The Nailco Group:
Keeping Pace With Industry Growth
by Judie Bizzozero
Since adding indoor tanning to its product mix in 1990, the Farmington Hills, Mich.-based distributor keeps a close eye on the industry, adjusting to trends and having the foresight to offer innovative programs to salons
Strategies For Growth
According to company president Larry Gaynor, the key to success is understanding the indoor tanning industry. "Since we started with tanning in 1990, The Nailco Group has created programs strictly for the indoor tanning industry," he says. "We provide salon owners with a program that includes competitive pricing, co-op advertising, delivery, rebates and much more.
"Over the past 10 years, the tanning industry has really evolved--it's expanded like crazy and contracted like crazy. Now, the industry is poised for another explosive growth spurt."
The Nailco Group's tanning business has maintained a steady growth each year over the last decade, and Gaynor forecasts his 2001 business to grow by 25 percent to 50 percent. However, no company can survive growth without proper planning.
In January, The Nailco Group added 13,000 square feet to its corporate headquarters and expanded a number of key departments, bringing its total size to an impressive 115,000 square feet. With more than 275 employees all committed to providing the best customer service in the industry, the company has established diverse divisions catering to salon's individual needs.
Nailco's mail order and store division is called The Industry Source. Currently, there are five Industry Source stores in Michigan, with plans to open another six by the end of 2001. The company also has three remote distribution centers located in Los Angeles, Atlanta and Newark, N.J., which provide nationwide distribution of products.
"We constantly look for ways to save salon owners inventory space and cost," he says, noting that with the opening of the new distribution center in Newark 80 percent of the company's U.S. customers now can receive their orders in 48 hours or less.
"This brings home the concept of 'just in time inventory'," he says. "Salons don't need to keep thousands of dollars in product in their stock room when we can deliver it within days."
Nailco is driving home this concept by offering free shipping on orders of $99 or more. "We feel this is an excellent value to our customers and to our business," he adds.
The company's Web site, www.theindustrysource.com, is a worldwide source for professional beauty, nail, tanning and spa products. The site allows customers to browse product categories, place product orders, find out specials and research the various programs and incentives.
"We continue to have the No. 1 e-commerce Web site in the beauty industry," says Gaynor. "For 2001 we will be integrating our Web site to our database which will allow us to add a host of new features for our customers."
Some of those online features will include order history; quick order scheme, in which a customer's order will be placed in one minute or less; payment history account access; beautypoints Program history; and, a real-tie order status that shows what products are in stock and what products are back-ordered.
The company's thebeautybook delivers the most complete selection of nail, spa, hair, tanning and professional beauty products and offers more than 500 new products. The 344-page January-June 2001 edition features an expanded personalized beautybook section devoted to all of a salon's personalized business, private labeling and logo needs.
One of the hottest subjects these days is private labeling-a subject The Nailco Group takes a step further with its Retail Branding Division.
"It's really exciting because we can private label on more than 1,000 products," says Gaynor. "The division can provide salons with all types of merchandise--from silk screening and embroidery to logo creation, business cards and letterhead. It's enhanced marketing to the tee."
A contributing factor to the company's success is its dedication to industry education. Nailco provides salons and salon employees with a multitude of education options, including telephone training, one-on-one training and group seminars.
"We expect the salons to know everything about the various brands they are selling," he says. "We help them learn how to sell the product to the consumer, how to manage their inventory and how to make the most profit they can. It's as simple as that."
Over the years, Gaynor has found that salons that focus on one to three lotion brands tend to retail more product and have a higher customer satisfaction rate than those salons that stock every lotion brand under the sun.
"That is why we've been very selective in the lotion lines we carry this year," he says. "A few years ago we featured nearly 30 different brands; this year we feature about 10."
Gaynor's belief in offering lotion brands from companies committed to the industry is unwavering. "I'm proud to say we offer products from
Supre, MOST Products, Body Invest, John Abaté International, Hoss Sauce, all of ETS' and California Tan's branded suncare lines," he says. "We feel these companies will generate at least 90 percent of the overall lotion business in 2001."
 Company president Larry Gaynor cuts the ribbon to add 13,000 more square feet to the corporate headquarters in January. |
The company also offers its beautypoints Program, which allows members to earn one beautypoint for every dollar they spend with the Industry Source. Salons receive rewards based on their level of purchases.
Nailco also is working with manufacturers and implementing a salon rebate program in an effort to curb the discounting issue.
"Our policy is not to be undersold, but we are focusing on providing a maximum profit to the salons," he says. "Service and education will generate more profits for salons than pure discounting. With a quality rebate program, salons will be credited 50 cents or $1 for every bottle they sell. By the end of the season if they sell 5,000 bottles, they can get back a substantial rebate check, and that is money in their pockets."
Another area experiencing phenomenal growth is its Salon Spa Design Division. Although originally not tanning oriented, the division is seeing more and more tanning salons opening with a spa concept. The vertically integrated design division offers every service from A to Z. In fact, it is so popular that there is a four-month backlog in projects, and the division has expanded three times since its inception only three years ago.
"We supply the design, the AutoCAD, the blueprints and more. It's a complete turnkey service, and salons love it," says Gaynor. "We've really noticed a large increase in interest from tanning salons, and that speaks volumes about the type of owner getting into the business."
He notes that the division is considered to be one of the premiere design companies in the industry, adding that the company designed the Marshall Field Salon in Chicago, which is the largest salon in the country.
The Future
Investing more than $5 million this year just on the company's infrastructure, The Nailco Group and all its divisions are committed to providing customers with the highest-quality products while offering the best service possible.
Looking toward the future, the company has everything a salon owner needs under its corporate umbrella and is strengthening its programs to maintain its continued success.
