For Sale by Owner - How to Private Label

Why private label? Just let Susie Galvez, owner of Faceworks Day Spa in Richmond, Va., count the ways in which private label products have benefited her business.

1. Assured exclusivity. “I know they can’t get it anywhere else,” she says. “Over the past few years, Face- works has become a shopping destination rather than purchases being incidental to the visit”

2. Brand reinforcement. “Clients see and use the products every day at home,” she reminds.

3. Enhanced exposure. “When friends and coworkers compliment clients on how great they look, they tell them about the products and send them here to get them,” she says.

4. Higher profitability. “The higher mark-up means greater profitability, which is a big issue for salons and spas because of the high labor costs,” she explains.

In Galvez’s case, the benefits extend far beyond the spa. She’s in negotiations with a TV shopping channel and at least one major retailer to carry her Priorities skin care line. And then there’s the Face- works Day Spa brand, which Galvez credits with making the spa a shopping destination.

Galvez isn’t the only one who benefits: The in-creased profit margin allows her to pay staff members a higher retail commission — 25% vs. the 10% she can pay on professional name brands. Not to mention the new clients attracted to Faceworks because they’ve seen or sampled the products, or heard about them from a friend or coworker.

“Private label carries a lasting message of a client’s visit into the home,” agrees Rudy Zamora, director of marketing for CBI, a manufacturer of private label products (Carrollton, Texas). “And the message cross-pollinates daily as other people have a chance to see and hear about the product.

“A key objective of any salon is to create client loyalty, and private label strongly supports that through retail products that can only be recommended and purchased at their location.”

Your Name Here?

Private label manufacturers will tell you that any salon — regardless of size or market position — can sell its own line. But you don’t have to take their word for it. “It definitely pays to have your own label, even in a small salon in an even smaller area,” asserts Deborah Reeves, owner of Nailz Hand & Foot Spa in the mountain resort town of Cashiers, N.C.

In Zamora’s view, a salon’s size and market position are far less important than how the retailing figures into an overall business strategy. “Are you approaching retail as a profit center that demands regular merchandising and maintenance, or will it become a convenience center?” he asks.

If you offer retail as a convenience to clients and want products that will “sell themselves,” Zamora suggests sticking with name brands that consumers will recognize. But salons that use the products during services, educate clients on their benefits, and make professional recommendations can enjoy strong private label sales, regardless of the salon size.

Stick to Your Story

With the salon’s name on the package, the product becomes an extension of the salon experience. For that reason, your first task is to define the private label line’s role as a part of your overall business strategy.

“We want to be more individualized,” Reeves emphasizes. “We offer clients something different, something unique, and that sets us apart as innovators,” she says.

In nearby Beverly Hills, l.a. vie l’orange also has built a reputation on its approach of preparing products fresh for each service, but owner Melissa Ahmann says they’ve limited the salon’s private label selection of bath gels, body lotion, soaps, and candles to its signature scents — Orange Cucumber, Orange Vanilla, and Orange, Cucumber, and Lavender.

“We carry several other scents, but under a different brand,” Ahmann shares. “Our signature scents differentiate us because you can’t get them anywhere but here.”

In contrast, Reeves views the Nailz label as a personal endorsement rather than a salon statement. In her view, a Nailz label tells clients two things: They’ve found a quality product at a value price.

Listen, Watch, and Learn

Polishes, nail treatments, bath and body products, hair care — private-label manufacturers offer it all. Your Name Cosmetics (Long Island City, N.Y.), for example, offers 4,000 different SKUs to choose from. How do you choose?

Sometimes, the role private label plays in your salon practically decides itself for you. For example, by viewing her label as an endorsement, Reeves knew she should only put her name on products that fell within her realm of expertise — hands and feet. Currently, that includes nail polishes and lipsticks, although she’s looking to add hand and body lotions as well.

In deciding where to start, Zamora advises looking to your client demographics and service menu for cues. For example, do clients show a preference for glycolic-based products or sea salts in exfoliating services? Do they rave over scented lotions? Actions really do speak louder than words, so examine the products used in their favourite services.

Give credence to their concerns, though. Do they express concern over signs of aging? Do they complain about stress or exhaustion? Themes such as these can help define a product category such as skin care. Galvez, for example, developed her Priorities line not as a replacement for clients’ current skin care regime but as a supplement.

“I hear from clients daily who for whatever reason are unhappy with their current skin care regimen,” she says. “But they won’t consider changing that regime, for reasons known only to them.” Rather than attempt to overcome that resistance, she decided to offer supplemental products designed to enhance their current regimen.

As you consider all of your options, remember this caveat: Start small. It’s especially easy to overextend yourself on color items such as polishes, lipsticks, and eye shadows. Rather than try to offer something for everyone, Vicky Perrella, marketing director for Your Name Cosmetics, recommends tailoring your selection to reflect what clients choose for their services.

Monique and Monette Moore, owners of Aroma-Listic Day Spa & Salon in Agoura Hills, Calif., are taking this approach as they finalize their debut polish color collection. “Most of our established clients prefer corals, reds and burgundies, and sheers, so that’s what we’ll offer,” Monette explains.

But if your clients like to experiment with colors, keep things fresh with seasonal collections. “Trend colors are big,” Perrella observes. “Then coordinate a few shades — five to six eye shadows and lipsticks that complement the nail colors — and display them so that the lipsticks, polishes, and shadows tell a color story to clients.”

Pick Your Partner

Once you’ve identified your niche and have a good idea of what products you want to sell, you’re ready to find a manufacturing partner. Many companies offer private label manufacturing to the professional beauty industry, but you’ll be able to narrow the field somewhat by identifying their product specialty, price range, and packaging options.

As you evaluate potential partners, consider the following:

• Reputation. What do other salon owners say about the company?
• Research and development. Is the manufacturer a leader or a follower?
• Selection. What can they offer you? Keep in mind that a narrow selection isn’t always a bad thing—it’s better to do one thing really well than a lot of things just OK. Galvez says she sources products from a few different manufacturers.
• Support services. How much help will the company offer in guiding your product selections? For example, sales consultants at Your Name Cosmetics and CBI will offer guidance based on your retail space, target market, andexisting retail offerings. Likewise, Elizabeth Sanchez, special projects director of The Industry Source’s retail branding division (Farmington Hills, Mich.), recommends asking how open the company is to discussing ingredients and formulations. Also, she advises finding out what they offer in the way of graphic design services and promotional support.
• Order minimums. For stock formulations, some private label manufacturers require a minimum order of as little as $150-$250, with a further limitation of at least three of each product.
• Packaging options. Reeves evaluates this before anything else. “If the packaging isn’t that great, I don’t go further,” she says.
• Once you’ve narrowed the field, sample the products on yourself and your staff. How smoothly does the polish apply, and how well does it wear? With hand lotions you want to evaluate scent, texture, and absorption. If you don’tlove it, why would you want to put your name on it?
• “Private label is a double-edged sword because you can’t transfer the responsibility to someone else if the client isn’t happy,” Zamora reminds.

Wrapping It Up

When it comes to product packaging, forget everything you’ve learned about not judging a book by its cover. Carefully consider the messages clients will take from your packaging, product name, logo, and label.

Most private label manufacturers offer several packaging options, and your label will go a long way toward differentiating your product from others.

Perrella offers this advice: “Review your logo, because what looks good on the front of the salon may not look good on your product package.” The same goes for the salon name. Rather than rename the salon, let the name of your private label line reflect your culture, or play off the product itself. For example, you can name lotions after their scent, Sanchez suggests. Think Righteous Raspberry, Blimey Limey, Lemon-Aid, Orange-Rageous. “You’ll still get your salon name out there by saying, ‘Distributed by ...’ she notes.

Some private label manufacturers offer graphic design and production services as an additional cost. If yours doesn’t, look within your community — starting with your clientele — for assistance.

While the most economical option, stick-on labels can require a significant initial outlay. For example, while each Aroma-Listic label costs only about 15 cents, Monette points out that a bulk order costs about $3,000.

Reeves offers this little tip to keep down label costs: “I try to select packaging and sizes that let me use the same label on different products,” she says. “For example, my nail polish label also fits on the lipstick containers.”

Take Me Home

As great as your products look on display, your objective is to get them off the shelves and into your client’s bag. While you don’t have the marketing might of a national brand behind you, keep in mind that you’ve got something even better: a personal relationship with your customers. “Clients have already demonstrated their trust by coming to you,” Sanchez notes. If you’ve done your job right, you’ve honored this trust by selecting products that meet your clients’ needs and expectations.

Now it’s time to spread the word. “I tell people that I personally picked out every product on the shelf,” Galvez says. Get the support of your entire staff by encouraging them to use the products personally in addition to incorporating them into services. Salon owners also advise sharing the wealth by offering a higher retail commission on private-label products.

According to Sanchez, some salons invest in sample sizes, justifying the investment as a marketing expense. Likewise, you’ll want to incorporate the products into your services, which not only lets clients experience them firsthand but also gives you an opportunity to educate them on the product benefits.

“Consumers are used to buying elsewhere,” comments Monique Moore. “It’s hard to re-educate them, but once they try a product — see it, feel it, smell it —they’ll buy it.”

“We have quite a few clients who first buy a product because they liked the way it felt and smelled during the service,” Monette adds.

Why Private Labeling Works

1. Assured exclusivity. “I know they can’t get it anywhere else,” says Susie Galvez, owner of Faceworks Spa in Richmond. Va “Over the past few years, Faceworks has become a shopping destination rather than purchases being incidental to the visit.”

2. Brand reinforcement. “Clients see and use the products every day at home.”

3. Enhanced exposure. “When friends and coworkers compliment clients on how great they look, they tell them about the products and send them here to get them.”

4. Higher profitability. “The higher mark-up means greater profitability, which is a big issue for salons and spas because of the high labor costs.”