of Farmington Hills, Mich.-based The Nailco Group. “The open method of selling beauty products is a positive concept, as women love to touch and feel.”

One thing the chain does not carry, however, is professional products. All of Sephora’s items are prestige brands that would normally be sold at high-end or specialty department stores. That’s where “professional” beauty superstores such as Ulta and Beauty Brands come in. Both chains are luring consumers in with a full range of beauty products — including professional brands — as well as salon services. Consumers who might’ve never walked into a nail salon and asked for a manicure are now discovering the beauty of entering one of these stores and not just faking home a bottle of polish, but also staying for a service.

When these superstores first appeared in the early 1990s, their validity was questioned by those in the salon industry. Many wondered if they were a new batch of phantom salons, a term used to describe beauty supply stores that try to pass off as salons by featuring a shampoo bowl and styling chair in the back of the store. Having such equipment permits them to buy and retail exclusive salon-only professional products. David Bernstein, vice president of operations for Kansas City, Mo.-based Beauty Brands, says that when the chain first opened its doors in 1995, there was some concern from neighbouring salons.

Today, however, many people in the beauty industry agree that phantom salons are not as much of a problem as they were before — and these superstores are no phantoms. “Phantom salons were more of a concern a few years ago because these larger stores didn’t really exist,” says Mary Rector-Gable of Roselle, Ill.-based M. Rector and Associates, a management recruitment and consultation firm. The salon industry had a fear of professional products being diverted.” They also agree that these superstores are indeed valid and pose stiff competition for salon owners and others industry. “Salons have to recognize the huge competition from these stores. They also have to recognize flat o petition also comes from other branches — and not all professional brands other,” Rector-Gable says.

“We try to convert people who come to the salon over to retail and vice versa,” Bernstein says, “We’re opening an avenue for people who never had salon services or purchased professional products.” In fact Bernstein says stores like Beauty brands are opening up an avenue for the entire salon industry. By making consumers aware of the endless services and products the beauty industry has to offer, they help bring in more business in general, he says. And just how they lure customers in?


It’s All About Presentation and Convenience 

We’ve all seen or been to salons that great services but just don’t care when it comes to retailing. The latest of superstores are taking a different route and are catering to consumers in a new way. Like other retail businesses, these superstores are well aware of the need to have stylish fixtures, well-lit displays, open floor plans, signage that promotes and explains the products, advisors trained in the products they’re selling, and hands-on displays that encourage customers to see, touch, and smell the products. Not only that, they also offer little extras smaller salons do not (or cannot). 

“With these types of stores, women can take care of everything under one roof. The one-stop facility definitely has appeal for busy women,” says Adam Broderick, director of salon and spa development for Chicago-based Ulta. The chain, which touts itself as the “first place where women come first,” not only features a salon and a wide range of brand names and professional products, it also has a cafe and interactive store directories for those in search of nail polish remover or any other product. Ulta offers more than 20,000 name brand cosmetics, fragrances, accessories, and nail, hair, and skin care products.

Like Ulta, Beauty Brands also offers plenty of products to choose from — more than 50,000 salon products for nails, skin, and hair. But it’s not just appearance that counts. Convenience also has a lot to do with it. “Our stores are open seven days a week, they’re open early in the morning, and they close late at night,” Broderick says.

And the fact that these stores are increasingly opening up new locations signifies that consumers are hungry and more than ready for professional products and services. Beauty Brands recently opened several locations in Arizona and Missouri; Ulta has plans to open 50 of its upscale format stores by the end of 2000.

Lessons to be Learned

Although more salon owners are realizing the importance of having a client take home a bottle of polish, only a few can really say their products are flying off the shelves. “Only about 7% of the average salon gross revenue comes from retail, so who is going to get excited about that?” Gaynor asks. “Salons are in business to service their clients. They cannot compete with retail superstores or the Internet, and they shouldn’t have to.”

Debbie Doerrlamm, owner of Wicked Wich Nails in Ronkonkoma, N.Y., and NAILS’ cyber editor, says that more than 60% of salons retail less than $500 of product monthly. She thinks salons should be shooting for $1,000.

Gaynor says salons should offer select retail products, but instead of offering 10 lines and giving the illusion that they are trying to compete, they should only retail one to three lines at the most and build brand loyalty.

Jan Arnold, president of Creative Nail Design in Vista, Calif., agrees on the importance of retailing. “Salon owners are doing themselves a favor by selling a product with a service,” she says. “More and more nail technicians are realizing the need to retail.” Ideally, she says, 20% of a salon’s income should come from retail.

Most people agree that while superstores do pose competition, smaller salons — at least those that know their clients and have a good thing going — needn’t worry too much. “I’ve seen some ‘smaller’ salons that are quite successful at retailing,” says Lauren Breese, who’s in charge of new product development for OPI Products in North Hollywood, Calif. “Many clients love the personal touch they get in a smaller, more intimate environment. Bigger is not always necessarily better, or for everyone.”

Sandra Siepak, public relations director for Star Nail Products in Valencia, Calif., echoes Breese’s sentiment. “If the salon has a good loyal customer base that buys regularly, chances are the salon business will remain strong,” she says. “Customer service, local neighborhood availability, and good products keep customers in the long run.” So if a salon is weak at retailing and isn’t selling a client the bottle of cuticle oil she needs, the salon is at fault. If the client ends up going to one of these stores to purchase that bottle of cuticle oil and stays to have a service done, the salon is again at fault.

“If the consumer leaves the salon without at-home maintenance products and instructions on how to use them, she will go to a retail store and try to find products that will help her create the experience at home,” says Dixie Eklund, vice president of sales for FPO in Farmington Hills, Mich. That’s why many agree that it is beneficial for a salon owner to stop in and learn a few lessons from the big guys. Rector-Gable says the best advice she can give salons is to see what these superstores — and even other successful salons — are doing and incorporate it into their salons.

Gaynor says it’s important to learn why these stores are in business and why they are successful. “In simplistic terms, they offer a complete selection and they put the customer in the mood to buy,” he says. “At the salon level, owners must do the same, but on their level. And since most of their revenue comes from services, they should start there first.”

Although many say there is much a salon owner can learn from walking into a superstore, there are some who think they are not really helping the industry at all. “The thing that concerns me most is that these are professional products, meaning a professional recommends them based on the client’s needs,” says Darlene Baker, owner of Bella Spazio in Knoxville, Tenn. “Going in and picking items off the shelf with little or no help isn’t much better than going to the drugstore.”

Baker’s salon is situated near a couple of superstores, and she says that although they haven’t taken away any of her clients, they haven’t brought her any new business either. People are more likely to ask for additional services from someone they are already comfortable with, she says, and use of products does not, in her opinion, attract new clients to the salon industry.

Consumer Friendly

Manufacturers are also realizing the need for salon owners to offer attractive products to their clients. Retail superstores are not the only ones who are competing with salons for a customer’s attention. Retail stores selling bath and body products are also vying for consumers who love pampering themselves.

“What these stores lack in professional-grade formulas they make up for m marketing and merchandising,” Eklund says. She says that manufacturers have a responsibility to provide salons with professional-grade formulas and packaging, displays, and merchandising pieces targeted toward the consumer. She admits that the hair industry has been quick to adopt this way of thinking. Many nail manufacturers, on the other hand, do not have the budget to create custom packaging and even less of a budget to compete with consumer-style advertising.

All in all, those in the industry seem to agree that for the most part, this new batch of superstores will not harm smaller salons or even distributors. The key is for salon owners to make sure they know their clients. “Salons have to brand themselves,” Rector-Gable says. “High-end salons should use high-end products. Low- end salons should stick to budget products.” And if a salon has a good thing going, then it has no need to worry about the competition.

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