Growing at a Fast Clip
Great Clips belongs to a select group of companies, ones that have used the economic downturn as an opportunity. At a time when many segments in the hair care industry are experiencing declines, particularly higher-end salons and professional hair care product sales, Great Clips continues to grow. Its value-priced positioning resonates with consumers who still want to look good, but don’t have as much disposable income as they once did. The company just completed its 21st quarter of same-store sales and customer-count growth, and is aggressively pursuing sites and adding franchisees.
Founded in 1982, Great Clips is headed by Ray Barton, CEO, who is also its majority owner. His sister, Rhoda Olsen, is president. The siblings run a tight ship. Great Clips is selective when its comes to its franchisees, and it won’t expand into new markets until it has a training center and full-time real estate person in place on the ground.
Chain Store Age editor Marianne Wilson spoke with Olsen about how the company has weathered the downturn and its plans going forward.
How do you explain Great Clips’ success in the recession?
Great Clips provides an exceptional value, and because of this has continued to grow through the recent recession. Our franchisees recognize that people continue to spend money through recessions. But they buy smartly, and Great Clips works hard every day to provide the outstanding service and value that our consumers seek.
Great Clips has not expanded into other salon services, e.g., manicures. Is that by design?
Yes. Great Clips offers consumers a limited service menu. Our primary focus is on delivering great haircuts in a relaxing environment at an affordable price.
What are the ways Great Clips differs from competitors?
One of the key differences is that all Great Clips are 100% franchisee-owned and operated. The franchise business model creates the strength of a large corporation with the benefits of a small business environment. Our franchisees care deeply about their stylists, their customers and their community—and they are committed to delivering the brand in a consistent manner in their salons.
We’re also different because of our very simple, straightforward and customer-focused brand strategy. We clearly listen to what the customers want and define and develop all of our systems around those customers. We use a consistent language and make sure that everything we communicate to the franchisees and their staff revolves around the brand that we know our customers want. The combination of providing that warm and comfortable environment along with low waits, low prices and a great quality haircut differentiates us from our competitors.
You recently had a promotion with Old Navy. What was the response?
It was great! Our 2009 partnership promotion with Old Navy was very successful and well-received by our franchisees and customers. In addition to providing savings to our customers, the promotion allowed us to associate with another value brand. This helps build national equity and awareness for Great Clips. Old Navy was thrilled with the coupon redemption in their stores, and felt the visibility the promotion gave to Old Navy during the back-to-school season contributed positively to their sales.
What is your real estate strategy? What is the ideal location?
Although we have been successful in a number of different types of real estate, the ideal location for us is one that is most convenient to the customers and is clearly on the customers’ errand path. This means being in a heavy retail traffic area with a No. 1 or 2 grocer. We’ve also done very well in strip centers anchored by Target or Walmart.
What is the average build-out?
The average size of a salon is 1,000 to 1,200 sq. ft. with 10 to 12 stylist work stations.
Are you going into new markets?
Recently, we expanded into both Boston and Toronto, and we’re off to a fast start in both markets. We are currently focused on building new locations in these and other existing markets to leverage the strength of our franchisees and increase our presence in those markets.
What do you look for in franchisees?
Successful Great Clips franchisees typically have executive backgrounds, strong people skills and are interested in building a business that has long-term value. Because Great Clips is a manager-run salon, our franchisees typically have three to 10 salons and look at their role as coaching and developing their managers and building their business.
How do you ensure consistency throughout the organization?
Consistency truly is the hallmark of a great brand, and we place a very high value on it in every aspect of our business. The primary thing we do to drive consistency is to have a very well-defined and clear brand position. This brand is reinforced through every part of our organization from publications, to newsletters, to training, to meetings.
We provide training to the franchisees, salon managers and stylists to ensure they have a clear understanding of what needs to happen with every customer in every salon. We also have a monitoring process, which includes business services staff that visits the salons to observe brand delivery and provide feedback to the franchisees.
Your brother, Ray Barton, is CEO of Great Clips. What is it like working so closely with a family member?
Ray and I have very different skills sets and add real strength to the business in different ways. When you work so closely with family there is a level of commitment that goes beyond the normal business relationship. Additionally, I believe one of the secrets of our success is that because we are a “family business” the family values have become a part of our culture and strength.