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Jul, 12 2011

From skin deep to diversity

TILL a few years back, coming across a branded salon was an unusual sight but the scenario changed with the mushrooming of beauty centres all over. In the past, customers used to go to beauty salons only for services like facial, hair cut, etc.

TILL a few years back, coming across a branded salon was an unusual sight but the scenario changed with the mushrooming of beauty centres all over. In the past, customers used to go to beauty salons only for services like facial, hair cut, etc. But with increasing consciousness to look better, a large number of new services have been included in salons such as skin, hair and nail care, spa facility and a broad range of beauty products. “The beauty and salon industry is a significant part of the growing wellness business in India. The current size of the salon industry (skin & hair) is estimated at Rs 20,000 crore. The organised sector is estimated to be around 25 per cent of the total industry,” says C.K. Kumaravel, Co-Founder & Manager, Natural Beauty Salon India Pvt Ltd. He adds, we can take salon & spa industry as an example where one compliments the other and thus becomes a synergistic opportunity for the brand to go from salon industry to spa or vice a versa.

Business Potential

The branded salons' business is around Rs 1,800 crore and growing at a rate of 25 per cent annually. The beauty product business is said to be nearly Rs 4,000 crore and growing at 20 per cent while the herbal beauty business is growing at 40 per cent. A look at these booming figures ensures that the future of this sector is quite bright. Besides, due to brands diversifying into other segments, the market potential is growing much faster. Strands Salons Pvt Ltd had launched Bourjois Spa as well as Strands Academy to increase its clientele. Now it has ventured into nail care with its outlet 'Perfect 10 Nail Salon'. Regarding diversification, Naunihal Singh, CEO, Strands Salon Pvt Ltd, says, “It is a step forward from our side to offer the best available and variety of services to our clientele. We are the pioneers in these ventures and want to carry on this tradition. A client can come to us for our salon and spa services and now for nail care also. The other factor is to stay ahead of  competition with our innovative services.” Tress Lounge has started Seven Seas Spa to tap the spa market. Talking about diversification, Shahnaz Husain, Founder, Chairperson and Managing Director, Shahnaz Husain Group, feels, “Brands diversify into other segments to broaden their customer base. We have launched our Shahnaz Forever range in the middle segment. Its success lies on the strength of brand identity and brand loyalty.”

But what are the driving forces behind the beauty industry getting into its present stature. Firstly, with the growing economy, opportunities and disposable incomes are also increasing; people can afford to invest more in themselves and their personal grooming. This changing lifestyle has provided an impetus to the beauty industry. Till a decade back, it was unheard of men visiting salons for facials and other beauty services but presently, there is equality among both the genders in visiting salons. Regarding men venturing into salons, Munish Bajaj, Director, Tress Lounge says, “A look at our salon will clear all doubts regarding gender bias. There are about 60 per cent of men clients who avail beauty services of my brand.” Another key factor is emergence of many high-end branded salons. These beauty brands see India as a potential market for their beauty services and products. Celebrity advertising is yet another drawing factor for salon and beauty products. The anti-aging factor also boost the industry figures. Singh shares, “The anti-ageing industry is coming up rapidly and boosting the beauty sector too.”

Franchising scope

Franchising in beauty salons is quite a recent phenomenon. It is the most profitable as well as popular way for brand success, as it provides rapid yet reliable expansion. Moreover, there is a guaranteed standardisation in all outlets. Husain informs, “For us, franchising has been at the core of the success of our brand. Initially, our franchise system was not a consciously conceived idea or decision but later we realised that it offered distinct advantages in terms of business expansion and for spreading ayurvedic beauty care around the world.” Anuradha CH, Director, Anoo's, says, “As our business is capital intensive where expansion is a must on a regular basis, it is imperative to expand to other areas aggressively. Because of this reason, we adopted the franchise route.” Dr Blossom Kochhar, Founder and Chairperson, Blossom Kochhar Group, says, “We took the franchise route for expansion to reach out to everyone.” In words of Singh, “We have taken the franchise route for our salons and the academy as well. In January 2012, we will start franchise expansion of 'Perfect 10 Nail Salon.” The organised industry is growing at 30 per cent CAGR over the last four-year period, whereas the unorganised industry is growing at 10 per cent. For the beauty industry to grow rapidly in the organised sector, the model has to be franchised, says Kumaravel.

Regarding training and eligibility of franchisees, Bajaj mentions, “We have developed a complete training programme with the help of L'oreal brand. Training on each prospect of running a salon is provided to franchisee and his staff.” Husain states, “Franchisee has to complete our Beauty Diploma Course as well as an advanced course, in which the franchisee receives professional training in the specialised Shahnaz salon treatments as well as in the Shahnaz Husain products.” Kumaravel says, “Franchisee gets an opportunity to share our phenomenal success and valued services. We give a comprehensive package to the franchisee right from choosing the right place, right interiors and fit out, equipments and most importantly, providing well-trained staff to the salons. We train the franchisee in the nuances of the salon business as well and handhold them during first few months of inception of the salon.”

Spreading Wings

All beauty brands adopt the franchise route to expand rapidly and successfully. However, looking at the present expansion scenario, it can be seen that after targeting the main metros and tier I cities, these brands are now keen in opening up in smaller cities. This is due to the popularity of big salons in smaller cities. Briefing about her plans, Anuradha says, “We are planning to have a pan-India expansion through franchising in the future. We aim at opening around 23 outlets through franchising in the next few years.” Kochhar informs, “We are presently operating through 12 franchise outlets across the nation. Now, we are eyeing all the major metropolitan cities along with the various holiday resorts to increase our presence via franchising.” Singh shares, “We presently have 18 outlets, out of which 15 are franchised. We plan to have 50 centres by end of this year in north India, including smaller cities.”

Speed breakers

The beauty industry presents numerous advantages to both franchisors and franchisees. However, there are few hurdles in the success path. A beauty salon can undoubtedly enhance beauty but it can also prove hazardous if some product reacts negatively on the client. Therefore, the franchisor has to be extremely careful while recruiting franchisees. Husain said, “The main challenge faced by the franchisee is to live up to an established brand name. Being part of a world renowned chain has its advantages but it also has responsibilities. Each franchisee has to ensure that the brand name is not devalued.” Regarding challenges, Singh states, “Maintaining excellent manpower in beauty sector is the main challenge. Franchising is easy but to maintain the same quality across the franchises is challenge. Moreover, now it is seen that many entrepreneurs without any prior experience in beauty are entering into the field. This also sets a big hurdle for the industry as a whole.” To overcome all such challenges, it is important that all franchisees operate in accordance with principles and standards set by franchisors. It is the franchisee's duty to build up a client base, pay a great deal of attention to client handling and building up goodwill.

To conclude, it can be said that the beauty industry is highly lucrative and has a lot of options for potential entrepreneurs. However, it is imperative to have passion for beauty as well as for business to taste success.

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The beauty industry has always been at the forefront as far as franchising is concern. The only change that is being witnessed now is diversification. Big brands are expanding into wider segments to expand consumer base. What will they gain and lose, let's see

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