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Fast moving consumer goods (FMCG) major CavinKare has a wide range of hair and skin care products such as Chik, Spinz, Fairever, Meera, Nyle, Karthika and others, but they account for just 5 per cent of the demand from the company's own salon business.
"Ninety five per cent of the requirements of Green Trends and Limelite (the two brand names for the salon businesss) are still catered to by competitors' products," says C K Ranganathan, chairman and managing director, CavinKare. "This is a service business and we can't thrust our products on customers," Ranganathan adds.
While this shows a practical approach to doing business, it also helps CavinKare to understand what customers really want. "The FMCG business learns a lot from the salon business, which helps us to bring new products. For instance, Raaga products were developed based on the research done at salons," Ranganathan says.
That's just one small part of the utility of the fast-growing salon business, owned by Trends-in-Vogue, a separate entity. While Green Trends is focused on middle-class customers, Limelite caters to the premium segment and offers what it calls "international standard beauty care". The company currently has 112 Green Trends and eight Limelite salons, and a majority of them are in the South. In the next two years, CavinKare wants to increase the total count to 350 outlets - and all over the country.
Though a majority of the proposed outlets will be franchised, the company will also invest over Rs 80 crore in expansion. While one Green Trend outlet will cost around Rs 40 lakh, the same for Limelite is Rs 65-70 lakh.
R Gopalakrishnan, Business Head, Trends-in-Vogue, says the potential is enormous as the salon industry, estimated at around Rs 7,000 crore, is growing at 25 per cent annually and organised players account for just 10 per cent of the market at present. That is expected to go up to around 40 per cent in a decade.
Launched in Chennai in 2001, Green Trends went through a brand revamp in 2010 to change the positioning from a family salon to a 'hair & style' salon. The company, which competes with brands like Naturals, Lakme and Habibs, says, one of the best way to expand is to set up stores in the neighbourhoods rather than the high street. The company will soon rope in a brand ambassador, who will be from the South - a woman who is a national figure from sports or films.
That's because the company is also planning to launch a third brand under which the salons will be only for women. At present, both the brands are for uni-sex salons.
"We need a separate brand for two reasons, one is to avoid any confusion (since both the existing brands are uni-sex salons), and the other is to make sure that the name is feminine enough for easier connection and recollection," Ranganthan says. Besides, there is a plan to launch a new brand for SPA.
Special care is being taken for induction of staff, as in the salon business, the main brand ambassador is the beautician. "Customers prefer a particular beautician, just like he/she prefers a particular doctor," Gopalakrishnan says.
As if these are not enough, the FMCG major is also planning to take its salon brands global - not in neighbouring countries, but in developed ones including in the US, Europe, the Gulf and Malaysia.
