Breaking into Retail

Before you start ordering products to sell in your salon, do the math. You'll need to determine how much room you can devote to a retail area, how to track inventory, and know when it's time to restock. Here are some rules of thumb to follow.

If you're moving product quickly and don't have space for a stock room, Grider-Troc says storing back-up inventory on displays is definitely an alternative.

"One of my clients was moving prod­uct quickly and had a manpower short­age. They didn't want to have to place a weekly order but they didn't have the storage space for back-up inventory. So what we did was expand their shelves into deeper shelves.

We went from a 12-foot depth to an 18-foot depth so their actual display became storage."

Choosing Products

When a manufacturer says a product is "ideal for retail" you have to evaluate for yourself whether it's ideal for retail in your salon. When starting out or expanding your retail business, you have to consider not only the kinds of prod­ucts and the breadth of a product line, you need also to be concerned with manufacturer and distributor support in the way of display items, packaging fi­nesse, consumer "push" marketing (does a manufacturer create demand for a product by advertising directly to a potential salon customer, for example?).

If you're just starting out, you may not know which products will work for your clientele. You can directly survey customers about the products they use at home and would be interested in see­ing in the salon. You can also get advice from your manufacturers and distribu­tor on a good product mix for your salon and client demographics.

Ellen Genco of Orly International (Los Angeles, Calif.), says, "We try to help salons figure out what will sell. If a salon has limited space, we'll advise which products would work best in their salon."

Knowing your customer base is criti­cal to success, says Lloyd. "When 1 started it was winter and my clients had dry skin so I started with lotion," she says. You can certainly take a few risks in offering new or unique items, but you also need to stock a few "sure things," like treatments, top coats, files, adhesive, and color.

When evaluating product lines, ask yourself these questions.

Docs the line complement my salon's image? A discount salon proba­bly isn't going to have a lot of success with a high-end polish. A salon catering to a 40-50 year old female demograph­ic may not do as well with do-at-home body tattoos as it would with nat­ural nail treatments.

Who distributes the line and is the distributor accessible? You're going to need an ally in this new retail venture. Will your distributor be there for you and see you through the tough times? Will she help you wade through slow-selling merchandise and accept returns? Most distributors will accept returns for a limited period of time. If you cannot return items or an item is discontinued, Lloyd suggests taking a couple of dol­lars off of the price and selling it just above cost to move the merchandise.

Will a distributor assist with some sort of sales training for the salon staff? If your staff doesn't have experi­ence with retail, your merchandise can end up collecting dust on the shelves. "You need to arm your staff with the right dialog," says Grider-Troc. "Make sure your staff not only understands what the product itself does, but that they can initiate and close a sale."

Will the distributor or manufactur­er provide product knowledge train­ing so we can talk intelligently about a product's features, benefits, and ad­vantages? Your clients have questions about a product before they buy it. A nail tech needs to understand not only what a product can do, but how to use it. The nail technician offering advice and her professional recommendation should be able to talk intelligently about any product on the shelves.

Will the product line fill your nail technicians' and customers' needs? It's the mantra of beauty industry experts that you should sell what you use in the salon - because customers will see you use a product on her and the product will have your professional recommen­dation. Consider in your retail selec­tion whether an item can be used in a service or complement it.

Lloyd says the key to retailing is to start small. Although you certainly want to offer customers choice, you don't want to overwhelm them or yourself as you launch into retailing.

"When 1 first started, a manufacturer was offering specials so this gave me an opportunity to try retailing on a very small basis," she says. "1 would buy a few specials and see how they would sell. This worked wonderfully because I could see the fruits of our labor without a big initial commitment."

Breakey asks other salons for refer­ences before choosing product lines.

"Besides asking around and attending trade shows, 1 always ask the manufac­turer for a list of salons that retail the company's line so I can call and talk salon to salon about the product and the manufacturer, specifically what kind of service they provide," she says.

Says Breakey, "When you're calling ref­erences, ask the other salons about the manufacturer's history of back orders that will affect your business. Even if a product's great, if it's constantly on back order, people either aren't going to want it anymore or they're going to go some­where else for it."

Truly understanding how a product works and what it can do for a customer's nails is the key to successful retailing. When you look at retail as a service to customers - that you're recommending products that solve problems for them - it's much easier than thinking of it as sell­ing a product. The better versed in a product's virtues that you are, the easier time you'll have recommending it to someone. When you are deciding which lines to take, it's wise to also consider aligning with a product you know well already and trust. When a client walks out of the salon with a bottle of a new treatment, you need to know she's going to have the results you said she would.

Besides product knowledge help, does the manufacturer offer market­ing support for the product line? Strong marketing and promotional materials allow you to generate sales by calling the customer's attention to the products, creating an interaction, and then a purchase. These support materials (often called "collateral") can be in the form of shelf-talkers, which draw attention to products on the shelf.

"A lot of our displays come with areas for pamphlets that we provide, which give facts about each product," says Genco. "The displays also come with shelf-talkers, which are brochures that sit on the shelf and 'do the talking'."

"Shelf-talkers are the perfect vehicle for new product in­troductions and are highly effective for seasonal promotions and special product offers," says Lloyd.

Other collateral materials are postcards that can be used for direct mail, client education pamphlets, booklets, and window signs. Retail support can also come in the form of consumer advertising. You can display your items with the greatest panache, but when a customer sees a new nail color advertised or written up in Vogue then sees it on your shelf, that's going to carry a great deal of weight. Aligning with a product that has high brand recognition will help you sell.

Sometimes a manufacturer doesn't provide "stuff" as much as advice. This can be in the form of video training or sales sheets for the salon to use in training.

"All of our seasonal nail lacquer collections come with point of purchase display materials and cus­tomer brochures," says OPI's Breese.

Besides support materials and advice, a manufacturer can provide in-salon training by an educator to help you un­derstand the sales sheets and product information, and demonstrations.

Manufacturers can also provide a plan-o-gram, which is a standardized layout of where and how products are arranged on your shelves. Plan-o-grams make ordering product, recognizing out-of-stocks, and conducting invento­ry much easier, Lloyd says.

"They also ensure that product won't end up displayed inappropriately," adds Grider-Troc. "The staff gets used to a consis­tent plan-o-gram."

Invest Wisely

So, how much should you spend on products? Goldstein again suggests starting out small.

"Initially, you can spend $200 to $300 on retail and have a good amount of product to sell," Goldstein says. "It varies from salon to salon, so it's advised to go with what you think is right for your needs. Remember that you can always order more." Look at it as an investment: It will take time to see a return.

Lloyd agrees: "1 started with two small shelves. It took $15 for the two shelves and four brackets," she says. "Both shelves sold out in one week so 1 restocked. My suggestion would be to start slow." Also, knowing your customer base is very helpful. "When I started retailing it was winter and my clients had dry skin, so I started with lotion."

To start out, you can purchase a small retail unit that costs between $60 and $100. For example, a 17" wide X 72" tall display that carries cuticle oil, nail strengtheners, and lotions that cost $90 may generate up to $250 in revenue.

If you're just starting out, you may not know which products will work for your clientele. But don't let this keep you from getting started. Face it, we all make mistakes. If you order a product that simply won't move off your shelves — mark it down, combine it as a "free" gift with the purchase of something else, or at the very least use it for chari­table donation.

Taking Inventory and Restocking

Now that you've got the stuff, how do you keep track of it and when do you need to get more? Should you order big­ger orders initially to take advantage of quantity discounts? Keeping an accurate and regular inventory is the only way to assess profitability of your effort and to know whether it's worthwhile. Retail products must be tallied separately from products used on clients.

If you have a computer, there are a variety of software programs to help keep track of inventory, among other things. "With almost all of the software packages available, you can run reports and see exactly how many nail polish bottles you sold in the last day, week, and month," says Grider-Troc.

Most salon software has features specifically designed for the task of tracking retail profitability and inventory con­trol. Some features to look for include:

üfeatures that allow you to main­tain stock levels on products

üview stock levels at any time

ükeep a record of suppliers

ümonitor product inventory levels

ücreate purchase orders

üdo order entry

üback-up maintenance

üset up normal and promotional pricing

üset up custom tax rates and mark ups for each product

üset up product codes

üprint product labels and price tags

ürecord information about the products and services

üreorder prompts

üautomatically generate retail product labels

ütrack usage of "back bar" or prod­ucts used in the salon (as opposed to sold for retail)

ütrack cash intake

üdo Daily Reconciliation Reports

If you aren't ready to invest in a soft­ware system, there are other ways of keep­ing track of inventory, explains Lloyd. "If you don't have a computer, I recommend keeping a list of all the products you pur­chase. List: them on a piece of paper under products purchased, products sold, and products used in the salon. This allows you to keep track of your retail on a daily basis and at the end of each week you will know what you need to reorder."

Also, use an inventory control form so you can monitor what products are selling well. This also helps account for product sales and makes reordering eas­ier. Be sure to keep sufficient quantity of stock on the shelves at all times.

"Never let inventory of any one item fall below three remaining units on the shelf," says Breese. "Our nail lacquer displays can be refilled from open stock purchases."

Genco agrees: "The biggest problem we see with salons is that they're not keeping enough back-up stock in the salon. If a product starts to move fast and they don't have back-up stock, they're not going to be able to provide for their customers," says Genco. "Salons may not have enough space to store back-up or enough money, but to real­ly run a retail business efficiently, you need to have back-up stock."

Making sure that you're stocking ad­equate quantities of the items that move fast so you're not out-of-stock on that item is one of the biggest challenges when starting out in retail, according to Grider-Troc. "I think that salons lose obscene amounts of money because of the out-of-stock factor. But by the same token you don't want 36 items sitting on your shelf that move one per week. So, that means really tracking your out-of-stock and tracking how many requests you get for it when it is out-of-stock. That whole procedure usually takes three to four months to nail down to where your inventory makes sense."

When you really take the time to an­alyze all the elements involved in run­ning a successful retail business before you begin, you'll be more confident and prepared, and probably more inclined to see it through.

So start shopping around. Get to know your choices and opportunities. Make a slow, well-informed decision about product choices, yet don't be afraid to make mistakes (that's what "red-tag sales" are for!).


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