From the source: Steve Terry, Hairhouse
Steve Terry founded the popular haircare brand Toni & Guy in Sweden in 1995. After running several online and offline beauty businesses there over the past two decades, he recently returned to Australia to become executive general manager of Hairhouse Warehouse.
Since taking the job in January 2018, Terry has ramped up the business’s online presence, refocused its marketing efforts towards digital platforms and rolled out a number of new store designs. Last week, he unveiled a new brand identity for the nearly 30-year-old national retail franchise: Hairhouse.
According to Terry, the new name better reflects the company’s current offering and future direction, which is to grow the services side of the business. Here, he shares what Hairhouse has learned as an early mover in the services space, and how the business is working with franchisees to grow online.
Inside Retail Weekly: I understand Hairhouse Warehouse recently rebranded as Hairhouse? How long has that been in the works, and what does it entail beyond simply a change of name?
Steve Terry: It’s something the company has been talking about for quite some time. I’ve been with the company now for 14 months, and when I came in, the owners [brothers Tony and Joseph Lattouf] were already talking about whether the name Hairhouse Warehouse speaks to the offering we have today. That warehouse set-up combined with a salon made them successful, but we all know the retail landscape is changing, and the company has become more service-focused over the years.
If you think about what the unique selling point of Hairhouse is, it comes down to the fact that we have 130 stores, we have a really strong retail offering in the professional haircare and beauty space and we’re the largest employer of hairdressers in the country. We have over 1000 beauty professionals, professional hairdressers and piercers, in our stores, which anchors the brand as being an authentic, knowledge-based brand. We felt the name Hairhouse says it all. It simplifies everything, and many people call us Hairhouse anyway, so we decided to rebrand.
We put a lot of work into making sure the change would be accepted by our existing customers, without moving too far away from our aesthetic, but also making sure we’re speaking more to who are now, and potentially attracting a new type of customer.
IRW: So it’s more about ensuring the name reflects the current offering, rather than changing your offering?
ST: Whenever you use the word ‘warehouse’, it implies that you’re shifting goods, so it was almost misleading. We do stock some pretty pricey items, and we actually don’t discount all that heavily. We try very hard to value-add and we work with our suppliers to ensure we’re bringing good value to our customers. I think the ‘warehouse’ mentality was very early on in the piece; the concept of having professional haircare at scale in a salon was something that was very new at the time. And let’s not forget, 27 years ago when the owners started the company, it was cool to call yourself a warehouse. That’s kind of died off.
IRW: We’re seeing a lot of retailers looking for ways to add services into the business to create a new revenue stream or to keep customers loyal and engaged at all points in the journey. What lessons can you share about how Hairhouse has created a positive feedback loop between the retail side of the business and the services side of the business?
ST: For us, we’re grounded in service; that side of the business is second nature to us. Whereas some might consider us a large retail space with a salon, we consider ourselves a salon with a large retail space. That’s just the language that we speak. Anyone operating in that space has to be authentic and consistent with their messaging.
People don’t want to be just sold things anymore, they want to be recommended and educated in order to make an informed purchase, so if you have knowledgeable professionals working in the space, that’s the best thing you can offer. That’s what we’re really trying to do with Hairhouse now: capture the massive amounts of knowledge we have in the business. If you consider we have 1000 hairdressers who have on average say 10 years of experience, that’s 10,000 years of experience we have to lean on.
IRW: What’s the breakdown between the revenue you get from the retail side of the business versus the salon?
ST: At the moment, we’re predominantly retail, but we have a sizable part of the business coming from services, and we have capacity to grow there as well. It’s not a small figure, but it’s not the predominant side of the business at the moment. We definitely want to grow the services side of the business to be more comparable to the retail side. We still have a ways to go with that; we’re still learning.
You touched before on the fact that a lot of retailers are trying to move into the services space to safeguard themselves against the pure online players. That’s an increasingly significant challenge in retail. Fortunately, we don’t have to reinvent ourselves around that, it’s been in the DNA of our business since conception. It’s really just putting more focus on that.
You never know what will happen in future, but at least nowadays, you still have to go to the salon to get your hair done, and to a piercer to get your piercing done, so we have an audience there. And people often have a very intimate relationship with their hairdresser, so we don’t have to sell to them, we can simply recommend to them.
IRW: Do you see different buying behaviour from customers who are also salon customers compared to those who just come in to buy products off the shelf?
ST: They’re reasonably similar in that they all want knowledge. Some customers know exactly what they want to buy and they just come in and purchase it and go, ‘Thanks very much’. But even these customers often want further knowledge. We’re very fortunate to be in the beauty space, because people who are engaging in beauty are doing something for themselves; they’re in a really good space and it’s often a really enjoyable purchasing moment.
IRW: Given Hairhouse’s focus on the services side of the business, which is all about bringing the customer in-store, what’s your approach to e-commerce? Can you share what percentage of sales currently happen online?
ST: E-commerce hasn’t been a big focus for Hairhouse, simply because it’s a franchise business. Our online range isn’t huge; it’s roughly comparable to the range we have in-store, but we talk about our homepage being our biggest window. It’s where we meet the overwhelming majority of our customers for the first time, so we try to ensure our messaging on the site is strongly based around the fact that we’re a salon group and we’re knowledgeable.
For us, it has been important to educate our franchisees that customer behaviour is changing, and we have to be there and greet our customers in a very professional way [online], because if you don’t, online shoppers are going to go somewhere else. The network understands that. We also maintain parity with the stores, so our e-commerce site will never run a deal or bargain that is different to what he stores are doing. And we share a bit of the upside with the network too.
IRW: I know it can be challenging for franchise businesses to operate as omnichannel retailers because franchisees may see the online site as competition that they’re not deriving any benefit from…
ST: I don’t think it was that so much as there just wasn’t a focus on e-commerce until recently. But we recently spent 12 months having meetings with the franchisees and discussing the whole piece. We take a lot of feedback from the franchisees, and we listen to their concerns and recommendations. I think if you approach it like that, as a win-win, then you can find a good solution. It’s a very rapidly changing climate, but our franchisees have been diligent in understanding the online business needs to operate well, and we’re actually seeing very strong growth online at the moment.
IRW: How has Hairhouse been impacted by the increased scrutiny on the franchise sector in recent months?
ST: That’s one of the reasons I’m so passionate about the business: it’s still a family-owned business, we’re not a public company, and the whole network has been formed on relationships. The founding brothers are still very much involved, they’re still majority shareholders, and they still very much care about the franchisees. We have a great relationship with the franchisees, we’re very transparent, we keep a close dialogue with them and we really do believe – and this is continuously reinforced at head office – that the strength of our business are our franchisees. Their success is our success, so we ensure that relationship is strong. We do regular surveys with our franchisees and receive very good reviews.
IRW: I know the rebrand involves trying out new store formats. Can you talk a bit about the benefits you expect to see from refreshing the look and feel of your stores?
ST: The store design is continuously evolving over time. Some of our newer stores – for example Fountain Gate in Victoria – have a very large salon at the front of the store, side by side with the retail offering. They’re both visible from the front window, so that very much speaks to the services side of the business, and that has proven to be very good for us.
In our space, you really need to provide a nice experience to people. They need to be able to test and play. We’re big in electrical – we sell a lot of straightening irons and blow-dryers – so we’ve developed something called ‘style bar’, where people can pick up products and use them. That’s something we’re working on all the time: improving our experience, improving our navigation. We were very campaign-driven for a long time, and we’ve really slowed that down. We’re talking more about that experiential messaging, where people can come in and have a nice experience.
We have a way to go. We have stores within the network that are due for a refresh, and we have stores that have been [refreshed] and have seen an increase in customers and purchase value and more time being spent in-store. We’ll be further developing that design and working on the omnichannel experience over the next 12 to 18 months. The importance of an experiential store environment and knowledgeable and passionate staff is the key to the future if you want to succeed in retail.
IRW: Has your focus on services put you in a good position with your shopping centre landlords as far as leases go, especially as we’ve seen them weighting their tenancy mix towards services and experiences recently?
ST: We have a very good relationship with our landlords, and as you say, they’re really looking at that service side of the market. Hairhouse is also a heritage brand – we’ve been around for so long, and we’ve had such a long and strong relationship with our landlords that we’re not having any issues. I do think the fact that our strategy is to develop the services side of the business moving forward works in our favour.
IRW: Is there anything else on your radar that we haven’t touched on yet?
ST: We’re looking very closely at the digital space. Marketing is not what it used to be, and the company until recently has been fairly traditional in its marketing approach, so we’re focusing on that. We’re continuing to grow our online sales in close collaboration with the network, and we’re working closely on our relationship with our suppliers.
We’re the largest hairdressing company in Australia, which makes us the largest customer to some of our suppliers, so we’re ensuring that we are supporting each other and looking for opportunities where we can gain a share of voice. We also have our own brands within the network that we continue to develop.
We haven’t so much invented a strategy around this, as just looked at what our strengths are, what makes us different to everyone else out there and where we naturally land. Those are the points that we’re truly focusing on. If we continue to work hard and focus on what we’re best at, we’re in a good position. I think it you try to compete with the really big guys, for example, Amazon, and compete on their terms, it’s hard. We’re just fortunate that we’ve been around for so long and are a big company of hairdressers and beauty professionals. That’s not something Amazon can do – yet!