 "Salon chain to provide stage for women entrepreneurs")
Groom India Salon & Spa Pvt Ltd, which owns the Naturals salon brand, is planning to open over 2,500 salons across the country, through the franchisee route. Most of these franchisees will be run by women entrepreneurs.
K Veena, founder and chairperson of Groom India Salon and Spa Ltd, said today the size of the salon industry is around Rs 8,000 crore and 70 per cent of the business comes from women customers. "This shows the extent of opportunity that is available for the company if it associates with women entrepreneurs", she said.
At present Naturals runs 240 saloons, focusing mainly on the southern states. Of these, 230 are franchisee-owned and 10 are owned and run by the company. Of the total, 200 salons are run by women entrepreneurs, Veena added. In the industry as a whole, however, the share of franchisee salons is estimated at 18 per cent today, and is expected to grow to 20 per cent by 2015.
She gives the example of Sowmya, an entrepreneur who runs the Natural franchise at T Nagar - Chennai's shopping hub. When Sowmya took over the salon from a male franchisee, it was clocking monthly revenues of about Rs 7 lakh. In six months she increased this to Rs 12 lakh, and, within a year, further to Rs 17 lakh a month.
Veena started her first salon in 2000 with the objective of becoming self-employed. She recalls that when she decided to start a business, she faced a choice between a boutique, a pre-school and a salon. She chose the salon, as she wanted a business model which was free of multinational companies competition, scalable and easy to operate.
More than 50 per cent of Groom India's new salons have been taken up by existing franchisees, which Veena says is an indicator of the success of their formula. Another endeavour of the brand is towards creating 1,000 women entrepreneurs, 3,000 salons and 50,000 jobs by 2020.
"It's not just the metros, but even tier-II and tier-III cities that are performing well", says Veena. Going forward, she envisions 70 per cent of the entrepreneurs being erstwhile housewives, while the remaining 30 per cent would be professionals who want to quit their jobs and become entrepreneurs.
"One of the major problems for the entrepreneurs is finance", she adds. Each saloon will cost between Rs 25 lakh to 50 lakh, depending on the infrastructure and location of the outlet.
C K Kumaravelu, Groom India's co-founder and chief executive officer, said the company had signed an agreement with the Indian Overseas Bank (IOB), which would provide funding of up to Rs 25 crore under the "Credit Guarantee Fund Trust for Micro and Small Enterprises" scheme to about 100 women franchisees identified by the company.
He says these franchisees would be rated by Crisil and will be screened by the Small Industries Development Bank of India, after which IOB will extend loans. While the franchisee will have to bring in 30 per cent of the required investment, the bank will provide up to 70 per cent, without asking for collateral. "All these salons are expected to be up and running before the end of the current financial year," Kumaravelu said.
The expansion strategy provides for aggressively establishing a footprint in North Indian cities, and this process has already started. Naturals signed an agreement last year with Bharti Retail to open 250 salons in their Easy Day stores over the next few years, and eight have been opened so far.
The company, which reported 100 per cent growth in the last five years to reach revenues of Rs 180 crore, has now set a target to reach a turnover of Rs 350 crore by 2020.
K Veena, founder and chairperson of Groom India Salon and Spa Ltd, said today the size of the salon industry is around Rs 8,000 crore and 70 per cent of the business comes from women customers. "This shows the extent of opportunity that is available for the company if it associates with women entrepreneurs", she said.
At present Naturals runs 240 saloons, focusing mainly on the southern states. Of these, 230 are franchisee-owned and 10 are owned and run by the company. Of the total, 200 salons are run by women entrepreneurs, Veena added. In the industry as a whole, however, the share of franchisee salons is estimated at 18 per cent today, and is expected to grow to 20 per cent by 2015.
More From This Section
"We feel that the franchisee route is the best way to grow our business, and associating with women entrepreneurs will yield greater advantages," said Veena. She has good reason to rope in more women franchisees.
She gives the example of Sowmya, an entrepreneur who runs the Natural franchise at T Nagar - Chennai's shopping hub. When Sowmya took over the salon from a male franchisee, it was clocking monthly revenues of about Rs 7 lakh. In six months she increased this to Rs 12 lakh, and, within a year, further to Rs 17 lakh a month.
Veena started her first salon in 2000 with the objective of becoming self-employed. She recalls that when she decided to start a business, she faced a choice between a boutique, a pre-school and a salon. She chose the salon, as she wanted a business model which was free of multinational companies competition, scalable and easy to operate.
More than 50 per cent of Groom India's new salons have been taken up by existing franchisees, which Veena says is an indicator of the success of their formula. Another endeavour of the brand is towards creating 1,000 women entrepreneurs, 3,000 salons and 50,000 jobs by 2020.
"It's not just the metros, but even tier-II and tier-III cities that are performing well", says Veena. Going forward, she envisions 70 per cent of the entrepreneurs being erstwhile housewives, while the remaining 30 per cent would be professionals who want to quit their jobs and become entrepreneurs.
"One of the major problems for the entrepreneurs is finance", she adds. Each saloon will cost between Rs 25 lakh to 50 lakh, depending on the infrastructure and location of the outlet.
C K Kumaravelu, Groom India's co-founder and chief executive officer, said the company had signed an agreement with the Indian Overseas Bank (IOB), which would provide funding of up to Rs 25 crore under the "Credit Guarantee Fund Trust for Micro and Small Enterprises" scheme to about 100 women franchisees identified by the company.
He says these franchisees would be rated by Crisil and will be screened by the Small Industries Development Bank of India, after which IOB will extend loans. While the franchisee will have to bring in 30 per cent of the required investment, the bank will provide up to 70 per cent, without asking for collateral. "All these salons are expected to be up and running before the end of the current financial year," Kumaravelu said.
The expansion strategy provides for aggressively establishing a footprint in North Indian cities, and this process has already started. Naturals signed an agreement last year with Bharti Retail to open 250 salons in their Easy Day stores over the next few years, and eight have been opened so far.
The company, which reported 100 per cent growth in the last five years to reach revenues of Rs 180 crore, has now set a target to reach a turnover of Rs 350 crore by 2020.