Aishwarya Chandrasekhar, a software techie with an IT major, calls up the Green Trends Hair and Style Salon at Thiruvanmiyur in south Chennai, once in about six weeks, for a hair trim. “I always ask for the stylist I like and never take an appointment unless she is available,” exclaims the cherubic 26-year-old who had her first layered cut from the same stylist. “They are close to where I live, and they charge ₹400 for a shampoo, haircut and blow-drying. Why would I go anywhere else?” Naturally, CK Ranganathan, chairman and MD, Trends in Vogue, the closely held company that owns Chennai-based salon brands, Limelite Salon and Spa, and Green Trends, has reason to be pleased.
Since its launch over a decade ago, Trends in Vogue has grown to 120 salons, thanks to the patronage of young customers like Chandrasekhar. There are currently 43 company-owned and 70 franchisee-owned Green Trends outlets. These are distributed mostly around south India — from all state capitals to tier 2 towns such as Mysore, Trichy, Madurai and Coimbatore; and tier 3 towns such as Tirupati, Kumbakonam, Namakkal and Pollachi. The brand took baby steps at going national recently, with two salons each in Kolkata and Delhi.
The more exclusive Limelite has a limited presence right now — three salons in Chennai, three in Bengaluru and one in NCR, all company-owned. “Limelite is for clients who are looking for personal service and pampering; they feel the price doesn’t matter. Green Trends is for the value-conscious customer who wants a great hair cut and colouring but cannot afford to indulge in luxury,” explains Ranganathan, better known as the founder-owner of CavinKare that makes hair and beauty products (Nyle and Chik shampoos and Meera shikakai powder), foods (Ruchi pickles), and beverages (Maa mango juice and Cavin’s milk and milkshakes).
Trends in Vogue notched a total turnover of ₹70 crore, from both owned (₹ 50 crore) and franchised (₹ 20 crore) salons in 2012, and has been profitable from the fourth year of operations. “The last three to four years have seen the fastest growth,” Ranganathan says, referring to the addition of 60 franchise salons in 18 months. Most of these were in smaller centres. “Smaller towns are now where Chennai used to be 10 years ago.” In March, Ranganathan announced an aggressive nationwide expansion plan at a press conference in Chennai, aiming for 350 salons in two years, of which two-thirds will be franchised.
This mix is in line with an industry trend. According to the India Salon Report 2012, released in conjunction with the recent Indian Salon Congress — a gathering of over 400 owners, suppliers and experts in the beauty services market in March 2013 — one in every four beauty salons in India will be franchised by 2020, and franchises will grow to be a ₹ 4,500 crore part of the industry. What’s more, over 60% of current growth in the ₹ 13,200-crore market is coming from within the industry.
Hair and there
Within a year of its launch in 2002, Trends in Vogue tried five different formats — men-only, women-only, very low-cost (#30 per haircut), family salon and high-end salon — finally settling for a mix of unisex high-end spa-and-salons (Limelite) and mid-range family salons (Green Trends). “Till 2005-06, there were separate sections for men and women but, as the market and the ‘culture of beauty’ evolved, we started having unisex hair cutting areas and separate sections for beauty treatments,” explains R Gopalakrishnan, business head, Trends in Vogue.
Today, a typical client is 25-35 years-old and, surprisingly, male. “Men’s grooming is now a big part of the market,” says Ranganathan. The India Salon Report confirms this — 53% male respondents visit the salon once a month and 20% do it twice, with 67% trying out new services like hair massages or spa therapies. While the average monthly spend per person at a salon is ₹ 1,500-2,000, women customers spend more than men.
In return, they expect pampering service, a relaxing ambience and superior beauty products. So Limelite has secluded alcoves that replace the banter of a salon with a spa’s tranquility, while customers are treated to premium products from L’Oreal Professional, Skin Miracle (Malaysia) and Remy Laure (USA) in addition to house brands like Meera coconut oil and the Raaga Professional range. To add to this experience, Trends in Vogue is also working on bettering its technology-led customer interface. “Soon we will offer online and mobile-based appointment bookings. We are developing tablet-based hair styling and colouring apps on which your photo can be uploaded and hair styling and colouring styles can be tried out virtually,” says Ranganathan.
Nationally, the attractiveness of the franchise proposition that Trends in Vogue offers will matter. Typically, a Green Trends salon spread over 1,200-1,500 sq ft of space in a suburban, residential neighbourhood, requires a ₹ 30-40 lakh investment to start. A Limelite salon, with 1,500-2,000 sq ft in an upmarket locality, will need a ₹ 60-70 lakh investment by the franchisee. All of this is in exchange for brand mileage, training and standardisation support from Trends in Vogue for an 85%-15% revenue split between the franchisee and the company. Gopalakrishnan says average monthly revenues hover at around ₹ 6 lakh per salon, although premium locations can generate up to ₹ 14 lakh a month. Operating margins for the salons segment are estimated between 25% and 30% according to a Ficci-PwC report titled Riding the Growth Wave: Wellness 2011.
Training makes some difference too. Trends in Vogue’s in-house training academy — with centres across Chennai, Bengaluru, Hyderabad and Kolkata — fusses over the perfect service provider, and hair stylists are at the top of the staff ladder. Over time, Ranganathan wants to turn his academy into an undergraduate college offering degrees in beauty care as well as styling.
All of this depends on the group’s ability to adequately fund its plans. “We are looking at raising funds via bank loans and internal accruals for the current expansion. We will get to private equity later, in the second year of this expansion, unless a particularly good acquisition opportunity comes along,” elaborates Ranganathan, who says he’s also buying out small start-ups and chains with half a dozen outlets, which can be funded with internal accruals. “Our ambition is to grow nationally and become the top player in the industry.” Now, that’s a bold bet.