Retail sales are integral to the Civello Salon-Spa experience.
American Salon has a heritage of retail leadership that goes back to 1988, when we presented an idea to our readers called Target 25, challenging salons to make retail 25 percent of their gross sales. It was a lofty goal, but many salons found that they were able to meet it, and we printed their success stories in the magazine for the next three years. The problem is that too many salons have still failed to grasp the importance of retailing, and they are struggling because of it. In an effort to help and inspire, we have decided to use this space every month to share modern-day success stories.
Ray Civello, founder and president of the Civello Salon-Spa Group and Aveda's Collega International in Canada, seemed like a good place to start. As one of the top-ranking industry experts in retail sales, with four successful salons in Canada, Civello says that retail is an important business aspect that salon owners should be more conscious of. "The profit margin of most product sales is higher than that of services," Civello says. "It's a huge opportunity missed if you don't understand the profit potential."
Civello stresses that there are several considerations for creating a business model conducive to high retail sales. First is selecting a location that is retail-friendly. "I may have to pay more for rent, but a Main Street location shows that I'm offering a different type of experience," he says. Second is creating a clean retail section that is manageable and easy to navigate. Third, and most important, is the investment in education to train the staff. "You have to give your team the tools to be successful and invest heavily," Civello says. In that respect, he reinvests a proportion of retail sales directly into education.
The retail area at the Civello Salon-Spa Rosedale location in Toronto
Retail sales are non-negotiable responsibilities for Civello's stylists. They must sell at least $500 worth of products a week before a percentage is awarded based on additional sales. To keep stylists motivated, Civello sets aside a monthly budget of $100 to $200 for each salon manager to use for such things as tickets to MTV show tapings, Starbucks gift cards or even a random drawing for a vacation. "You have to bring fun into the salon all the time," Civello says.
Civello uses his product sales profits to fund various expenses from his business model, such as paying nonrevenue-generating staff like assistants and receptionists, providing education for stylists and implementing marketing programs.
In light of the troubled economic climate and its effect on the industry, Civello cautions that retail should never replace the quality of service in a salon. "Being a salesperson is so far off from the paradigm that I believe in," Civello says. "Retail should be a driver of revenue that creates opportunity for stylists to work on their craft and make the whole experience better for their clients." —G.B.
The National Cosmetology Association (NCA) has launched an aggressive campaign to help salons increase retail sales by $50 per stylist per day. That's a $600 million infusion of cash into salons in 2009 if just 25 percent of the 50,000 salons in the United States participate. Visit ncacares.org for more information.