Elaine Klekotka, owner of two Headliners Design Team Inc. salons (Canton, Ohio), recently joined Matrix’s Crusade for Professionalism after watching her salons’ retail sales decline. “We do our part in offering clients consultations and we were making the first sale. But sales stopped after the first one. We started doing telemarketing to find out what happened, and over 50% of our customers said they got the product somewhere else.” Klekotka, who used to carry four other professional lines, dedicated her salons’ retail areas to Matrix because, she says, clients have to come back to her if they want the products.
A few other manufacturers have followed Matrix’s lead with the 50/50 rule, and so have a few distributors, such as Peel’s Beauty Supply (Omaha, Neb.), which says a salon’s business must be at least 50% service, both in sales and in square footage, to purchase products from them.
“That’s to protect our credibility,” says DiDi Hornig, director of Peel’s Nail Authority division. “When we tell salons that a line is professional but then they turn around and see that their customer can just walk into what looks like a huge retailing outlet, it takes away from the salon’s ability to compete.” Nor does Hornig feel the 50/50 rule is unreasonable for a true salon. “Twenty-five percent is a standard amount of retail business that a technician or stylist should be doing. If they hit 25%, they’re doing an excellent job of retailing. If they’re doing 50%, that’s incredible. If they’re doing more than 50%, are they truly doing their job as nail technicians?”
Grider, however, calls the 50/50 rule “ludicrous” when it’s applied in terms of sales. “I challenge manufacturers to do it by square footage rather than by sales. I don’t think how much service you do in relation to how much you retail has a bearing on whether you’re a salon. If you always have stylists and technicians available to do consultations and services and you support them with education, you’re a salon,” she says.
Archdekin agrees: “Manufacturers have encouraged and supported and educated salons on accelerating the retail environment in the salon, but now that businesses have come in and are doing it, they’re now using the 50/50 rule to penalize those people who are effective marketers.” As for taking customers away from salons, she says, “There’s no reason a client would leave her salon and come here to buy the same products.” Unless, of course, the salon doesn’t sell the products, the client wasn’t told she could purchase them, or then wasn’t a selection to choose from.
“The reason these salons thrive is because everyone else is so weak at retailing,” says Paula Gilmore, co-owner of Tips Nail & Image Center (Redwood Shores, Calif.), and owner of Tips Nails Industry Solutions, which specializes in nail salon business issues. “Manufacturers and distributors shouldn’t have a beef. If the small salons aren’t selling clients the hand lotions they need and their clients go to one of these stores, that’s the salon’s fault. If the client ends up getting services done there as well, the salon just lost a customer, and again it’s the salon’s fault.”
Most of the people interviewed do agree that a definition is needed to prevent further blurring of the line between professional and retail products. What’s at stake for the professional industry is not just a loss of income from retailing, but a loss of the mystique — that “It must be better because my nail technician uses it and she knows what she’s doing” feeling — associated with professional products.
Everyone Needs To Lead
“We are being forced as an industry to define who our customers are and how we’re going to support them,” says Goldberg. “Thirty years ago there was a beauty parlor and a barber shop. Today, at last count there are 32 concepts that we’re trying to serve. If the manufacturer is clear on his or her vision, the rest is easy for me. But I need to know, who would you like me to sell it to? Is there a particular segment you want as a niche?
“Those who can’t define themselves are clearly in trouble. Take Sears and Walmart. Walmart has clearly defined its market and is doing great, while Sears continues to struggle because it hasn’t defined its market. The implication for our industry is that you must know who you are and what your market segment is; those definitions will dictate the product lines you choose to carry,” says Goldberg.
For example, Matrix has defined its market as salons whose service sales account for more than 50% of the salon’s overall sales. Other big hair product manufacturers, such as Aveda, John Paul Mitchell Systems, and Redken, have formulated similar policies. For nail manufacturers, it’s harder to set a rigid definition, says Jan Arnold, president of Creative Nail Design Systems (Vista, Calif.), because home-care nail products are not as widely available as hairspray and. shampoo. “Our phones are ringing off the hook with consumers calling for Pinkies [the company’s new 1/8-oz. size of nail polish bottles], but there are some areas of the country where we don’t have a place to send them. It’s difficult for us as manufacturers to know how to satisfy those customers’ needs,” she says.
At the same time, says Arnold, her company is analyzing the issue. “Our ultimate goal is to stay professional and support the professional salon. Some of the retail-oriented salons are doing a good job and we’ve done some tests with them, but we haven’t said we want to target them and make them apart of our business,” she says.
Susan Weiss-Fischmann, executive vice president of OPI Products (N. Hollywood, Calif.), says her company does sell to retail-oriented salons, but only as long as service sales account for at least 50% of sales. Christina Jahn, marketing director for Star Nail Products (Valencia, Calif.), says her company also sells to retail-oriented salons if there art licensed professionals providing services at all times. She adds, “The growth of retail-oriented salons is not a passing fad, but a new direction that professional manufacturers have been trying to impress upon up-and-coming salons for years.”
Gaynor agrees that retail-oriented salons will be around for a long time, but how prominent they become is up to manufacturers, distributors, and salons. While retail-oriented .salons generally don’t discount the manufacturer-recommended retail price, they do take advantage of manufacturers’ and distributors’ special offers and pass them on to their customers.
“The irony of the situation is that for the most part, these stores aren’t discounting. It’s a supply issue, not a price issue. They’re providing the supply to meet the demand, and salons are losing business. If these stores couldn’t get the “A” lines and fewer of the “Bs,” they wouldn’t be nearly as successful as they are, Gaynor explains. (The A lines are, of course, the most sought-after lines, and the B lines are the second-most popular lines.) Its up to manufacturers and distributors to make sure they don’t get those; top lines, says Gaynor, but it’s also up to salons to switch to lines that aren’t featured in retail-oriented salons if the manufacturer won’t control distribution.
At the same time, Goldberg cautions salons to evaluate their businesses just as manufacturers must evaluate their own. “Make your strategic decisions based on your overall plan for your market niche. For example, if you’ve been carrying brand X and doing great things and the imaging is upscale, you’ve developed, a base. If brand X shows up in a budget chain nearby, you need to evaluate if it has eroded your business or hurt your strategic plan. If so, to what degree? If it hasn’t affected your business or your plan, then you know your customers wouldn’t consider going there so it’s not a concern for you,” he advises.
The success and growth of retail-oriented salons are indicators that the beauty industry is headed in a new direction. Will service-oriented salons survive? Well, says Miller, they survived the haircutting salons of the ’70s and the OTC beauty stores/booth rental salons of the ’80s. In the future, says Miller, salons will continue to survive and thrive by expanding into such areas as day spa.
As Goldberg said, he last counted 32 different salon concepts. A big change from the days of the beauty parlor and barber shop. But take warning as well as comfort from that thought. After all, how many barber shops do you see around these days?
The Lessons Salons Can Learn
Retail-oriented salons can’t be criticized too much because, after all, they’re only doing what manufacturers and distributors have encouraged for so long. As Elaine Klekotka says, “If we had been doing our job in retail, these salons wouldn’t have sprung up and taken away our business.” Klekotka sees the friction in the industry as spurring growth. “You’ll either jump up the scale or slide down,” she says. At the same time, she thinks there is something to be said for salons with three to four operators and no retail section. “They concentrate on service and do very well.”
Jan Arnold agrees that there are many salons who choose not to retail, but she thinks the choice is a poor one for the industry as a whole. “Consumers are searching for availability and convenience. They don’t know where to get the products they want. I had one distributor tell me that he has had salons call and say that they don’t want to retail but they love our products, so can they send their customers to him?” she says.
Larry Gaynor foresees more and more salons focusing on services. “The feeling is that they’ll concentrate on service and not really attempt to stop their customers from going to these other places.” This attitude on the part of salons is inexcusable, says Gaynor. “If a customer walks into a salon and a nail technician uses a certain polish or top coat or nail dryer, that customer should be able to purchase it. When they go into one of the retail stores, they may buy hair products but they should have no need for nail care products,” he explains.
The upside of retail-oriented salons, says Gaynor, is that they expose consumers who might otherwise never have been exposed to professional products, and, potentially, to professional services. “Many of the people going into these stores probably don’t go to salons anyway. The exposure might push them into salons for services.”
Rick Goldberg, too, applauds retail-oriented salons for the merchandising sophistication they’ve brought to the industry. “The bar has been raised in the way they’ve merchandised and defined retailing and salon services. They’ve brought in a new level — video monitors, walls of backlit images, consistent signage, remote video cameras capturing clients as they get a manicure and beaming the images back to the retail area to make retail customers aware of the services. I believe all salons need to do better in merchandising and marketing. Beauty Brands does it, so now we have a concept others can look to.”
To keep up, much less stay ahead, you have to keep looking, says Teddie Kossof, owner of Teddie Kossof Salon & Spa in Northfield, III.
“You have to become more sophisticated, you have to be well-read and follow trends, you have to experiment with different marketing ideas,” he says. “That’s what opened up markets for this type of store.”
“They’re offering incentives by tying the purchase of products to services, and we can do that, too,” Kossof continues. “If it’s working for them, try it in your business. Take a walk through the retailers and see how they’re marketing their products and services and how they run their sales. You can downsize any idea to fit your salon and your budget.”