In today’s economic climate, every salon owner wants the best recipe for success. Twenty years ago, the shopping centre business model was accepted as the go-to, but today things are very different. A huge number of factors have contributed to this shift – social media has allowed salons to connect directly to clients, malls have competition from online stores, and with people being time-poor, and traffic increasing in many areas, our lifestyle is more pressurised than it used to be.
Shopping centres, and the attitude of landlords, also play a role and this was reinforced in the recent anonymous survey that Hairnews undertook. The results from the survey are published below – we are grateful to everyone who took part.
Separately from the survey, we have also interviewed some leading salons who have made their business model work well for them, and their feedback is below the survey results.
Shopping Mall Survey Results
Of the respondents, 72 percent are currently in shopping centres, and 28 percent have relocated elsewhere and spoke about their recent experience while in a shopping centre.
Relationship with Landlords
• 41 percent of respondents said their relationship with landlords was average
• 25 percent stated their experience was always positive.
• 17 percent said their experience was always negative
• 17 percent said their relationship was worsening and becoming more difficult.
• No salons reported that their relationship was improving.
• Comments included landlords having a take it or leave it attitude, and that landlords don’t understand salon cost structures. One owner with salons in two different centres, had two completely different landlord relationships, one was reasonable, the other totally unsatisfactory with arrogance of unacceptable levels.
Shopping Centre Rentals
• 26 percent of respondents said that their rental was fair and it was possible to run a sustainable business
• 74 percent said the rental was unfair and it was difficult to do business.
• Comments included the fact that years ago, rentals were about 12% of turnover, today it is around 18% to 20% of turnover, and that Rentals are definitely too high....the commonly accepted + - 10% of gross turnover have not been the case in many years
Locations and Rental Amounts
• 56 percent of respondents were located in large shopping malls
• 40 percent in smaller malls
• 4 percent in retail parks.
• 8 percent of respondents paid more than R750 per square metre
• 24 percent paid R500 to R750 per square metre
• 52 percent paid R250 to R500 per square metre
• 8 percent paid R150 to R250 per square metre
• 8 percent paid less than R150 per square metre.
Rental Negotiation
• 36 percent of respondents were unable to negotiate their rental
• 36 percent said their ability to negotiate had decreased over time
• 16 percent were always able to negotiate
• 12 percent reported that their ability to negotiate had improved over time.
Opening Hours
• 68 percent of respondents were compelled to abide by the mall’s opening hours
• 16 percent had a small flexibility in opening hours
• 16 percent were able to keep their own opening hours, different from other stores.
How busy is the centre?
• 76 percent of respondents stated their centre was only busy at certain times or certain days of the week.
• 16 percent said their centre was always very busy.
• 8 percent said their centre was never very busy
Passing Trade
• 48 percent of salons said passing trade and walk ins were an important part of their business
• 40 percent stated walk ins did not play a big part
• 12 percent stating that the majority of their business came from passing trade.
• In terms of new clients, the majority were word of mouth or personal referrals, with marketing campaigns also important. Passing trade and salon signage were also important contributors. Social media played an important role but was not the biggest tool for any of the salons who responded.
Comments from Leading Salon Owners
Terence of Terenzo Hairdressing – in a private property, Jhb
I have been seeing for 10 or 15 years now that the shopping mall business model is becoming less viable; this has been confirmed to me by the many interactions I’ve had with other salon owners.
20 years ago you would pay top dollar per square metre in a shopping mall but you got enough passing trade to make it worthwhile. Today, there is less passing trade in many shopping malls. More and more malls are being built, but online shopping competes with the mall business model, and also as big cities densify, clients choose to shop at smaller and more relaxed locations. Many people also have more limited time due to traffic, and a busier lifestyle. Having a “day out” shopping with lunch at a mall and doing your hair is not a popular pastime any more.
Most Afro hair clients have retained a confidence and loyalty to specialist Afro salons, and this can impact upon hair salons in areas where the shopping demographics have changed as their salon is no longer appealing to the total shopping demographic but only to a smaller portion of it... yet they are paying the full rental.
I believe that the big salons who are rocking the shopping mall setup, have an excellent business model but it is also a case of “the strong survive” as they are the “last man standing” in many big malls, where smaller salons have not succeeded and closed their doors!
In five years I believe there will be very few salons left in big malls, if any, as it will be even more challenging. The world is changing and we have to adapt to it.
My salons have never been located in a shopping centre, and this was a personal decision rather than a business one, because when I started malls were very popular locations. However I wanted to see the sun, know when it rains, and be more connected with the outside world. I decided if I was spending my life in a salon it must be in a location that was pleasant for me. From a business perspective, owning my own place makes it an additional investment, as opposed to renting space in a centre.
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Terry Scott of Terry Scott Hairfashion – in large shopping malls, Durban
Shopping malls do work when it comes to walk-in trade , but it comes at a price... the shopping mall rentals are currently way too high for our business model, and are forcing salons to quit the larger malls and find more affordable space. One of the malls where my salons are located, the smallest mall, has the most salons out of all the malls in Durban – 5 salons! This means the slice has gotten smaller, and with most carrying the same retail, it impacts upon our sales. We are a very strong brand which helps, and so does the fact that we bring the centre a lot of business as clients come to have their hair done and then shop. The load shedding has also been a huge problem resulting in loss of profits.
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Clinton Valjeaux of Jeauval Hair Salons – in convenience centres in Jhb and Cape Town
Location, Location, Location... there are no truer words for a salon! Being located in a shopping centre means convenience, comfortable parking, accessibility. Clients can pick up essentials or get their car washed while they are here, which they love in today’s hectic world.
However, we have changed our business model over the years from larger malls, to more convenience-type centres such as Nicolway and Dainfern Square in Johannesburg, and the Sanctuary Centre in Somerset West. These offer easier parking and access with less congestion.
The big plus about our locations is that they offer generator power in case of load shedding, and have water tanks. These are vital to our survival!
Rental costs are a factor and we have “expired” certain malls as time has gone by, this is often due to a change in LSM as we are a luxury brand that offers our clients the very best experience. Although it is a huge investment, we constantly change and update our salon design to keep a fresh, new look and reinvent ourselves.
Jeauval will turn 30 years old this year, and so far our formula is working well for us, however we are always open to change if needs be as nothing is set in stone!
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Will Breedt - @Will Hairdressing in a private property, Pretoria
The advantages of being in a private house are firstly, you can determine your own salon hours and have more flexibility with staff movements, where salons in shopping centres are under immense staff pressure to meet the demand due to the long trading hours.
Secondly, lower salon rentals for destination salons gives you, the salon owner more scope to structure your prices and annual price increases to suit your own business model - owning the property you operate from is always an investment for the business owner long term and can form part of your retirement portfolio.
However there are challenges also! Being a destination salon means that as a business owner, the concept of “Location! location! location!” is so important to establish your salon as the “address” to be at. Also, marketing and social media strategies need to be in place to advertise and build your business continuously. As a result, it might take salons in houses or commercial properties in a residential area longer to build a solid client base and to establish the salon as a elite destination -salons in houses need to guard against being too informal, “homely" and not upholding professional standards. So one of the challenges is to strike a balance between finding your identity as business without being perceived as a “back street salon”.
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Gina Capra: Palladium – in a lifestyle centre, Pretoria and Cape Town
“We are more of a destination store, and our two salons are located in lifestyle centres rather than big malls, with exclusive stores around us making the environment unique. We have always strived to be more than just a hair salon, and our success lies in how we make people feel – we strive for a theatrical feel that offers a memorable experience!
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Simone Black: Lonehill Hair – in a small shopping mall, Jhb
Being established in an area for a long period of time is definitely an advantage for a salon, but not necessarily in a specific mall as the centre management could decide not to renew your lease at any time... it’s important to try and keep a good relationship with mall management!
Your skill, reputation and how you treat your client’s is what contributes to your success.
Pricing is important as you still have to be affordable for your demographic even though your rentals may be high.
Is a shopping centre location essential? Well, passing trade is important for new stylists in a salon more than for the established hairdresser who has built up a good reputation.
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Larry le Roux – previous owner of Bijan in a large shopping mall, Jhb
As a salon owner for many years I have seen that salons are perceived differently today by landlords. Thirty years ago we were regarded as a service business, and we were charged a lower rent for premises which would sometimes be in a quieter part of the mall. However when retailing became a bigger focus, and we started displaying products at the front of the salon, landlords began to perceive salons differently and started treating us as a retail business rather than a service business. This meant our rental increased accordingly, despite the fact that retail does not play a major role in a salon’s business.
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