Growing Fantastic Sams

At 1,350 hair salons, Fantastic Sams isn’t new to expansion.

But to continue its growth effectively, strategically and profitably, the Beverly, Mass.-based hair salon turned to Fort Worth, Texas-based Buxton to evaluate existing locations and model future expansion.

“We engaged Buxton to provide us with a strategic partner to improve our site-selection capabilities,” said Jeff Sturgis, VP franchise development, Fantastic Sams. “Having 35 years of experience and performance, we were confident in the brand and concept and our ability to identify the right people to become owners, but as competition increases and technology improves, we recognized that there were tools available to us to provide better site-selection resources for our franchisees.”

Fantastic Sams was able to provide Buxton with a huge head start on the project, in the form of voluminous data with which to build a reliable model.

“The predictive model is based on existing Fantastic Sams locations,” explained Charles Wetzel, president of Buxton, “which then can be utilized to score any potential trade area in the United States and place a value on that area for Fantastic Sams.”

On top of that, from the predictive model, Buxton can analyze any given market in order to evaluate the existing locations and optimize the area for future expansion.

Fantastic Sam’s has enlisted Buxton to analyze a number of targeted markets.

“For the remainder of 2009, projections call for 30 to 40 additional openings,” said Fantastic Sams’ Sturgis, “and in 2010, we project to open 70 to 80 across the United States. Most of the openings are in markets like California, Florida, Minnesota, Texas, New Jersey and Georgia.”

Fantastic Sams has a specific real estate strategy that calls for 1,000-sq.-ft. to 1,400-sq.-ft. spaces in neighborhood or grocery-anchored shopping centers. “We look for centers that have strong traffic patterns and a solid lineup of name brand co-tenants that are a mix of destination and daily-need businesses,” said Sturgis.

With the downturn causing a slew of store closings, site opportunities within Fantastic Sams’ real estate parameters are on the rise.

“The most successful companies capitalize on economic downturns -- low lease rates can be found right now -- and if a company expands correctly, it can be done extremely efficiently in this marketplace,” said Wetzel.

Fantastic Sams now feels it has the proper tools with which to leverage the downturn -- and its subsequent opportunities -- to ramp up the chain’s growth.

“One of the hardest parts for a retailer during growth times is the ability to understand what its potential is and where that potential is located,” said Wetzel. “By having a forecasting model, we are able to sit at a table and have a strategic conversation on how many stores there should be and where they should be located, which allows Fantastic Sams to mobilize as a company around its growth strategy.”

Which is exactly what the company is doing. Fantastic Sams, said Sturgis, is employing Buxton’s market-optimization studies (they did eight, beginning in early 2008) to create market plans around key areas of expansion. “We then use these plans to identify available sites in the potential markets where our existing franchisees can expand, or to work with the landlords to identify potential new franchisees.”