Selling Discount Salon Products to Increase Salon and Barber Sales
Posted on September 28, 2009 with No Comments
In our continuing quest to increase sales and traffic in salons and barber shops, consider selling major brand salon products at a discount – it has worked for Wal-Mart and other major retailers, it might just work for you!
Many salons and barber shops I have visited generally carry one to three major brands they keep on the shelf. If promoted by the stylists or owner, you might get a few sales. Unfortunately, this is often NOT the case and product sits on the shelf moving very slowly. If this sounds like it might be the situation for you, then consider an alternative – deeply discounting well-known shampoos and conditioners to attract more customers and increase sales.
Many small and even multi-unit shops believe products should be marked-up to give them the highest margin. For high-demand products or if your shop has high traffic, this very well may be the strategy you might follow. However, as with many types of products, there is an “elasticity” to the price and volume associated with most products.
“Elasticity”, or more commonly referred to as “price elasticity”, refers to the sensitivity the product’s price has on its sales volume. For the highest demand products, the price can be raised quite high before demand drops. For most products, however, discounting the price leads to increased sales – to the point where discounting no longer shows an acceptable profit. The trick is finding the perfect balance – and that balance varies depending on the product’s demand and exclusivity (can they find it somewhere else?)
Many salons sell brand products at a 100% mark-up or a 50% gross margin. This is typical is the similar mark-up the distributor might get from the manufacturer. For instance, a distributor may get Kenra shampoo from the manufacturer for $4.00. They in turn sell to the salon for $8.00. The salon in turn sells to their customers for $16.00. Pretty stardard fare.
But, what good does a good, high or reasonable mark-up get you if you don’t sell anything?
Therein lies the the justification for selling discount salon products. If you discount a $16.00 shampoo 25% (selling price of $12.00), you still get a reasonable gross margin (GM), but you might triple your sales – puttting you ahead on cash and profit. Also, if a customer likes the product they bought AND the price is good, they will likely return for more purchases – giving you an annuity-like revenue you didn’t have before.
While this sounds good on the surface, you must promote the products. Signage, ads, recommendations by stylists, etc can “get the word out” improving traffic. Next time we will talk mores specifically about how to promote your discounted products.