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Kaya goes in for facelift

The hair and skin care services brand is trying hard to change consumer perceptions

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Preeti Khicha Bangalore
Last Updated : Jan 20 2013 | 2:56 AM IST

Kaya, the hair care and skin care services business of Marico (contributing seven per cent to the parent’s turnover of Rs 3,128 crore) has just undergone a face-lift. The change has been initiated at several levels. At the most visible level, Kaya will now have a new logo with the tagline ‘love what you see’. The new identity, which has been crafted after a period of nine years — the first since the brand was born — will span across all marketing efforts. In the second phase, the company will revamp the product packaging and invest in a new retail design.

The makeover is driven by Kaya’s attempt to change consumer perceptions. “Most people classify Kaya as a place to visit only when there is something wrong with their skin. We want to change that and showcase that even people with normal skin can visit for skin maintenance,” asserts Suvodeep Das, head (marketing), Kaya Skin Clinic. For this, in the last 18 months, the brand has introduced several enhancement solutions which are targeted at people who may not be dealing with a particular skin problem. The new retail environment, which will roll out in phases will also communicate this new change. “We want the environment to look less like a clinic and make it more interactive,” says Das.

It is no surprise that Kaya’s new focus is in response to increasing competition in the skincare market in India. In the last few years, Indians have been exposed to several premium skincare brands. From L’Oreal which brought the Kiehl's brand to India last year to brands like Shiseido, Clarins, Lancome which are increasing their footprint rapidly, Kaya has enough company. Add to that the growing chain of beauty parlours which are tying up with international brands to deliver high-end skincare services.

However Das believes Kaya’s business model is a differentiator by itself. “Being the only skincare chain in the country, we have an edge. A lot of product companies claim anti-aging products remove wrinkles, but that is not possible. We can do it through our services like injecting botox,” says Das. “We regularly invest in technology to ensure our services are top-of-the-line,” claims Das. “We have enough scale through our businesses in Middle East and India thus allowing us to invest in any new technology that comes into the market.”

While services, which rake in 80 per cent of sales, will continue to be the focus area, the company will not ignore product sales. The new retail design will merchandise products creatively to drive sales of products used during services. The company has also introduced seven products from the DermaRx portfolio, which have done fairly well in India. DermaRx (a Singapore based specialised skincare firm which the company acquired in 2010) products will also be rolled out in the Middle East. Analysts claim DermaRx has helped improve the profitability of Kaya as the profit margins are much higher.

Plans might be ambitious, but the Kaya business continues to be in the red. In 2010-11, losses at the PBT (profit before tax) level were Rs 2.3 crore. In fact, these would have been much higher (close to Rs 14 crore) if it wasn’t for the profit of Rs 11.7 crore contributed by Derma Rx. As analysts point out, the business is yet to break-even. However, Das remains upbeat and indicates that the business recorded a 16 per cent same-store sales growth across metros and tier -II towns. “This year we have a turnaround,” says Das, who agrees the business was affected by the economic downturn in the last couple of years where premium retail businesses were under pressure.

Kaya currently has 103 clinics in total, with 82 in India, 19 in the Middle East and 2 in Bangladesh. It also has 4 medi-spas in Singapore and Malaysia. While metros like Delhi, Mumbai and Bangalore continue to drive maximum sales for the brand, Das also believes towns deeper down hold promise.

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In response to analyst concerns about the recent shutdown of retail stores, Das explains. “We shut down six stores in the last 18 months but most of them were re-locations. For example, we had two stores in Powai (suburb of Mumbai) and merged it into one. This was for better utilisation of space and improve operating efficiency,” Besides clinics, the company will also retail through the 16 shop in shop counters at Lifestyle and online channels like Rediff.com.

As Kaya embarks on an expansion drive, it needs to pay attention to quality. As mouthshut.com, a user generated and consumer review website reveals, there are several negative comments surrounding the poor quality service in-store and nature of products and treatments. Das, is quick to counter and explains the ‘satisfaction levels’ as indicated through an in-house service quality tracking system high. “Every concern on an online forum is addressed and we ensure consumers are satisfied.” In fact, as Das reveals, all stores are company owned to ensure quality is not compromised.

“The other crib factor for consumers has been the high attrition rate of practitioners,” notes Swati Gupta, senior research analyst (institutional clients), AC Choksi Share Brokers. As an online review indicates, “Many dermatologists do not remain here. So it is better to consult a doctor who will stay with me throughout the treatment.” Das explains the attrition rate in retail is fairly common and we are taking measures to reduce churn. “Our workplace is woman friendly and we have team-building activities like morning breakfasts.”

To tackle the issue of low client retention, two years ago, Kaya launched an extensive customer relationship management program. "We have a high-end analytics program which allows us to know when a customer is going to lapse out. We also have other retention strategies like an exclusive magazine called Ivory for select customers and wine and cheese events at the stores," says Das.

Initiatives surely might be underway, but it may be well for Kaya to know that consumers are not going to settle for anything that's skin deep.

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First Published: Jan 20 2012 | 12:12 AM IST

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