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Services Marketing
Notes Expert Samantha Kochhar briefing media on the Winter Look of 2003 at the Lakme
Beauty Salon, New Delhi.
Industry Opportunity & Competition Analysis
Baccarose, the company that distributes and markets premium lifestyle brands like Elizabeth
Arden, Escade, Nina Ricci and Siedo, is planning to open Clarins beauty studios in Bangalore,
Delhi and Chennai over the next two years. At present, it has only one studio in Mumbai.
Meanwhile, several companies that run beauty salons are setting up training institutes,
competing head on with Lakme in another area. LOreal Professional, a division of LOreal,
has invested in four technical centres (in Mumbai, Delhi, Kolkata and Bangalore). Schwarzkopf
Professional, a division of Henkel Spic, has a training academy in Delhi. According to
Shekhar Sethu, general manager at Schwarzkopf Professional: Technical and service standards
have been improving rapidly with companies investing in technical education.
Salon Business & Growth: If the big boys are expanding, its because business is growing
at impressive rates. Lakmes beauty salons in Mumbai clocked 28 per cent growth in
revenue, 21 per cent growth in Chennai and a hefty 60 per cent or so growth rate in
Bangalore. The Marico Industries-promoted Kaya Skin Clinic (which the company says is a
skin treatment business) started in the third quarter of 2002-2003, but now has over 10
clinics in India and abroad. Kayas turnover crossed ` 1 crore (` 10 million) during the third
quarter of 2003-2004. The clinics have started breaking even.
Product offtake: Furthermore, companies like Henkel, LOreal and Wella, the German hair
care company, are seeing the off take of their products from beauty salons climb. According
to industry sources, the salons generate over ` 200 crore (` 2 billion) in product sales. The
statistics tell a fuller story. According to ValueNotes Database, the Pune-based research
firm, India has over 61,000 beauty salons in towns that have a population of over one
million. It is difficult to estimate the beauty salon industrys estimated turnover, which is
anywhere between ` 1500-2,000 crore (` 15-20 billion), with the metros accounting for
about 60 per cent of this. The large beauty salons take up over 27 per cent of the revenue in
the towns.
Consumer behaviour: So why is the beauty salon business booming? Explains Dipali
Prasad, brand manager, retail, House of Baccarose: As feel good is becoming very
important in todays high stress urban environment, beauty treatments at salons, gyms,
massages, the spa experience and so on have become a part of peoples lifestyles. Owing to
the increasing demand the salon segment is experiencing a high growth rate. Salons are
coming out of their 5-star environment and making an appearance in stand-alone formats.
The business itself is rapidly changing. A few years ago, beauty salons used to offer
regular services (waxing, threading, bleaching, facials). Now they offer specialized services
like visible radiance lightening facials, intense glow facials, skin toning facials, hair
reviving, hair revitalizing and scalp conditioning programmes, among other things.
Strikingly too, men are flocking to beauty salons in ever increasing numbers. Says Vismay
Sharma, director, LOreal Professional India: Men are getting more and more enthusiastic
about beauty services. Business in mens salons is growing slightly faster than in womens
salons as men are getting more conscious about their looks. Adds Prasad: Men comprise
25-30 per cent of the customers at the Clarins beauty studios.
Sums up a consultant at Jacques Dessang, the Paris-based unisex beauty salon that fashion
house Ravissant introduced into India and which has a presence at Mumbais Taj Mahal
Hotel: The image of the beauty salon has changed. It is now known for its infrastructure,
ambience and service. Consumers today are willing to pay much more for a better
experience. No doubt, HLL and Baccarose will bear testimony to that.
Contd...
14 LOVELY PROFESSIONAL UNIVERSITY
