Because profit margins on retail goods are many times those of service dollars, retail is vital to the health of your business. Learn eight tricks for implementing a successful merchandising strategy — from product placement to lighting.
In the salon and spa industry, understanding the profit margin of retail is essential. The profitability of a retail dollar is four to five times that of a service dollar. This should be motivation enough to get your retail business into gear. But there are other reasons to dive in.
First is the investment involved. When you add up all the back bar costs and the costs of retail sitting on your shelves, it’s substantial. Whether your investment is $1,000 or $10,000, you need to be committed to moving your inventory. It’s money just sitting there. Secondly, you should be maintaining a service guarantee with every service you provide. It’s essential to recommend home care items when a client’s needs are discovered during the service visit. Heather Borga, a nail technician at Hair by Borga & The Spa at Borga’s in Springdale, Pa., urges her clients to maintain their hands and feet between visits. This, says Borga, “makes my job easier.” Finally, retailing is important for the purposes of client retention. Clients who purchase retail have a better chance of being retained. Recent industry statistics bring the retention percentage to the 50% mark if the client leaves with at least one product.
Getting started with your merchandising plan means implementing some simple but often neglected strategies. Here are some basic principles that should be incorporated consistently into your retail efforts.
Cleanliness and organization are fundamental. Making the search for a product simple and straightforward enables the client to find what she is looking for quickly, giving you more time to make the proper recommendation needed to connect the client with the product she is purchasing. Study your competition — along with successful retail chains and outlets — to get ideas. You may find even very small changes that can work for you.
Store layout is important. The amount of space you dedicate to retail usually dictates what percentage of retail sales your business will see. For example, 10% of square footage to house your retail products and displays will yield on average 10% of your total sales in retail — or it should! When you have a larger space for your merchandising, you convey a more powerful and professional presence. Placing your products in one area may work well for your business. However, strategically placing product at the nail station, the front desk, and the retail center gives it more of a presence and shows this is something you speak of all the time, not just when you are reminded by seeing it.
Product placement is also key. Products need to be two to three deep to show a commitment, and must be properly stocked at all times. Nothing is more frustrating to both the tech and the client than not having an item available for purchase. Your client may go somewhere else to fulfill her needs. If you feel you do not have enough product in quantity to properly fill the space, add props, such as baskets, candles, or pictures. You can choose to display your products in a variety of ways — all products from the same manufacturer together, all products of the same type together, or kits designated for different nail conditions in the same area. This is a trial-and-error process. What works for one salon or spa may not be successful for another business. The bottom line: Adopt whatever placement scheme makes it easiest for your technicians to follow through on their recommendations and get your clients’ attention.
Lighting works wonders. Studies show light attracts four times the attention as a non-lighted area. Lighting fixtures are an inexpensive way to make a big change to your retail area; they scream “I am here. Take a look!” Using moving color and light is another option. Placing the light slightly off to the side or in front of the display is ideal. Finally, every time you adjust, alter, or change your displays in any way, change the lighting too.
Rotate your stock and displays every six weeks. Yes, every six weeks. You will make a stronger impression on clients if, when they visit, they are always experiencing something new. Place slow movers in the middle of the shelf at eye level if you want them to move. Product placed behind the reception desk is just as bad as being behind glass. It is OK to have some product there for show, but that product should be on the retail floor too so the client can access it easily. Behind the desk says exclusive and pricey.
Offer gift cards and retail bags. Written gift certificates are slowly becoming extinct. The gift card is the way to go. Studies show you will gain a 30% increase in gift card sales if you switch from certificates to gift cards; they’re more professional and more are sold through point-of-purchase displays. Your retail bags should not be generic. They should contain your name or logo and be filled with tissue paper to give it a little kick.
Creating balance gets results. Dark appears heavier than light. All products that are contained in darker packaging should be at or near the bottom of a display. Smaller items should always be placed near the top. When you have a shelf with smaller objects on the right, try placing one big item or prop on the left. This balance is visually pleasing to the eye. Nothing should be placed behind glass unless it has diamonds or gold in it! Clients will not ask to feel or smell a product if it is not at their fingertips.
Mark all products with a price. Nothing annoys a shopper more than having to guess at what something will cost. Computer-generated price tags or stickers create a professional presence.
We have to make it as easy as possible for our guests to embrace our retail centers and our product recommendations. It is often the technician’s fear of rejection and discomfort in the role of a salesperson that gets in the way of strong retail sales. Spend some time and a little bit of money to see great returns on what could — and should — be your biggest profit point in your salon or spa.