Nivedita Jayaram Pawar
Back in 1997, ‘unisex’ was a word you only whispered; the metrosexual was yet to be born; and the wellness industry was still a niche market. Confess to visiting a unisex salon and you had to brace yourself for a few awkward glances.
But Vikram Bhatt was not deterred. With a B-school background, the young entrepreneur realised he could turn this ‘awkwardness’ into an opportunity. Thus, with an initial investment of Rs 6 lakh from his personal savings, Bhatt launched Enrich, the first unisex salon in Mumbai, in a 270-sq ft space in Mulund.
It’s been a phenomenal journey from opening the Mulund salon to operating 50 salons across metros – 35 in Mumbai, 7 in Ahmedabad, 6 in Pune and 1 in Bangalore. A first-mover in this domain, Enrich was quick to establish standards and processes, which is what kept it ahead of the game.
1. Rate Card: The salon offered a range of beauty and wellness therapies along with a rate card, which was unheard of at the time. “We wanted to be very transparent and it helped that we were not from the industry as we were able to think differently,” explains Bhatt.
2. Loyalty Programme: Next was a loyalty programme. “Our focus was to make 75-100 members a month and we used strip advertisements on cable television to promote Enrich. We also tied up with a social circle called Ekta Group,” he reveals. Bhatt claims around 1 lakh members have signed up for the company’s loyalty programme.
3. Salon Manager: The third innovation was the introduction of a salon manager, who became a bridge between client and therapist, again something that was unheard of back then.
These out-of-the box ideas paid rich dividends and Bhatt claims the Mulund salon broke even in three months.
Founder: Vikram Bhatt
Launch date: October 1997
Business model: Company owned stores
Initial investment: Rs 600000
Average investment in a store: Rs 50-70 lakhs
Break even period: 9-12 months
Average ticket size: Rs 700-800.
Average foot fall: 40-50 people on week day's and around 100 on weekends.
Attrition rate: 30-40 per cent
Chopping & Changing
Two years later, Enrich opened it second salon, in Chembur, but it was the third outlet, at Irla in Vile Parle, that presented a challenge. “Irla was a different ball game as there were two to three established players already operating there. It was a mature market,” remembers Bhatt.
With business slack and the Irla salon on the verge of closing, Bhatt went back to the drawing board. “We got a floor manager and concentrated on training our staff. I realised you can’t open a salon and wait for clients to come in. You have to go to them. So we tied up with a few well-established retail outlets in the locality, where we gave away complimentary service vouchers designed like an invitation. The ‘no conditions applied’ line worked and business picked up,” he says.
Enrich also tied up with the L’Oreal Group, which offered the salon incentives on achieving sales targets. L’Oreal, in turn, trained the Enrich staff, which raised their knowledge and service standards exponentially. “Today, Enrich Salons owns a 7,000-sq ft training facility in Bandra to train our staff in technical areas as well as soft skills,” says a proud Bhatt.
The average size of an Enrich salon is 1,000 sq ft with a staff strength of 20. Each outlet requires an investment of Rs 50-70 lakh. “We reserve a timeline of 9-12 months to break even,” reveals Bhatt, who adds that the capital for company’s expansion has come solely from its profits.
He says 50 per cent of business comes from hair, 30 per cent from skin, 15 per cent from product sales and the remaining 5 per cent from the membership fee paid by customers who sign up for the company’s loyalty programme. Looked at another way, the loyalty programme accounts for 80 per cent of the company’s revenue. “Our average ticket size is Rs 700-800 and average footfalls are 40-50 on weekdays and 100 on weekends.”
All Enrich salons are owned and managed by the parent company. “The problem with the franchise model is the danger that a bad franchise store may affect the brand image in the long run,” reasons Bhatt.
1. Control Costs: Although the wellness industry in India is growing at 35-45 per cent, high rentals and people costs are taking a toll on operators. “The costs to generate Rs 100 in revenue have gone up 30-50 per cent. This puts considerable pressure on profit margins. If you can control your costs, profits will come easily,” believes Bhatt.
2. Scale Up Quickly: The longer you take to scale up, higher is the costs. “The kind of margins that existed earlier are lost today.”
3. Hooking Clients: The toughest thing in the service industry is to get the client in for the first time. Once that happens, the rest depends on the service and pricing, Bhatt points out.
4. Tracking Business: Using special software, Enrich constantly tracks its customers to understand the services they find attractive, frequency of visits, services that are becoming stagnant, customer profile, etc.
5. Customisation: When footfalls at its new salon at JVLR, Mumbai, were marred by parking issues, Enrich offered to pick up and drop its customers. “All the customer had to do was call us. This worked well and the salon picked up, claims Bhatt.
Enrich has witnessed a gradual shift in its customer profile. Whereas 70 per cent of customers were once women, the sex ratio is beginning to balance out. Customers are also getting younger. “In the last 4-5 years, there has been a sudden spurt in 25-year-olds visiting our salons for grooming services in the range of Rs 2,000-3,000. Surprisingly, even college students have started spending small amounts at salons,” says Bhatt.
The size of the Indian hair and beauty market is around Rs 2,000 crore. Higher disposable income coupled with a need to look good is expected to double the figure in 5 years. “We’re looking pretty good to take on that market”, smiles Bhatt.
Currently our Loyalty Program has close to 1,00,000 plus members and generates about 80 per cent of the current revenue of the company and the membership fee forms 4 per cent of the total revenues of the company,” explains Vikram.
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