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BLONDE AMBITION

Two salons specializing in hair color plan national expansions

By Kimberly Pfaff

Big hair plans: Haircolorxpress expects to grow from five salons in Florida to 10,000 in the United States and overseas by 2010.

Hair salon customers needing to “lighten up” a little are going to have a few more choices in the future. Two franchise salon concepts with different approaches to hair color are eyeing the national scene. And their goal, it seems, is to be everywhere.

Haircolorxpress, launched in 2000, is hoping to persuade the 61 percent of Americans who color their hair at home to throw away those bottles for good. The Fort Lauderdale, Fla.-based chain offers specialized yet affordable hair color (basic color starts at just $20) and some styling services, along with customized cosmetics, in a salon setting.

There is also 16-year-old BeautyFirst, based in Wichita, Kan., a full-service salon with upscale spa services and a sizable retail component. Haircuts at these medium-price salons are $29 to $60, and color ranges from $50 to $150.

Both have big plans for their respective customers at opposite ends of the income spectrum. Haircolorxpress has five salons in Florida and aims to launch more than 30 salons within a year, starting in the New Jersey, New York and Washington, D.C., metropolitan areas. But the company’s overall expansion plans are grander still: CEO Larry Feldman has projected 10,000 salons within eight years in the United States and overseas.

Coming from someone else, that might sound like, well, a colorful dream. But Feldman already has one solid success behind him. Starting out as owner of a single Washington, D.C., Subway franchise, he became CEO of the fast-food chain’s largest development corporation, with nearly 700 restaurants throughout D.C. and in nearby states.

Today Haircolorxpress is following the Subway model and selling the rights to open its salons in various regions. So far the chain has sold development rights to agents in 15 territories, including California, Delaware, Florida, Maryland, Minnesota, New Jersey, New York, Pennsylvania and Virginia.

At present there are 1,698 units committed; by the fall the salon expects to have 3,500 committed units, both in the United States and abroad, possibly in Australia, Germany, the United Kingdom and South America. “We’re not only on target, but years ahead,” said Feldman. “I anticipated an eight-year development schedule, but now I believe we’ll be closer to four to five years.”

Feldman’s partners are salon owners Pasquale Benasillo of Pasquale Salon & Spa, Fort Lee, N.J., who is president of Haircolorxpress; and Chenzo Balsamo of Chenzo & Co., Boca Raton and Palm Beach Gardens, Fla., Haircolorxpress vice president and director of marketing.

BeautyFirst, which has 85 locations in 23 states, is also ramping up its expansion, envisioning 500 salons nationwide.

Is there room for more salon megachains? Analysts say yes, noting that the salon industry as a whole shows great promise.

“It’s probably the fastest-growing segment of women’s consumer services,” said Rommel Dionisio, a senior vice president at Arlington, Va.-based investment banking, brokerage and asset management firm Friedman, Billings, Ramsey Group. “It’s partly fashion, but also demographics — you’ve got the aging baby boomer population, but it’s also a big trend among the youth. The salon industry as a whole is highly recession-resistant.”

Currently, Regis Corp., Minneapolis, is the world’s leading salon franchisor. Yet, even with 12 brands and 6,514 units in malls and strip centers in the United States alone Regis has just a 4 percent market share of this $45 billion industry. “It’s a pretty fragmented market,” observed Dionisio, noting the prevalence of individually owned shops. (See Story, REGIS STAYING ON TOP.)

Developers say salons make a valuable contribution to centers.

“Salons are an important part of the merchandise mix for a regional mall,” said Robert A. Michaels, president of Chicago-based General Growth Properties, which has many Regis salons and is now starting to work with both Haircolorxpress and BeautyFirst. His larger centers will often feature four or five salon concepts. “They provide one-stop shopping, which we always emphasize, and they obviously bring people back to the center on a regular basis.”

Taubman Centers is equally enthusiastic about these tenants.

“We have multiple salons in almost every center we own,” said David Weinert, group vice president of leasing for the Bloomfield Hills, Mich., developer. “We love the fact that they’re a destination unto themselves.” Besides its numerous Regis salons, Taubman is working with Haircolorxpress. “And because salons are a destination, it’s not like they need to be on the 50-yard line. They’re not seeking out the best real estate in the center.”

BeautyFirst is a full-service salon with a sizable retail component.

At press time, Taubman’s first Haircolorxpress was under construction in The Mall at Wellington Green, which opened last October just outside Palm Beach, Fla. Taubman has two other leases in the pipeline with Haircolorxpress and is actively pursuing additional locations.

“We’re excited to be doing business with them,” said Weinert, adding that because Haircolorxpress serves a moderate-income customer, it will pose no threat to existing salons.

“When you have a shopping center with 150 stores, even with the quality of tenants we have at Wellington Green, you want retailers that cover a broad range of demographics,” Weinert said. “Now, would we put it in [upscale] The Mall at Short Hills, in New Jersey? Probably not. But can it go into most centers in the country, in most regional malls? Yes.” At Haircolorxpress, color is provided not by stylists, but by full-time color specialists.

The salon also offers custom makeup formulations by full-time cosmetics artists. “We don’t talk about trying to be all things to all people,” said Feldman. “We’re not a franchise of salons in the traditional sense — we’re a franchise of specialists.”

Then there are the high-tech bells and whistles. Customers use the salon’s proprietary imaging program to digitally experiment with different styles and colors before changing their look. Tying all the Haircolorxpress salons together in a network is the little piece of plastic the company calls a client-profile card, containing each client’s hair-color formula. “If a woman travels, she can go into any of our salons around the world, swipe her card, and there’s her entire history,” said Feldman. Grand plans, indeed, for a company whose overseas salons are still way off in the future.

Not everyone is convinced that the ability to get one’s hair colored on the road will be a big draw.

“I would question what impact that really has, given that most people have their hair cut at home and the fact that there’s a tremendous amount of loyalty to certain stylists,” said Dionisio.

Suburban Haircolorxpress shops will average 1,500 square feet, while urban units will be 2,000 to 2,200 square feet, Feldman said. Haircolorxpress is open to every type of retail setting, from urban storefronts to malls and strip and lifestyle centers. “We literally go across the board,” he said. “For us, it’s about accessibility and visibility.”

Though Haircolorxpress had initially targeted 25-to-45-year-olds, Feldman said, the concept has been attracting customers from preteens to seniors. And the average ticket, predicted to be $26, is now $65.

At BeautyFirst more than 60 percent of the business is hair color, but these full-service salons also feature cuts, facials, makeovers, manicures, massage therapy and pedicures. In addition the salons offer name-brand cosmetics, skin and hair care, and bath and body products and accessories.

“In this industry you’re either a beauty store and you have a little salon, or you’re a great big salon with a few beauty products,” said Pat Neville, president of BeautyFirst. “It’s sort of the 90-10 rule. We really use the 60-40 rule, and in many cases it’s 50-50 salon and retail.”

Immediate development plans call for 20 to 22 new salons this year and an additional 30 to 35 units in 2003. BeautyFirst is now focused mainly on suburban big-box locations and strip centers, though as the company expands, it will target more urban downtown locations, Neville said. Salons range from 3,000 to 4,000 square feet.

Despite the company’s suburban presence, however, enclosed malls and lifestyle centers are not part of its real estate plans. Malls, Neville explained, are not convenient for his customers. “We want to provide easy-access locations, where parking is convenient and where she can get in and get out quickly,” he said.

And lifestyle centers don’t offer the frequency of visitors Neville’s concept requires. “Fashion victims might shop [lifestyle centers] often, but other customers might visit two to three times a year,” he noted. “Our average customer visits every 10 weeks.”

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