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Shopping Centers Today -> December 2002
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PUREBEAUTY STARTS OPENING BEYOND WEST COAST
By Kimberly Pfaff
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| PureBeauty’s sales, which exceed $1,000 per square foot in some salons, are giving the company and its landlords plenty to smile about, too. |
At first blush, it might seem that regional centers already have more than their share of beauty salons. But several centers around the United States are fast making room for yet another. PureBeauty, Encino, Calif., has already built a loyal following out West for its signature blend of mid-priced salon services and trendy, high-end cosmetics and personal care products. Now it is going to work on the rest of the country.
In just three years, the chain has opened 57 stores not only in California, but also Arizona, Missouri and Nevada, with 25 to 30 new stores planned in the South for 2003. The privately held company won’t disclose exact figures, but did say that year-to-date comparable-store sales are up 7 percent over last year and are trending to 10 percent each month beginning with May. Overall revenues are projected to be 38 percent higher for 2002 than 2001. And depending on the age of the store, sales per square foot range from $400 to over $1,000.
There’s no disputing the fact that beauty is big business. Industry estimates cite the salon category as bringing in $45 billion nationwide. The dominant player remains Minneapolis-based Regis Corp., with more than 6,000 company-owned and franchised salons in the United States alone. (It plans to open 435 new company-owned salons by June 2003, up from 349 such salons a year earlier.) Yet despite its size, Regis commands only 4 percent of the market. The vast majority of salons are small, individually owned businesses. That, analysts say, means that the category is wide open to new chain concepts.
“There’s plenty of opportunity for other companies to come in and try to roll up a position in this segment, as long as they have capital behind them,” said Dennis Nielsen, director of equity research at Minneapolis-based Miller Johnson Steichen Kinnard, a full-service investment firm. “Even though Regis is the largest salon operator, this is still an industry dominated by single proprietors operating stores around the country.”
Landlords say PureBeauty is proving to be a strong draw to their centers.
“PureBeauty is different than other concepts,” said Robert A. Michaels, president of General Growth Properties. “It’s much more exciting than the old salon type of business, and it gives the consumer other alternatives.” The developer has several PureBeauty stores in its portfolio now and is working to sign up more. And just because a mall might already have a salon — or several salons — doesn’t mean you can’t add another, he insisted.
“The fact is, they each have a much different approach,” Michaels said. “So you can have several of them in your center, without hurting or duplicating your sales efforts.”
Salons can offer developers some welcome stability in an uncertain retail climate, noted Miller Johnson’s Nielsen.
“It’s a very stable business regardless of the economic cycle, because it is a renewal business,” he said. “People are going to continue to get their personal care taken care of.”
At Scottsdale Fashion Square, Arizona, marketing manager Debbie Simons says that the PureBeauty salon, open a year in November, complements the center’s mix of beauty offerings.
“It’s been a very good draw for customers, and it fits a niche in our center that was needed,” she said. “They also carry more beauty products and accessories than a typical salon, so shoppers don’t have to leave the mall to go to a Target or a beauty supply store — they can get it all right here.”
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Many of the center’s customers are tourists, which is also a good fit for the salon. “Some people come here because they’ve lost their luggage or forgotten to pack their favorite nail polish,” Simons said. “So while they’re shopping, they can come in and get a waxing or a manicure as well.”
PureBeauty’s business is 60 percent retail, 40 percent salon services.
“We’ve been able to marry the best of specialty retailing and beauty together,” said Brett Saevitzon, the chain’s president and CEO, a former COO of Freeman Cosmetics.
The chain’s focus is on hip, high-end cosmetics and products for hair, skin, nails, bath and body, and home. Brands include such names as Decleor, Dermalogica, Japonesque and Yonka. “We wouldn’t sell a product that was available at a mass marketer,” said Saevitzon. A private-label line is also in the works.
Services range from haircuts and coloring to waxing, manicures, pedicures and a full menu of facials. Prices are reasonable: $31 for a shampoo, cut and style, $45 for a basic facial and $65 and up for full highlights. “On the retail side, we always have promotions and incentives, so we’re always giving the customer incremental value,” said Saevitzon.
PureBeauty also places a premium on education. All of the chain’s consultants and district managers attend PureInstitute, the firm’s own “university,” where they learn about the products and beauty trends and techniques. And vendors provide ongoing training.
“When someone walks into a store and talks with a consultant, she doesn’t want someone giving her a hard sell,” said Saevitzon. “She wants someone who listens to her needs. She has questions, and we have to be able to give her answers.”
PureBeauty has assembled a multifaceted real estate portfolio, encompassing power centers, regional malls, urban streetfronts and lifestyle centers. “I like to be where our customer is,” Saevitzon said. “I want to be where she shops.”
As the company expands in 2003, it is targeting Atlanta, Florida and Texas. Eventual plans call for additional locations in Chicago, Kansas City and the Northeast. “We’re in a very fortunate position,” said Saevitzon. “We’re backed by an equity fund out of Boston [that] would like to see exponential growth from our company.”
The salons are typically 2,400 square feet. “Give me 40-foot frontage, 60 feet deep, and I’m ecstatic,” said Saevitzon.
The company has created a stylish yet comfortable environment where shoppers are always free to sample new items. “Beauty needs to be tactile,” Saevitzon said. “The customer needs to touch, feel and smell the products.”
As for co-tenants, the chain is happy to be near grocery stores and drugstores. “I like tenants who have name cachet,” said Saevitzon, “places where our customer is going to visit once a month.”
Customers appear to be doing just that. Already, more than 100,000 clients have enrolled in the company’s affinity program, Club PureBeauty. Members pay $10 to enroll, which they get back in value immediately, with a product and coupon. They accrue points based on how much they spend and receive a newsletter and e-mail updates on special promotions and new product information.
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