When the 150-million euro French beauty house Jean-Claude Biguine (JCB) opened its first salon in 2008 in Mumbai?s suburb Bandra, it was certain that its brand value and high disposable incomes of Indians would set cash registers ringing from day one. But it took time for the international salon chain to expand as there was intense competition right in their neighbourhood from already established salons like Juice, Hakim?s Aalim and Dilshad?s.
Dharmendra Manwani, CEO, JCB India, had to do some quick rethinking as the chain expanded. ?Local adaptation process took some time for us. Initially when we launched we had very high expectations, but the reality was different. Indian consumers look for more value at less price,? he says. ?We have kept our price 20-25% higher than the established local names. Our spa service is 60% cheaper than five-star spas.?
Manwani slashed the investment in each salon. ?We invested about R2.5 crore in our first store, but now we invest about R80 lakh per salon,? he says. ?It now takes just six months to break even.? JCB has six salons and expects to touch R400 crore revenue with profit of R100 crore in the next five years.
Even as JCB prides itself on being on the list of international biggies like Toni & Guy, Franck Provost, Jacques Dessange and Guy Kremer, which have entered the Indian market, domestic players still rule the roost in R11,000-crore salon-spa market. The MNCs, despite their expertise and branding, account for only 0.5% of this market. The grooming industry is a largely domestic business, with organised players accounting for barely 5%.
?One of the problems is that international chains arrived quite late to the party. India is in a bullish mood but it doesn?t mean that people have just discovered the pleasures of having their hair cut,? says Thomas Dawes, CEO, b:blunt, one of the leading salon chains. ?Independent salons as well as salon chains adorn every street corner from Bangalore to Kolkata, and many have already drawn inspiration from their European counterparts.?
Anand Dikshit, executive director, corporate finance and investment banking, PwC India, adds, ?The domestic players always have the advantage of understanding the masses in a better way. The success stories of Bangalore-based salon and spa chain You Look Great (Y:G) and others show that the potential is immense provided you have the right ideas to ignite the growth.?
In India, 60% of the grooming market is of skin services and 40% is of hair care. Most international salons, like Toni & Guy, focus on the hair market, missing out the larger piece of the pie. ?Their scalability is also low as they cater only to the upper crust of the market. So the impact on the overall industry is not high,? says Rahul Bhalchandra, founder-CEO of YLG.
YLG started in 2009 and is currently present in 18 locations in Bangalore and plans to add three salons in Pune and four more in Bangalore in the next three months. Other chains like Shahnaz Husain Herbals, Lakme Beauty Salon, VLCC, Kaya Skin Clinic, Naturals, and Jawed Habib Hair and Beauty, among others, too have seen robust growth.
The beauty services market in India, which grew at 30% in the last two years despite the downturn, is expected to sustain growth at about 35% CAGR for the next few years. But international chains aren?t exactly keeping pace. They have yet to taste the kind of success they have met with in other countries.