At the midpoint of the calendar year 2015, one of India’s most prominent salon chains, Naturals Salon and Spa, is thriving with 475 outlets, split into 240 salons in metros, 130 in tier I, 70 in tier II, and 25 in tier III markets. Over the years, not only has the brand catered to upper-income consumers, but also to a whole potpourri of Indians from across income divides. CK Kumaravel, CEO, Naturals Salon and Spa divulges to indiaretailing his current and future business strategies and the goals to drive the brand to unprecedented heights by the year 2025.
What are your views on salon opportunities in small towns? One view is that co-branding with existing salons in small towns could be a viable model. What do you think of this arrangement?
Salon opportunities in small towns are largely on the increase, due to the twin factors of increased disposable time and money available. The world has shrunk today and everyone is well connected with television and internet access. This has led to film stars and cricket players exerting strong influences on the way people in small town think and behave. The smartphone revolution currently on a boom in India today has also raised levels of aspirations in small town residents. All these elements put together make small towns extremely interesting and viable opportunities for the salon industry.
About co-branding, I would say that the question falls largely within a yes and no answer category. It is viable if you source the right partner in the right location. Otherwise the franchise model will remain a challenge.
You’ve been quoted as saying that you plan to create 1,000 women entrepreneurs, and 50,000 jobs across 3,000 salons by December 2017. How do you plan to achieve these ambitious targets?
Well, today’s Indian woman is also waking up to the reality that there is a strong need for her to augment financial resources for the family. Also, the beauty industry is ideally suited for a woman entrepreneur. As a result, we already have 350 of our 400 plus stores being operated by women, out of which 260 own the business. We also have a few of our women entrepreneurs owning multiple Naturals salons. When we touch our goal of 3,000 salons, 1,000 women entrepreneurs will become a reality along with 50,000 jobs, with a typical salon having a staff of about 15 to 20. The business strategies that served us well in the South need to be replicated in the North as well. Towards this end, Naturals is participating in women entrepreneur forums and seminars, where we have been showcasing our progress and the credentials of our existing franchise partners. This Women’s Day we had renowned Indian author Chetan Bhagat chatting with our women franchise partners, about their journey and thoughts on life. As Naturals gains recognition as a women friendly brand and a leader in the beauty industry, we will make with ease the 1,000 women entrepreneurs by December 2017.
How have you planned to achieve your long term goal of making Naturals the number one salon brand in the world by 2025?
To make Naturals the number one salon brand in the world, we are looking at 10,000 salons worldwide by 2025. Work is in progress in Dubai and Gulf countries and we are poised to enter the American market as well. In India, our focus is on creating successful sub brands of Naturals Unisex, the Naturals W as an exclusive women’s salon and the Naturals Lounge for the premium segment. We plan to move in wherever there is a sizeable Indian population abroad. Within the country, we want to reach tier III and IV territories, thereby touching the last mile.
How would you look back at Naturals Salon and Spa’s trajectory in the last fifteen years since inception in the year 2000?
Well, the first seven years were extremely slow and we opened only seven salons in that time. This was the learning phase when we attempted to understand the market. We made all the mistakes but also corrected them to realise the consideration for our expansion. After this came the shift to partnering, which was a model where we co-invested with the franchisee partner. This worked for us which helped us reach 50 stores mark. But it was soon apparent that this was not a model that would make us scale up to the levels we had in mind.
In 2010, we moved into full time franchising, of course, tweaked to suit Indian needs. We discovered a traction which was unbelievable and beyond our wildest expectations.
Please elaborate on your typical franchise agreements. How do you maintain quality control?
A successful franchise partner agreement is all about selecting the right partner and the right location. These two factors have a weightage of about 60 per cent in the agreement between the corporate and the franchise partner. At Naturals, we look for a person who is not from the beauty industry which allows us to write on a clean slate, so to speak. Once the agreement is signed, our project team will take care of all aspects of location selection, interiors, purchase of products and equipment, recruitment, training and even co-ordination of the salon launch. Then the franchise partner moves in and manages day to day activities in the salon according to our directions, taking 85 per cent of the top line revenue and paying us 15 per cent.
Apart from this, we also handle salon audits, re-training, branding, marketing and introduction of new services and products on a continual basis.
How do you help them in hiring and training staff?
It’s true that trained manpower is the biggest challenge the industry faces today. We have a tie up with Godrej which enables us to fill the demand for staff in salons pan-India. We also have training academies which handle training of freshers and upgradation training of existing staff. A residential academy to train upto 250 students at a time is under construction. With our salons located pan-India we can also guarantee 100 per cent placement to all students who train with us. Our team of professional expert trainers ensure that service techniques are up to date with the latest trends.
What are your targets — salon numbers and revenue — for this fiscal?
This year, our target is to climb up to 600 outlets from 475. In addition, we are aiming at 50 salons in international markets.
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