January 2009

Retail Matters

by Gordon Miller, Executive Director, National Cosmetology Association

As the saying goes, “Numbers don’t lie.” And with retail sales hovering at under seven percent of salon sales industry wide, the truth is that retail remains the great untapped profit stream for most salons.

Importantly, retail might hold the key to meeting the challenges of the very real economic crisis at hand.

Although there are many differences between successful salons and the rest, it’s hard to find a salon with a healthy bottom line that does not have a strong retail program. So what’s holding us back? Success is all about making the right choices. Here are ten reasons to choose retail:


Top 10 Reasons to Be Serious About Retail

1. Successful salons retail. Retail is one of the big success drivers for leading salons.

2. Clients like retail. A recent study showed that 78 percent of clients would buy products recommended by their stylist.

3. High profit margins. With an average gross margin of 50 percent, a properly managed retail program can be highly profitable. At 240 days a year of operation, an increase of just $50 per day in retail sales translates into $12,000 in annual sales; $200 per day in new sales brings in $48,000.

4. Increased client retention. Retail creates another point of connection with clients and encourages client loyalty.

5. Employee benefits. Retail profits are often used to provide benefits such as vacation and sick pay, health insurance and bonuses for performance.

6. Staff training programs. A strong retail program brings high-quality manufacturer-supported education to your staff to keep them up with the latest trends and techniques.

7. Increased staff retention. It’s been proven repeatedly: Staff retention is higher in salons that offer employee benefits and education. Retail holds the key to both.

8. Better cash flow. A strong retail program adds cash to your bank account, which provides a financial cushion during challenging times.

9. Enhanced salon image. Leading brands bring with them the image they have created through marketing to consumers. That image rubs off on your salon in the mind of consumers.

10. Builds a winning culture. Success breeds success. The stronger your retail program, the stronger every part of your salon will be.

Experience tells us that building a successful retail program is all about choice. You can choose to lose the opportunity to grow your business by not focusing on retail or you can choose to succeed.

You can choose to be “diverted” by product diversion or you can focus on the power of retail to transform salons by creating both wealth and opportunity for increased education, staff retention, client loyalty and personal gain.

The National Cosmetology Association plans to launch an industry-wide campaign that will show how service and retail go together to help create a stronger, more professional industry. This new program will include:

1. An industry-wide marketing campaign promoting the value of retail to salon owners and professionals, promoting economic empowerment through increased profitability.

It will consist of a significant print and online presence focused on inspiring salons to use growth in retail as a key to beating the recession and building long-term success.

In addition, each month we will feature a case study, benchmarking information and step-by-step, easy-to-implement guidance on creating a simple yet successful long term retail program.

2. A grassroots salon retailers network promoting role models to inspire success among their peers.

To do this, we must recognize levels of retail expertise and focus, so that salons, regardless of size or experience, can be part of a nationwide program with which they can relate and grow. Our goal is to support incremental growth in a way that serves the needs of salons and professionals at various levels of experience and commitment.

3. A robust online repository of easy to use proven tools, benchmarks and best practice systems to help build retail success.

Built with input from the best retailing minds the industry has to offer, we will use the internet to further push out a strong, ongoing message of economic empowerment rooted in strong retails sales, inclusive of a variety of forums for engagement, feedback and support.

4. A grassroots support system of education, inspiration and motivation using existing industry events to help create and sustain momentum.

Through a series of live workshops, panels and case studies directly connected to print and online resources, we’ll bring to life the power of retail profits to change salons for the better.

This spring, the NCA will launch this important initiative to help grow our industry. Stay tuned to this column for updates.

The National Cosmetology Association is the largest organization of salon professionals in the world. Its mission, since its inception in 1921, has been and continues to be to ensure that working salon professionals have the tools and resources available to create career success with integrity. For more information on the NCA, visit www.ncacares.org or call 312-527-6765.