Effective Retailing Strategies:
A Guide to Greater Salon Profits
by David Landau, ETS, Inc. Contributions by Leslie Hartieb, ETS, Inc.
Chief among the many challenges salon owners and managers face today is how to establish and maintain an effective strategy for their salon's retail products.
Ideally, a retail strategy should be determined prior to opening your salon's doors during the creation of its business plan. Non-tanning services, such as lotions, moisturizers, apparel, protective eyewear and sunglasses, have continued to become a larger share of a salon's income, and more attention should be given to retail items to ensure your salon's profitability, as well as to help create a total salon environment for your clients.
Understand your Client Needs
The most important aspect for a salon owner or manager to remember is to deliver to the customer a complete package in terms of meeting his or her unique tanning needs. Ask your customers the right questions to determine what lotions or gels are appropriate to their skin type and what their tanning expectations are.
Offer a range of tanning products that will have a wide appeal with your clients, and be sure to train your staff well so they can explain the features, advantages and benefits of all your products. Additionally, it is a good idea to offer other skincare products such as moisturizers, that will help your clients maintain the health of their skin and enhance and extend the glow of their tans.
Have an Effective Layout
In designing the layout of a new salon, review the reception area to ensure that merchandise can be placed between the front door and the reception counter. A common practice is to place displays and their products behind the counter because this pushes the counter further out into the room and displays products that are not accessible to the clients.
Except for more expensive, high-end products, behind-the-counter displays are not a good retail location. The area behind the counter should be large enough to accommodate only employees. The wall behind the counter is a great place for posters, mandatory warning signs and "Do you have your tanning lotion with you?" signage for added sales opportunities.
The purpose of eye-level, touchable merchandise between the front door and the counter is to attract attention from clients entering the salon and exiting the salon as well as while they are waiting for their session.
The time your clients spend waiting for their sessions can be valuable selling time, so be sure to evaluate your seating area. During your peak season, is there enough seating for everyone? If so, decrease some of your seating and add more retail space. The objective is to get your customers to look at and buy your merchandise while they are waiting for their session.
Your salon layout should place seating adjacent to merchandise shelves so clients are encouraged to touch, browse, smell lotions, look at apparel and read product labels. Hopefully, this tactic will result in an increase in purchases. This is definitely more effective than having your customers merely sit, pick up a magazine and wait for their session.
The Challenge Facing New Salons
New salons should make it a goal to have full shelves of retail products. Do your homework on lotion suppliers prior to opening your doors. Explain to them that you are opening a new business and ask for free samples and posters. Look for company representatives that are easy to access, have extensive product knowledge and take an interest in educating you. New salons generally should not carry more than three to four different lotion lines so as not to confuse new staff.
New salons should have a retail goal of at least 30 percent of their gross sales. This is very realistic, particularly if you plan ahead with a retail-savvy layout, educate your staff on products and services and keep display shelves well-stocked. For an existing salon with an effective layout, marketing plan and pricing strategy, it is recommended that 50 percent of gross should come from retail sales.
The amount of seating vs. retail space in a new salon will be hard to determine at first. In many cases, start-up costs will preclude a large inventory investment prior to the first sale. Ask the bank or lease company providing financing for equipment or lease-hold improvement if inventories can be financed in the initial transaction. This usually will apply only to a one-time inventory purchase; however, it can make filling your shelves much easier the first time.
Additionally, be aware of any other costs that can be financed prior to finalizing the loan or lease. These costs include transformers, remote timers, cable assemblies and computer hardware and software. Don't let these types of expenses cause your initial inventory budget to shrink. Find out if the company you are buying your products from can offer you terms. If it can, this will translate into money in your bank account before you actually have to pay for your products because you will be selling product and generating revenue before you will be required to pay your supplier.
Set Goals and Offer Commissions
Sales goals should be established for the salon by month and employee. Break the goal up into weekly and daily amounts. As with any sales goal, the numbers should be reviewed in a salon staff meeting. Review how the goal was reached, why lotions sales are important to the salon, how customers benefit from the right lotion advice and how being an expert builds client confidence (resulting in increased sales) and referrals.
Setting realistic sales goals will require extensive review of sales figures by time of year, product and type. Use whatever data is available. If your record keeping is spotty, contact your suppliers for invoice copies to track purchases. This can be adjusted depending on what other retail items your salon carries. Remember, always make the goal percentage higher than your existing retail sales percentages.
Review session sales by month and week to establish trends in salon volume and then use the goal percentage to create monthly and weekly sales amounts. By reviewing this with your staff, your sales goals will make more sense and your staff will be more likely to "buy into" the program. Your staff also will have a better understanding of how lotion sales affect everyone's bottom line.
Despite the fact that less than 60 percent of tanning salons pay commissions to their staff based on sales, if you don't, you will continue to fight a losing battle in increasing retail sales.
If you are thinking of starting a commission program, start with offering $1 for every bottle of lotion sold. Sure, your gross profit margin will appear to shrink, but think how that commission will motivate your staff to sell more. Different commissions can be offered depending on the price of the lotion. However, starting with the $1 per bottle commission is easy to track.
Another type of commission is to offer bonuses to employees who meet their individual goals on a weekly basis. It is important to remember that bonuses don't have to come in the form of cash. Try offering preferential work schedules, restaurant or theater gift certificates or even your own products. Remember, if your staff uses what you sell, they can better describe the product and describe its features and benefits better to the clients.
Effective Staffing
For existing salons, if your reception area is not sales-oriented, change it. In order to sell lotions and other retail products, sales people are needed. Hire customer-oriented, outgoing staff members with a sales background and educate your existing staff on how to sell.
Just as important as staffing salespeople for the front of the salon, staff the back of the salon with someone who is dedicated to keeping the tanning equipment clean. By having an employee specifically focused on the tanning rooms, the "sanitized for your protection" bed signs will have real meaning and the front will have a salesperson present at all times, eliminating the risk of a missed retail opportunity.
The front of the salon may have a great retail layout, the staff sales-driven and knowledgeable and the overall atmosphere cheerful and bright; however, if the tanning rooms have dusty corners, lotion-stained walls and a bed with grimy acrylic, your clients may have second thoughts about returning.
It is important that your salon offer superior products, clean, state-of-the-art equipment and excellent customer service. However, by implementing an effective retail strategy, you are sure to have a thriving, healthy business that will keep your clients coming as well as attract new ones.
