“It feels like it’s getting harder to make money from the retail side of my salon. What are your tips for turning products into profits?”
PHIL SAYS:
“Ah, products. This is a subject close to my heart. Having launched my own ranges and worked on the development of global brands, I’m passionate about every drop of knowledge that goes into a successful haircare range. When it comes to selling products in your salon, it’s an essential way to boost your bottom line. A healthy turnover percentage should be around 10 per cent, which is going to amount to 10 percent profit. In some cases that I’ve seen, this can be up to 20 to 30 per cent of your overall profits. Especially in these tough times, selling products effectively can be the key to your survival.
Of course, the world has changed and now, with an estimated one in every five pounds being spent online, it is admittedly becoming harder to ring those sales through your till. But remember, there are still just as many products being sold – just in different ways. It’s time to get smart if you want to protect your retail income.
PURCHASE PRODUCTS YOU BELIEVE IN
My first piece of advice is that you MUST stock products you believe in. Not only that, the brand or brands you select should align with your style and vision.
Be honest with yourself about where your salon sits – top end or mass market. There’s no point charging £30 for a haircut and £20 for a shampoo; your clients just won’t buy it.
With so much choice out there, it’s important to be choosy about getting the right products and negotiating the best deals on them.
Work out what you think the threshold is that your client will spend and then… Do your research! I’d aim for a mix of up to half a dozen brands. Every different choice is a new opportunity to win your client over.
NEGOTIATE THE BEST TERMS
When you’ve narrowed down your favourite ranges, target those manufacturers and see what they can do. You’re the customer here and there is plenty of competition, so don’t just take the first deal you’re offered. Once you’ve struck a deal, it’s important to go back annually and re-negotiate – just like you would with a rent review. For instance, do they offer performance-related retro payments? This way, the more you sell, the more you’ll get back.
SHOWCASE PRODUCTS TO THEIR BEST POTENTIAL
Yes, you should be creating a great visual display. Make sure your products are clearly labelled and priced, dusted, aligned, facing forwards and immaculately presented in every way. But that’s just the start of it.
You can’t sell what you don’t know, so make sure your team is acquainted with every product in every range. That way, they can be using them, talking about them and your clients will experience new products at every touchpoint. ‘Try before you buy’ is still the most convincing way to sell anything. Introduce a product of the week and seek out the hero product in each range that you know you can sell over and over again.
INCENTIVISE SALES
There are two parts to this – you need to incentivise your clients to buy and also your team to sell. The best way to compete with online sales is to steal some of their strategies.
Go hard on your promotions. Consumers have gone mad for ‘three for two’, ‘buy one get one free’ or any chance to get more for their money. Monitor what your main online competition is doing and get your suppliers on board to help you match it. If manufacturers are supporting promotions for other retail outlets, they should be doing it for you too. Bargain hard!
I incentivise my team with 25 per cent of every sale. In my experience, people won’t bother to sell something for nothing. Retail commission is a healthy boost to anyone’s salary and can really start to add up. Give the team knowledge of what you stock and make it worth their while to rave about it.
CONTROL YOUR STOCK
Holding a vast amount of stock is a false economy. If you have 500 products on your shelves that will take three months to sell, that is a big waste of cash. Only have what you can display and make sure you have a deal with your supplier where you can replenish regularly.
For slower moving lines, set up longer payment terms so that you have the money in the till before you have to pay out. Also, set up a rigorous stock control system. Every item needs to be accounted for and rung through the till when it’s sold. Keep a close eye on high ticket items like electricals.
Remember, retail is all part of a successful salon business. Get it right and you’ll be boosting your cashflow in no time.
