10 tips to BOOST your in-salon retail business

hair products

10 tips to BOOST your in-salon retail business

Are you getting the best return you could be from your products? Turn your retail shelves into a moneymaking machine that could pay your salon rent, see you going on that holiday of a lifetime or getting the car of your dreams. But before you decide on how you’re going to spend it, you first have to learn the secrets to earning that potential extra income.

With a low risk but high potential return on investment (ROI), retail can be your best friend earning you continuous and consistent amounts of money.

For that to happen, you first have to start thinking about your stock differently. Your stock is not just what sits on the shelves in your salon, oh no, it is an investment – not a cost. And it needs to be seen as a separate business. That’s right, a separate business to your salon business – it’s your ‘retail business’. So from here on in, we’ll refer to your stock as your retail business.

With that settled, let’s get into the 10 tips that will BOOST your retail business, making it more successful and start earning you that valuable extra income:

1) Firstly, do you believe in the products and brands you are selling? Do they fit into your values and the philosophy of your company? Do they marry with your visions and do you get great customer service and support from your suppliers? If the answer to any of these is ‘no’, then you’re not investing in the right products. If you don’t believe in the products you and your salon are selling, then they’re not the right products for you or the products that will keep your clients coming back to buy them. You need to be investing in the right products to see that ROI.

2) If your retail business is separate to your salon business, then it needs to have its own bank account. Make it a weekly task to move the sales money from any sold products across to the new bank account. And when you need to replenish stock, use this account to pay your suppliers. This way you get to see your investment grow and it doesn’t get lost in the main business account.

3) Next you will need to ask yourself how much do you realistically want to make each week, month and year. What do you want the retail business to pay for? Rent for the salon, or perhaps the yearly marketing budget? Starting with a specific goal in mind will keep you on track to hitting your target.

Example: I want to make £12,000 a year in net sales to pay the half the rent for the salon. With the mark-up on a bottle being 40% and the cost to the product company 60%(*most product companies will charge 60%) Therefore I will need to make £30,000 in retail sales each year to achieve £12,000 net profit. (aproxiamately £18,000 will be spent over the year on replenishing your stock to keep & maintain your investment levels.)

*The product companies win in the end taking more of your money, but this is still a sound investment and a better return than any savings account. Expect a 100% to 200% return on your investment each year when done well. And remember you still have your stock (investment) on your shelves to get another ROI every year!

The following chart will breakdown how this can be achieved:

A
Set your target cost or budget to cover,
e.g. salon rent/marketing budget
£12,000
B
Gross profit from retail sales
40%
C
Annual retail sales target
Divide A (£12,000) by B (40% or 0.4) to find your annual retail sales target
£30,000
D
Weekly retail sales target
Divide C (£30,000) by 50 (amount of working weeks)
£600
E
Number of stylists in your salon
8
F
Weekly retail sales target per stylist
Divide D (£600) by E (8)
£75
G
Daily retail sales target per stylist
Divide F (£75) by 5 (working days)
£15
H
Bottles per stylist per day (assuming £13 per bottle)
Divide G (£15) by £13 (average product pricing)
1.15

By breaking down the big target of earning £30,000 in retail sales, right down to figuring out how many bottles each stylist needs to be selling each day, you can then see that this is an achievable and realistic goal. Set out your magic number and begin breaking it down as shown above to find out how many bottles each of your stylists need to be selling.

4) Know your speed of sales (SOS) and percentage of stock sold (POSS). Knowing these figures will ensure you’re well stocked in the right products at all times. Big high-street stores and supermarkets know their numbers; think about it, products like bread and milk have a high speed of sale because of their desirability and quick use by date. Supermarkets don’t want to run out of these products as their customers would be forced to shop elsewhere; but they also don’t want so much of the stock that they can’t sell it all before the sell-by date hits. Both scenarios would create a loss for the supermarket, meaning they need to be on top of their SOS and POSS to avoid this.

The easiest way to measure your SOS and POSS is by monitoring the percentage of your stock value each week.

Example using the figures from section 3:

Speed of sales: If your weekly retail sales are £600 and the average product costing is £13, this would mean an average of 46.15 bottles of product are sold each week. Divide 600 by 13 = 46.15.

Percentage of stock sold: The percentage of stock sold each week should be roughly 10% of your total stock value. If your weekly retail sale goal is £600, this means you will need approximately £6,000 in recommended retail price (RRP) stock in your salon at all times. That’s an average of 461 bottles of product in stock at any given time.

Keep a weekly eye on these figures to know when to order more and you will always have the right amount of stock. You could also take it deeper and look at each product line individually to give you a more intense look at what products sell well and what needs reconsidering.

5) Merchandise your shelves well. Make your salon shop an inviting place for customers to buy in by making sure the shelves are stocked with the right product mix and facings; and remember – eye level is buy level, so get your best sellers at the correct height with ideally a minimum of two facings.

6) Don’t use stock cupboards. Use your shelves as stock cupboards as fully stocked shelves look far more appealing to customers. Have all products facing the right way on the shelf edge and always have the price on every individual bottle…just make sure it’s not on the front.

7) Use category signs and have information about the products available so your clients can see, read about and be directed to the right product for them quickly. Making the buying process as easy as possible for your clients encourages those last minute product purchases.

8) Use the free advertising space of your salon window to create engaging window displays that will encourage new customers in to the store. They may not want a new hairstyle, but they may be in the market for some new hair products. Continue the window’s story inside the salon too with further in-salon displays to promote your products.

9) Delegate by having an in-salon retail expert and champion to keep an eye on the shelves, doing the housekeeping, pricing and reordering of the products.

10) Take inspiration from other industries and other stores and see how they do it. The next time a display catches your eye, take a real good look at it and ask yourself why it caught your eye. Then use those elements that caught you – in your own display.

And there you have it. By investing a little more time and effort into your retail business, the return potential can really be life changing. Give it a go and see where your effort takes you.

BOOSTmySALON can help with team education and getting the best from your team, window display coaching and designing, realistic goal setting and planning, business coaching and much more. Get in touch for expert help in BOOSTing your retail business today.

HappyBIZness

Carey

 

 

 

Leave a Reply

Your e-mail address will not be published. Required fields are marked *