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Jul, 12 2011

A Natural Success Story

From just 65 salons to 100 in mere one year proves that Naturals has set its eyes firmly on expansion. However, this would be in no way a deterrent to the quality the brands offers. It's commitment towards franchisees is a raison d'être behind its flawles

THE future will belong to those who believe in the beauty of beauty business. If you are not a part of this bountiful ecosystem, then it's apt time to do so. According to industry estimates, the organised and semi-organised beauty services industry in the country is about Rs 1,500 to Rs 1,600 crore. The organised beauty segment is growing at about 25 -30 per cent per annum, which highlights how fast the beauty industry would be witnessing transition.

One such player who made the most of the beauty boom is Naturals, a leading Chennai-based chain of beauty salons that has marked a century by opening its 100th successful salon.

Seeds of success

The seeds of Naturals' success were sown a decade back by C.K. Kumaravel, Co-Founder and Managing Director, Naturals, and Veena Kumaravel, Founder and Chairperson. It started with just one salon with the aim of earning Rs 60,000 per month. However, it became so successful that the salon count reached 100, besotted with its quality services and undying commitment towards customers.

Franchise make-up

Franchising as a mode of expansion into both existing as well as untapped markets has beauty of its own. Industry experts believe that franchising can be effectively utilised for both expansion as well as organic expansion. In a span of four to five years, almost 20-25 per cent of the organised beauty services market is projected to be franchised.

When asked about choosing franchising as a business model, C.K. Kumaravel says, “We took up franchising in the year 2005 when we stepped into the second stage of growth for our brand. We took our salon count to 35 centres from five. Franchising is the only way to grow the business since it requires an owner-manager's presence on a continuous basis. World over, this business is highly franchised, which is a proof that franchising is the right option.”

Regarding the significance of franchising and what it takes to build a successful franchise, Veena Kumaravel, says, “Franchisee partners are a very important link, as this format is a network business. It is absolutely essential for the franchisor to consider franchisees’ money and time as his own and give all respect required in making it successful.”

To be a part of Naturals family, the basic requisite of a franchisee is to have passion for this industry, excellent supervising and client relation skills and an investment of Rs 50 lakh. If the franchisee suffices these prerequisites, the brand has a lucrative opportunity for a franchisee that he can operate via multi-unit franchise and become the territorial head.

Robust training, support system

Like all other successful brands in franchising, Naturals strongly believes in a robust training and support system. From locating the right location to interiors to marketing to staff recruitment and training to offering products, the company offers thorough support to its franchisees.

As manpower is the most significant element in this industry, Naturals makes sure that the staff is recruited and managed by them. The company strongly believes that manpower is the heart of this business. The company emphasises that the main role of the franchisee is to focus on administration of the salon while it takes care of the HR management. Thus, it becomes a perfect blend. The company has its own Trends Academy with five centers spread across major cities of South India and one at the foothills of Siliguri to cater in-house requirement. Students enjoy benefits like placement at their own brands, hostel, food, skill up-gradation and career advancement.

To have services at par at all franchised salons, standardisation is taken care at the training level. However, standardisation across all outlets is a challenging aspect, so the company works on it on a continuous basis. Naturals also use financial audit, technical audit and mystery customer audit to ensure quality standards across all outlets.

Apart from training, Naturals also has a key role in supporting the franchisee if he is not doing well. The brand offers the franchisee thorough support till the time business is back in shape or eventually takes over that centre.

Strengthening franchise presence

Good brand, good formula and a win-win attitude has made Naturals stand tall in the beauty sector. With already 100 salons under its umbrella, the brand has 40 others in the pipeline. The mission of the company is to create 1,000 successful women entreprenuers and create 10,000 job opportunities in the beauty and wellness industry. Having a strong foothold in South India, now the brand is enroute to North and West India.

Not just India, Naturals has plans to expand internationally through franchising. Currently, it has inquiries from Gulf, Malaysia and Singapore.

Interview

BEAUTIFYING SUCCESS

Kindly tell us about your entrepreneurial journey.

The company was initiated by me and my husband C.K. Kumaravel just for the sake of starting a business. Once we stepped into it, there was no looking back. The company went through three stages of growth viz fully-owned salon, partnership salons and franchised salons. When we started, our objective was twin fold, to understand the business and establish the brand Naturals. Our objective of partnering was to become the lead brand in Tamilnadu. This was by June 2008 and then we kept a new target of becoming the number 1 salon in South India, which we completed by December 2009.

What is the vision of your company?

We want to groom India naturally, as said before.

What are the prospects that Naturals offers to women entrepreneurs?

With a vision to groom Indian and create 1,000 women entrepreneurs by 2016, we already have 70 women entrepreneurs on board. We believe that women are as capable as men but all they need is a framework and support, which Naturals ensures to them. Beauty salon business is ideally suited for women since it requires hospitality and customer care, which women are naturally good at.

Do you prefer franchisees from same background or do you have a provision of offering conversion franchisee?

We don't prefer the franchisees from same background. However, we are open for conversion franchisee on a case-to-case basis.

What are the challenges and threats in carrying out the operations in this business?

Since the customers are extremely loyal to the service providers, it is very important to build a brand which rises above this limitation and ensures service providers retention.

Box1

The hair and beauty salon industry in India is estimated at Rs 6,900 crore, up from Rs 1,500 crore in 2005. It is expected to reach Rs 29,800 crore in 2015 and surge to Rs 98,500 crore by 2020.

A (e)merging Opportunity

Naturals Beauty Salon India (P) Ltd with two brands, Naturals, PAGE3 and Trends in Vogue (P) Ltd , and Cavinkare group company with two brands, Green Trends & Limelite, have merged to become the largest salon chain in India under the umbrella of Cavinkare. There will be no change in the brand names, as they themselves cater to different segments demographically. The merger will enhance the service standards and club expertise and strengths of both the brands to provide better customer experience. This will also create a platform to share the learnings of both the companies. Being an integral part of CavinKare Pvt. Ltd, a diversified FMCG major with a turnover close to Rs 1,000 crore, all the four brands imbibe CavinKare's astute professionalism, innovative products & consistent quality.

Box2

Franchise Facts:

Investment: Rs 35-50 lakh

Employee cost per sq.ft: Approx Rs 100/- per month

Working Capital: Negative, buy on credit and sell on cash

Payback period: 30 to 36 months

Marketing cost {% of sales}: 4%

Area: 1,200 to 2,000 sq.ft

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