Lights out on 160 salons. Are you next?
July 18th, 2008 • Posted by Seth Gardenswartz • Permalink
Regis, which operates salons under such brands as Supercuts, MasterCuts, Regis Salons, Sassoon Salon, SmartStyle, Cost Cutters, Trade Secret, PureBeauty, BeautyFirst and Hair Club for Men and Women, will be closing 160 of its salons by the end of the year. They are big and smart but had to make the tough decision to shrink rather than die.
Why did this happen?
In a nutshell, they commodified their brand, in part by being successful with their core concept. Supercuts is a basic hair cut place where most of us can expect a reasonably priced mediocre haircut that will reflect the current decade but not today's cutting (pardon me for punning) edge of cosmetology. It is a great concept and one almost everyone within 25 miles of a grocery-anchored shopping center knows. So with that success they built or acquired all those other concepts and leased space in every strip mall across America. Picture the Safeway-anchored center with a Supercuts on one corner across the street from the Kroger-anchored center with a MasterCuts. Sound like another iconic retail brand forced to announce store closures? Hint-it rhymes with "woodchucks."
Part of this occupy-every-corner strategy was to keep out competition but in the end both concepts lost their brand identity. Many of the Regis concepts are so similar most clients can't tell the difference. I occasionally go in one (to get my kid's hair cut or if I missed my appointment and am looking like "Shaggy" of Scooby Doo fame). For the most part they have incrementally distinguished concepts and seem to draw from the same pool of recent cosmetology school graduates. Consequently there is nothing special or unique about each brand.
The other big problem was over expansion. Both Regis and Starbucks are public companies who have to answer to shareholders. Both showed good growth until recently and had a stock price that reflected not how much the company is making now but, how much it will make based on forecasted growth. Basically they had to open lots of new stores to make their forecast numbers work. But, guess what? The more stores you open, the fewer really good locations you have to go into. So what do you do? Lower your standards of course! You take a couple hundred A- or B+ or B- locations along the way to meet the expectations of your shareholders. The problem is those locations don't meet the expectations of your customers and those stores underperform. That underperformance is a problem but is a harbinger of an even bigger issue–they degrade the brand.
Starbucks wound up competing with basic burger-and-fries fast food places for locations in order to meet their growth projections. Ten years ago the Starbucks brand was cool and sophisticated and stood for quality and a unique experience. Now, two blocks from my office, they share a pad site with a Carl's Jr. Don't get me wrong, I'm glad they are here, and I like to drive through on my way to the office or on the way to an appointment, but if I want an experience and a really great cup of coffee, I go to the Grove, Satellite or one of the other local places who have built their brands on that kind of experience for people like me.
Did you catch that segue on why this is all good for most folks reading this blog? Think about it this way–many spas report their business is down about 20% (except for gifts). So assuming most spas and salons did not have 20% extra to being with, one in five is in danger of closing. Most of you reading this blog have better information about your local markets and your customers, information that you can and should use as you adjust to an ever-changing marketplace. Your advantage (aside from SpaBoom)? You not only know the market but you can react faster. Don't compromise your brand into a commodity that can be replaced or substituted. Be something unique and irreplaceable to your clients.
July 19th, 2008 at 12:24 am
Seth, why do you get your haircuts at Supercuts? or your kids?!?
July 21st, 2008 at 6:39 am
This article makes me wonder if we will see this same thing happen to Massage Envy as they continue to open up "clinics" in every neighborhood in town. ME big problem is the low pay ensures they mostly get mediocre massage therapists, with a smattering of good ones who will stay there for the money. There has been such a negative response from massage clients in my town, that the ME concept is now being copied by a man who owns 100s of tanning salons around the country. He's calling it Massage Luxe and his model will offer 3 levels of skilled therapist to choose from at 3 different price levels. Sort of like hair salons that offer junior and senior stylists at different price levels. It's supposed to be a step up in quality from Massage Envy, but from therapists I know who have already worked there, the office/desk staff are young "tanning type gals" who are not trained in the nuances of the massage world. Oh well, I guess it is all inevitable — like Starbucks, Blockbuster, Netflix, and all the other cookie-cutter chains… some are good, some are not. But the big difference is most big chains are selling products, commodities, like videos, food, drink… massage and spas are mostly selling the hard, skilled labor of human beings and yet they treat the humans like commodities on the shelf…
July 23rd, 2008 at 1:01 pm
OK, Pamela, perhaps I have over shared. I generally visit a lovely independent cosmetologist who has been cutting my hair since high school. When she is booked (generally 6 weeks out) or I am in a pinch, I go to a great salon here in town who with several locations. However, if I'm having a "hair emergency," I have to do desperate things. Save me! Anyone who was in Scottsdale this weekend is welcome to vote on whether it was better to wait or take what I could get. I waited rather than subject myself to the unknown.
November 23rd, 2008 at 1:55 pm
The problem is not only mass expansion with Regis, but the inexperienced underpaid managers that run these salons multi division wide.
These salons are filthy, not to state board standard and hire Just out of beauty school graduates. Regis Corp is the Wallmart of hair salons.
Trade Secret has Phantom salons (salons with no stylists at all) Customer service is not a priority..