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How Navigate the Upheaval in Professional Product Retailing

July 31, 2017 | By Neil Ducoff | 2 Comments

how to handle professional product upheaval - mmwu 7-31-17

Virtually every professional-only product is now available for sale on Amazon.

It doesn’t matter if the manufacturers’ deal with Amazon is to buy from them and sell at salon/spa MSRP. (This essentially blocks unauthorized Amazon resellers from selling below MSRP.)

What does matter is that the once “professional only” products are even present on Amazon.

FACT: Professional products would have found their way to Amazon … no matter what.

If Shoemaker Birkenstock can battle Amazon … why aren’t professional product makers?

The chief executive of Birkenstock USA, David Kahan, has emerged as an unlikely crusader in a growing battle between smaller retailers and the ever-expanding Amazon online machine.

In a blistering five-page email dated July 20th, Kahan derided the online behemoth for contacting shop owners and offering to buy their products at full price. You can read Kahan’s full email here.

His message to shop owners: Don’t even think about selling our shoes to Amazon. “Any Authorized retailer who may do this for even a single pair will be closed FOREVER. I repeat, FOREVER.”

Birkenstock stopped selling its shoes on Amazon earlier this year, citing a rise in counterfeit products and unauthorized sellers.

Amazon, in an attempt to grow even bigger, has ramped up its efforts to stock its site with third-party goods. In past weeks, the company has contacted tens of thousands of U.S. retailers, asking them to sell their products directly to Amazon. Among the merchants it contacted were shoe stores that sell only Birkenstocks.

OBSERVATION: Imagine if just one professional product company CEO did what Birkenstock’s chief executive did … stood up to Amazon to protect the professional integrity of its product and brand. What a missed opportunity to be THE industry champion.

I get it, and respect what product makers must do to evolve and grow. Business is business and bucking major market trends takes courage and the potential risk of lost revenue.

But salons and spas don’t make products … you use and sell them

Your salon/spa brand is everything that your customers see and experience.

Retailing is going to change because of shrinking opportunities to expand salon distribution due to rental and suites, and more importantly, the lure of direct-to-consumer online selling opportunities. Amazon is just the beginning. Once professional manufacturers get a taste of direct to consumers (and the better margins) professional-only products, as we know them, are history.

Here’s my seven point No-Compromise Leadership hit list for navigating the current and future upheaval in the retailing of professional products:

  1. Service experiences x 10: YES, your salon/spa can deliver service experiences ten times better than you are now. It’s about leadership, skill development, systems, accountability, teamwork, commitment, passion, respect and all that good stuff. It’s time for salon and spa owners to get serious about delivering truly professional service experiences.
  2. It’s a business relationship … not a “love” affair: Salon owners need to understand that using and retailing a manufacturer brand is a “business relationship” … not a love affair. Especially when the manufacturer is openly selling through online channels like Amazon selling at MSRP and making better margins by eliminating the salon/spa. Call it what you want … but if it’s a “love” affair … the product partner is cheating. Sorry, it is what it is.
  3. Do business with a “Birkenstock” that’s committed to defending “Professional Only”: I predict that one will rise from the ashes of mass defections to Amazon and direct-to-consumer online sales. Maybe it’s one of the major brands that will change direction. Maybe it’s a new product player. It’s going to happen, and that company and the industry is going to win big.
  4. Don’t need the “retail store”: If EVERY client receives a truly professional product recommendation … and is asked for the sale … salons and spas could sell crazy amounts of professional products out of a closet. Bring back the professional product mystique by reducing, even eliminating, all those retail displays and ramping up recommendations and simple sale closings. It doesn’t matter if the client sees ALL THAT PRODUCT. You’re a service business, not a retail store. It’s time to reestablish the credibility and professional mystique of the products you use and sell.
  5. Retail recommendations are no longer “optional”: The days of accepting excuses why employees can’t make simple product recommendations are over. This is a leadership responsibility. More importantly, it is a massive cultural shift for almost all salons and spas. Yoda said it best, “Do or do not … there is no try.” Got it?
  6. The private label option: Private label gives you total control of your brand and product destiny. BUT, you need to be ready to invest in, and manage, your own private label business. If you cannot do 15%+ in retail now with the brand names you carry, private label would be more hassle and cost than it’s worth. WARNING: Going private label means playing the product game at a whole new level that IS NOT for everyone.
  7. Retail commissions have to go: All it does is give service providers a choice to “sell” or not. And the last 40 years prove that the majority of service providers would rather not sell … and could care less about retail commission.

Without question, the salon/spa industry has squandered the professional product retailing opportunity.

  • Manufacturers need to own it.
  • Salon/spa owners need to own it.
  • Service providers need to own it.

Here’s my challenge to you: Digest each of the seven points above. Put aside your emotional attachment to what the product side of the industry once was, because those “once was” days are long gone. There are powerful market forces and multiple agendas at play that are changing the industry as we know it.

It’s time to redefine and reestablish the very foundation of what a professional salon/spa service is, and what “retailing” in a professional service setting truly is. Everything is on the table waiting to change. Holding on to what was means digging your heels in and avoiding change. Change is going to occur with or without you. The big question is, are you ready to change and be part of a new future? Start processing the seven points and visualizing a better and stronger business and professional salon/spa industry.

Disclaimer: Strategies doesn’t manufacture salon/spa products. The only skin we have in the product game is to help our coaching client’s salons and spas perform at the highest levels of productivity, profitability, staff retention and customer loyalty as possible. For 24 years, our mission has been to create the most professional and business savvy industry possible.

Categories: Monday Morning Wake-Up

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Comments

  1. Neil, Eli Halliwell here. We met back in my Bumble days. Great article. We created Hairstory to address exactly the issues you bring up. I’m not going to post a self-promoting advertorial here, but I’d love to reconnect to explain further. Please reach out.

  2. WOW, Number 4 has my wheels turning! Would I? Could I? Imagine the exclusivity of your service provider bringing you something unique to your skin goals?!?! And reduce the cost of expensive display inventories?!?! Wow, all I have is WOW.

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