From www.behindthechair.com/Oct 2010
When JPMS Artistic Director Robert Cromeans opened his first salon, he held nothing back. The coolest design, the chicest decor, state-of-the art equipment – he knew success required the right environment, and he made a commitment to build it. Initially, however, Robert’s enthusiasm for retail investment fell short of the mark. He received a monthly bill for a few hundred dollars and, since he had no method in place to track the progress of the retail division of his business, he resented writing the check. To plan his future strategy, Robert decided to thoroughly investigate the value of retail to his salon’s overall profits. His research revealed he had one hell of a resource on his hands. Here is his story:
To calculate the return on my retail investment, I split my company into two financial divisions – one covering retail, and one incorporating all other aspects of the salon business. To my surprise, only a couple of months into tracking the progress of my retail division, I saw my inventory investment double in return!
Retail Investment Supports Your Business – No Matter What Your Model
Even in a booth-renting environment, the profit rate described above applies. The individual booth renter who exclusively invests and reinvests in a well-stocked supply of retail products will see his or her investment double every two to three months. The salon owner who engages in a joint venture retail program with booth renters will reap benefits as well. Such an enterprise breeds a common focus, encourages a teamwork environment, bolsters overall salon morale and keeps stylists from moving locations.
Drive Up Your Sales, and Help Build Our Industry
By keeping well-stocked reserves of product on hand, you help keep hair care profits where they belong – in your salon. Poorly stocked retail shelves encourage diversion. Customers want what they want when they want it – and they will frequent whatever venue meets this demand.
Proven tips for Retail Success
As I worked to build up my retail division, I discovered the following tips led me to greater and greater success:
- Invest in Retail, Kiss Wall Street Goodbye
I steadily reinvested half of my retail division profits back into product and merchandising purchases, and saw profits double every two to three months. Over the course of a twelve month tracking period, I saw a 300% profit on my initial retail investment. Sure beats day trading, doesn’t it?
- Keep the Shelves Sitting Pretty
I discovered attractive, well-stocked merchandising displays not only helped sway consumers to make a purchase, but increased consumers’ rate of single trip purchases of multiple products. I also discovered the importance of stocking inventory reserves of my top sellers. Nothing was more discouraging to my stylists than to inspire a client about a hair care prescription specific to their hair type, only to find the Gloss Drops they recommended absent from the shelves.
- Tie Yourself to a Brand
I found my exclusivity with a single, iconic hair care brand such as Paul Mitchell helped bolster sales as well. I believe it is much easier for a customer to focus on a single brand, and to identify with the fatness of it in a salon environment. It also speaks to the integrity of the hairdresser’s recommendation – if the salon only carries a single line of hair care products, the client realizes the hairdresser and salon owner must truly believe in that line.