Jawed Habib, the popular hair and beauty salon chain, opened 150 outlets last year. From 37 outlets in 2006, Habib has grown to over 340-plus outlets across 83 cities in India. That’s a huge growth, but others such as Lakme, VLCC, Naturals and Juice are not far behind in tapping the Rs 6,900- crore salon industry, growing at a CAGR of 35 per cent.
Almost 80 per cent of the salon business is still in the unorganised sector, but that is changing fast. For example, Naturals, a South-based chain, is expanding in North and Central India at a frenetic pace — at least four every month.
C K Kumaravel, co-founder and MD of Naturals, says branded salons were earlier considered to be high-end outlets “We have tried to bridge the gap by offering quality services at affordable pricing.” By 2018, the firm wants to open 3,000 salons.
There is apparently a lot of money to be made in the business. Kumaravel says branded salon is a high-margin business. “If you deduct all major expenditures including staff, rent, electricity, equipment etc, one can earn 40 per cent profit every month”, he adds.
Another key trend is the increasing demand for spa and wellness treatments. Nowadays, salons are including spa treatments or are being converted into ‘day spas’ offering both salon and spa services. Samantha Kochhar, MD of Blossom Kochhar beauty products, says the firm plans to double the number of salons every two years.” The company has 10 owned and 150 franchised salons.
VLCC has 180 outlets across 102 cities and is increasing its overseas footprint. Sandeep Ahuja, MD of VLCC, says a quarter of VLCC’s revenues come from overseas and the company plans to open more outlets in North Africa, South East Asia and Middle East. VLCC’s private label products are supplied to 75,000 outlets and the business is doubling every year.
Scarcity of skilled and trained workforce is one of the biggest challenges in the branded salon industry, so much so that industry requires 600,000 additional professionals in the next five years. To meet this huge gap, most have set up their own training institutes. Blossom Kochhar runs 70 training institutes in India and a similar number abroad. Similarly, Jawed Habib runs 46 academies. Lakme Lever, which operates Lakme Studio and Salons, also launched Lakme Academy in April last year. Lakmé Salon has 170 outlets , of which 38 are company-owned.
One of the reasons for the sharp growth in branded salons is the emergence of grooming-conscious men. A latest survey by Franchise India suggests that 53 per cent of male respondents visit a salon once a month and 20 per cent twice a month.
Most of these branded salons are also betting big on private labels which are growing at around 30 per cent annually. Jawed Habib, for example, will shortly launch a hair product range. Since private label products are around 5-20 per cent cheaper as it cuts out the cost of middlemen, this allows the manufacturer to pass on the benefit directly to the consumer. In India, private labels account for around 20 per cent of the total cosmetic sales.
