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Business > Articles > Brand You: Is Private Label Right for Your Business?

By Kate Hahn

VIDAL SASSOON. TREVOR SORBIE. JANE SMITH. Okay, you might not be so familiar with the last name on the list. But just like the big guys, Jane, an independent salon owner, has decided to create her very own product line. Every item in her retail section and some of the products in her back-bar will soon bear her name. But she isn't in the backroom mixing up batches of shampoo herself. She's working with a private label company that will do everything for her: from formulate the products to design the packaging.

Private Label Grows Up
If you've been in the salon business for awhile, you've probably heard of private label companies. But it's time to reconsider what you think you know. "Until recently, private label was a low-cost alternative to national brands," says EVAN PARKER, director of salon sales for AWARE PRODUCTS, a company that works with salons to
create customized hair, skin, and bath lines. "But now a better name for it would be 'personalized branding.' It's a way for mid-level to high-end salons to express their own ideas. It allows them to extend their own identity and marketing strategy."

That's a big benefit when all you have to do as an owner is approve a quick-and-dirty logo design and place a bulk order for generic shampoo. But wait. It isn't that simple. You have to devote some time to building your salon's individuality - and sometimes clout - before you can really benefit from this new and improved version of private label. "The most successful salons are ones with a commitment level," says VICKY COLANGELO, vice president of YOUR NAME PROFESSIONAL BRANDS, which produces private label make-up lines for salons. "Developing and supporting a brand takes time and attention."
Branding YOU
There are also new options to get the most from both a national brand and your own brand identity. "The success of your salon and the products sold in your salon are linked to the talent and relationships of the stylist," says BOB SALEM, co-founder of PROFOUND, a company that offers 31 hair-care SKUs to independent

salon owners. "We co-brand every product with the name, address and phone number of the salon right on every product. Profound is not private label. With Profound, salons gain the leverage of a powerful national brand with the local identity of the salon."
"We use the most technologically advanced ingredients," adds STEFANY REED, vice president of business development for Profound.
At Aware, R&D is also key. "When we make a new product we say to ourselves - let's make it the best thing you can find in that category." The formulas are constantly evolving, and thanks to modern inventory systems, none gets the chance to gather dust on a warehouse shelf. "The products are made as the orders are placed," says Parker.
In addition to paying careful attention to what goes inside the bottle, these businesses understand the importance of what goes outside too. They provide package design services, and have in-house graphic designers who can help you with logos and artwork. Profound is somewhat of a hybrid in this case. Although they include the salon name, address and contact information on the packaging, the overall design remains the same in every salon. "We advertise nationally, in magazines like Elle and InStyle, so salons benefit from the widely recognizable packaging, yet have a reminder of their brand on every product a client takes home," says Reed. All of the companies offer support in marketing, promotions, education, and sales. "The downside to private label used to be that there was no support. We are more full-service now," says Parker.

The Private Label Process
Your journey to getting your name on a bottle begins when you pick up the phone. Private label companies employ consultants who get what Parker calls a "snapshot" of your business to determine if you will benefit from a partnership with them. All of it can be done over the phone. Consultants ask basic informational questions like, "How much square footage does your salon have?" They also want to know the number of stations and employees, as well as your retail sales figures. Don't balk at providing the information. If you aren't already doing a steady business in take-home products, having your own line probably won't change that. They need to know you have the potential to succeed.

At a minimum, according to Parker, a salon should have at least four chairs, and do at least $1,000 a month in retail lines. "We have a range of customers though," he adds. "Some do $5,000 to $7,000 a year with us, others $200,000." Profound's Reed agrees that salons they work with need to be "grown-up," with established systems for dealing with retail sales. "We look for salons that are leaders in their market area - "go-to" places that are respected in the community," says Reed. Not every salon makes the cut. The story is a little different for cosmetics. "We can accommodate any size business," says Colangelo. "Our minimum order is $200."

After you and the private label company have decided to team up, you meet with a consultant in person, or receive a catalogue or sample pack so you can check out the product offerings. If you like what you find, "The next step is to define your image," says Colangelo. "This takes into account the demographics and psychographics of your target market. It also takes into account your salon and retail d├ęcor." Consultants talk with you about everything from your salon philosophy, to the esthetics of your space. They may even ask you to describe your most popular guest services, the exterior architectural style of your salon, whether your clients prefer chamomile tea or champagne, and if you are next door to a Chanel boutique or a Banana Republic.

There's a purpose to gathering all of this information. It helps the company guide you to the most appropriate products and package designs for your salon. Aware has many different types of packages, some that would fit perfectly into Zen-like spaces, others more suited for opulent decor. "And we're always offering new ones," says Parker. The company representatives guide you as much or as little as you like. "We make it so easy that you don't even have to choose colors," says Colangelo. "We know what shades or formulas perform in different territories or demographics." Because everything is customized, be prepared to make a deposit before your items are shipped. After all, if you decide to cancel, a private label company can't turn around and sell products bearing stickers that say Jane's Hairport to the owner of John's Shear Madness.

The Private Label Profit
Building a brand identity is nice, but so is building profit. Before the products even arrive at your door, you will be able to pre-set your price gun - and feel good about the numbers you're choosing. "The way we do our pricing structure, there is a 60% profit margin, rather than the typical 50%," says Parker. At Profound, they offer three different price point options, so the cost of a product reflects what the local market can bear. A Profound shampoo won't sell for the same amount in Des Moines as it will in New York. "Our clients like this because they can use the extra margins to incentivize staff or create promotions," says Reed.

Wherever you live, once the delivery van pulls up at your salon door, you may panic and think, "But what if it doesn't sell?" Luckily, you aren't left to figure out how to move those mousses all by yourself. "We support your brand with new seasonal launches and promotions four times a year, as well as new display options," says Colangelo. At Profound, local publications such as Ocean Drive and Washingtonian are targeted for advertising, along with the national campaign appearing in consumer magazines. The company also organizes an advertising co-op program. "Profound customers that have salons close to each other can pool their money and buy advertising in local publications," says Reed.

Business Support
Support goes beyond printed signage and advertisements. For Your Name, that means lots of education. They hold workshops at their studio space in New York's Soho neighborhood, where they can train an entire salon staff in anything from airbrush methods to how to start a bridal business. They also teach techniques in creating anti-aging makeup, ethnic looks, and the latest trends. Plus they have master educators who travel around the country, periodically updating their salon clients on the latest looks, buzzwords and techniques. "We keep clients ahead of the curve and inspired," says Colangelo.

When you are educated about how to use the products, it is a lot easier to sell them to your customers. Moving all of those eye-shadows and deep conditioners helps your bottom line, but it also enhances your relationship with the private label company. Most have loyalty or "partnership" programs, in which you benefit by earning points based on your sales. Club Aware members accrue points based on the size of their orders. In return, the company provides posters, point-of-purchase materials, tent cards, shelf talkers, volume discounts, and other benefits.

Whether your orders are big or small, you will find that today's private label companies provide you with much more than they did even just a few years ago. This desire for reinvention spills over into product development too. You - and your customers - won't get bored with what's on the shelf. Private label companies are always adding to the selection of makeup, skincare, and hair-care items - and improving current formulas. "The more you keep your line fresh and exciting, the more profit you make," says Colangelo.

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