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Nov, 03 2012

GARNERING GREEN PROFITS IN BEAUTY BIZ

‘An absolute win- win situation will make a successful franchise relationship’ is what these beauty brands from the house of Cavinkare believes in. Green Trends and Limelite are two successful salon chain brands that have made a mark down South.

 

WITH over 50 successful company owned salons and 50 operational franchise format salons. These brands are all equipped and promised to garner profits in the organised beauty space pan India.

Health and beauty has become the fourth most significant element, besides roti, kapda and makaaan, for survival. Health and beauty conscious Indians are ready to sacrifice anything but not their regular beauty treatment. In India, the current size of the beauty industry is Rs 6,900 crore, of which the organised segment comprises only 22%, which means another 78% is unorganised. So there is a great potential in the market. Looking at the scenario of increasing demand, changing lifestyle of people in general, a visionary. C.K Ranganathan established his pioneering footprints in the organised salon space way back in 2000.

 

In the national and international space , C.K Ranganathan is known for his innovative and differentiated product offerings, challenging the multinationals in the FMCG space. He started his entrepreneurial journey with “Chik India” and with an initial starting investment of Rs 15, 000.The company now rechristened as 'Cavinkare', proudly owns and markets more than 15 popular brands across personal care, Home care, Food and Beverage categories  viz. Chik, Nyle, Spinz, Fairever, Meera, Cavins Milk, Garden snacks , etc., both in the domestic and international markets, recording an annual Group turnover of Rs. 1,100 crore in the financial year end 2011-12.

Understanding the different orientation and needs of products and service business, Cavinkare spun off a separate company “Trends In Vogue” to handle the retail salon space. Gopalakrishnan, Current Business Head was the same person involved in the pilot study and experimentation of the initial salon models. The initial setup was a men's salon which came under the name “Greenie” focusing primarily on hygiene and professionalism in service delivery .Constant encouragement from the existing customers enabled the company to open a women's exclusive salon which again was a raving success . With continued success from both these formats, there was a constant customer need to open a salon catering to the needs of everyone in the family. Exploring the opportunities, and finding the unisex concepts acceptable to only a small  portion of the society, the unisex salon concept was rediscovered as a “family salon” with separate gents, ladies and Kids section with a common reception area with the much desired privacy. This concept became a raving success story in the salon arena, encouraging expansion to other cities in the south.  Now understanding the changing needs after completing more than a decade in the beauty business, the brand now has repositioned itself as “Hair and style salon” to cater to the needs of the customers and its operational expertise.

Parallelly, understanding the salon business and requirements of the higher strata, a lifestyle Unisex salon brand 'Limelite' was launched .This was the first unisex salon with well equipped day spa facilities .Soon Limelite established presence in Chennai , Bangalore and Delhi .

Now Trends in Vogue's specialist brands Limelite and Green Trends address to different societal strata with clear-cut focus on providing personal styling and beauty solutions to everyone in the family.

 

Spread through the beauty of franchising
When asked about choosing the franchise route, C K Ranganathan, Chairman & Managing Director, Cavinkare Pvt Ltd, says: “Yes, franchising is the right option for the salon business to grow. With over a decade of our experience we have distilled the best process and procedures for customer handling, employee handling, day to day salon operations to suit the Indian salon space; another element for a winning note is a constant and genuine empathy towards employees and customers, which we feel service oriented entrepreneurs can be trained to provide. Green trends stepped into the pool of franchising in 2010 and now have 50 operational salons with 50 more to commence operations by the end of this fiscal year.

“Whether a potential franchisee is keen to participate with Green Trends or Limelite, we have an exhaustive list of parameters of the applicant to evaluate them thoroughly. In a nutshell, we look for people with passion, money, business acumen, and educational background. Our process of recruiting franchisees is procedural and well defined. We don't give a franchise if the aspiring franchisee doesn't meet the criteria. We verify the aspirant's background and his stability record in whatever he has done so far and try to ascertain his involvement and commitment to run this business,” says Gopalakrishnan, Business Head.

Green growth via franchising
“To establish presence in newer markets, we have planned in the beginning to open a minimum of three company-owned salons in unrepresented areas to have the brand's presence, and open the market for the franchisees to have a look and feel before starting the business. Looking at continued expansion and consolidation phases, I see an opportunity for 1000 salons in India in the next 5 years. Understanding the needs and demands of consumers and regions, we are exploring newer brands as well. Presently, we have substantial presence in the South, and now we are climbing the ladder of growth by penetrating the North, West and Eastern markets at a rapid pace. We are seeking people who can invest and get involved in this highly profitable business,” says  Gopalakrishnan

 

Rock-solid support system
To partner with the brand, a franchisee requires 1,200-1,500 sq ft of space, along with an investment of Rs 30-40 lakh, which includes the rental for the space, staff training cost and the cost of equipment required.

The importance of training and support in a franchise system is commensurate with a franchise agreement. This is so because a franchisee needs handholding to achieve good results. The brand begins its support with an induction programme named as “Naya Prayas” meaning a new project, which is a project guidance programme. After the property for the project is selected, they conduct the “Happy Franchisee” induction programme which helps the franchisees understand the brand and the business. “We induct the franchisees based on the values and ethics of our organisation. Knowledge of HR practices and IT-related training is also imparted which enables the franchise partners to use our in-house software. Besides, the franchisees receive support in building franchise relationship, for skill training, sales, marketing, finance and statutory requirements,” says Chackochen Mathai, GM, Business Development, Trends In Vogue Pvt Ltd.

The franchisee can organize local marketing campaigns within his permitted area. In fact, if the marketing idea of the franchisee is a good one, the same will be utilised across the network.

Each member of the technical staff is trained by their in-house training and development school “Trends Academy” before deploying them in the salon. Trends academy has trained more than 5000 stylists till date.

As every coin has two sides, every business model too has its pros and cons. The beauty industry has its own challenges. Says Gopalakrishnan: “These days the biggest challenge is to find and retain skilled employees. This is a global issue and we are equipped to address this with our in-house training school. Trends Academy will continue to train the new recruits for all the existing and new salons and continue to upgrade the talent of all existing stylists. As industry leaders, we have been successfully addressing this problem.” To maintain consistency in services across all salons, they have put in place standard operating procedure for every service and this procedure is strictly to be adhered. They also conduct periodical internal audits and review mechanism on the service levels adhered to by every salon.

“Their credibility comes from their values, win-win attitude, professional business development capabilities and delivering exceptional customer service. I am very pleased with their deep commitment to practice successful business practices from other industries in terms of customer orientation, employee motivation and organisational development activities” says Venkat Changavalli Former, CEO, EMRI (108 Service)

Looking at the opportunity Green Trends and Limelite offer, it is the right time for franchisees seeking to invest in the beauty industry, to beautify the benefits by partnering with these trusted industry giants.

 

Franchise facts

Investment: Rs 30-35 lakh

ROI: 30-36 months

Working capital: Rs 3.5-4 lakh

Payback period: 36 months

Marketing cost (% of sales): 3-5% of the turnover

Area: 1,200-1,400 sq ft

 

BEAUTY BYTES

How did he climb the ladder of success? CavinKare group czar, C K Ranganathan, Chairman & Managing Director, CavinKare Pvt Ltd, talks in detail about his entrepreneurial journey and his plans for the future.

 

According to you, what does it take to be a successful franchisor?
The franchisor should work towards the franchisees' success. Making them achieve a profitable business should be the only goal. Addressing the concerns of a franchisee, creating the right environment to have a cordial relationship with them, will stand the test of the toughest time in the business. The franchisee is a partner who takes the brand to the local market; mutual respect is the key to a successful relationship.

 

What kind of innovation and research were involved in launching this concept?
I visited various salons and found what was missing and we also did surveys with consumers and found their requirements. Then we decided to launch the brand. We strongly believe in working closely with the consumers and a constant feedback from a focused group is taken to understand consumer psychology at different stages and work on the same to give the best services at all our outlets.

 

Discuss in brief your entrepreneurial journey.
I started CavinKare with Rs 15,000 about 30 years ago. Today we are a Rs 1,200-cr organisation with over 4000 employees. Being an FMCG company, we innovated and brought many new cosmetic products to the market. The idea of salon business came in my mind, when I understood the professional and hygienic grooming services at salons, which were catering to the higher strata of the society. I still recollect pedicures and manicures were terms understood by a few in the society those days. That’s when I realised the potential and the huge opportunity which exists in the unorganised beauty space and with focus on our core services, we further extended our services to indulgence and styling services; then constantly upgraded all value adding customer requisites like ambience, facilities and in salon entertainment.

FRANCHISEE SPEAK

According to you, what does it take to be a successful franchisor?
The franchisor should work towards the franchisees' success. Making them achieve a profitable business should be the only goal. Addressing the concerns of a franchisee, creating the right environment to have a cordial relationship with them, will stand the test of the toughest time in the business. The franchisee is a partner who takes the brand to the local market; mutual respect is the key to a successful relationship.

 

What kind of innovation and research were involved in launching this concept?
I visited various salons and found what was missing and we also did surveys with consumers and found their requirements. Then we decided to launch the brand. We strongly believe in working closely with the consumers and a constant feedback from a focused group is taken to understand consumer psychology at different stages and work on the same to give the best services at all our outlets.

 

Discuss in brief your entrepreneurial journey.
I started CavinKare with Rs 15,000 about 30 years ago. Today we are a Rs 1,200-cr organisation with over 4000 employees. Being an FMCG company, we innovated and brought many new cosmetic products to the market. The idea of salon business came in my mind, when I understood the professional and hygienic grooming services at salons, which were catering to the higher strata of the society. I still recollect pedicures and manicures were terms understood by a few in the society those days. That’s when I realised the potential and the huge opportunity which exists in the unorganised beauty space and with focus on our core services, we further extended our services to indulgence and styling services; then constantly upgraded all value adding customer requisites like ambience, facilities and in salon entertainment.

 

List of Awards achieved by Green Trends

Asia Retail Excellence Awards

Category: Retailer of the year - Beauty, Wellness and Fitness

20th July 2012, Park Royal, Singapore

Organisers: CMO Asia

Asian Retail Leadership Awards

Category: Retailer of the year – Beauty, Wellness and Fitness

25th September 2012, Taj Palace, Dubai

Organisers: Asian Confederation of Business

Business & Service Excellence Award for South India

Category: Most Promising Beauty Salon Brand in Tamilnadu

13th October 2012, Lalit Ashok, Bangalore

Organisers: Big Research India.

Best HR Practice Award for the year 2011 by World HRD Congress

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