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Sector Focus

Keeping Up Appearances

Comprising a diverse range of business lines, the beauty industry aims to help us feel, look and smell our best.

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Increasingly, people are taking a more holistic view of their health. Today’s beauty rituals now include massages, a full-day trip to the spa where we can relax and unwind, or spoiling ourselves with a luxury high-end product. Beauty rituals are seen as an escape from the hustle and bustle of life in the information age. The demands of work and family have in many ways contributed to the ongoing development of the industry and to the diversification of personal services on offer. For the entrepreneur this continuing growth and evolution offers a varied menu of opportunity.

Products and Services

Beauty industry opportunities can be broadly separated between products and services, though many providers offer both. Within both products and services, there exists a wide range of business models based on target market, production processes and location.

From exfoliating soaps and volumising shampoos to anti-wrinkle creams, the beauty industry provides us with choices galore that fuel our drive to keep looking youthful, attractive and healthy. Cosmetics exist for every style and taste, as well as every skin tone, texture and even allergy. Certain businesses also distinguish themselves through manufacturing processes such as using all natural ingredients or a refusal to test products on animals.
Indeed, it’s in the product or retail division that face and body treatment franchise Sorbet, which launched in 2005, has seen the biggest growth. “Development in the industry has been consistent, but where we have seen the most amazing growth is on the retail side,” says Jade Kirkel, brand manager at Sorbet. “Where once our business was 60% treatments and 40% retail, those figures have changed. Today, at least 60% of our business is selling products.”

Sorbet products include the Dermalogica and Environ skincare ranges, OPI, Essie and Incoco nail care, and Sorbet’s own range of nail and body care products.
“Our focus on retail has seen Sorbet perform extremely well in the last two years and we will be opening our 40th branch this month. Around half our branches are owned by franchisees, and the plan is to open another four before the end of 2012.”

Beauty Industry Trends

Diversity and innovation exists because consumers demand it. The beauty industry continues to expand globally, with some projections claiming 8,5% growth by 2014.
Several trends support this expansion and promise continued profitability into the future.

Globally, rising per capita incomes and greater access to international markets are increasing spending on discretionary items such as perfumes and cosmetics. Though the recent economic turmoil had decreased spending on some discretionary products, purchasing of beauty products has remained strong.

Targeting Male Customers

Unsurprisingly, one of the fastest growing segments of the beauty industry is the range of products and services aimed at men. Where once the beauty industry targeted female consumers, metrosexuals (usually urban males who pay attention to their personal appearance and style) are gaining increasing attention from the industry. Men are being targeted for body sprays, specialised hair products, lotions and even nail care. Salons offer a menu of pampering services for men, including massages, facials, manicures and pedicures.

“We’ve definitely seen our male customer database grow rapidly,” says Kirkel. “The way to attract men to beauty salons is to ensure that the décor is not ‘girly’ or too feminine. Sorbet salons are gender-neutral and our colours and store layouts are designed to be attractive and comfortable for both men and women. We’ve also seen that it takes quite a lot to get male customers into a store, but once they are there and they feel comfortable, the level of customer loyalty is high.”

Brand Loyalty

Kirkel notes that women, who are very experienced consumers of beauty products, tend to be more fickle than their male counterparts when it comes to brand loyalty and they are often more likely to shop around. However, when they find a salon or product that they like, they share what works for them with their friends.

An international survey shows that personal recommendations weigh more heavily than celebrity marketing, and only 44% of consumers buy a particular product because of its claimed attributes. Like many things, beauty products gain a level of familiarity and comfort for the consumer, and switching to a new product often takes some extra incentive.

Loyalty Programmes

Popular marketing campaigns in the beauty industry often include a free sample and discounts for referrals to lure new customers in, and loyalty programmes to keep them.
“In Sorbet’s case, one of the most successful marketing initiatives we have undertaken was the creation of our loyalty programme,” says Kirkel. “It has 70 000 members and is growing every month.”

Hair Care

“Hair care is one area we are very keen to expand into,” says Kirkel. “One of the major trends in the industry is the move to the ‘one-stop beauty shop’. Time-pressed consumers are increasingly keen on salons that offer all aspects of personal care, from hair styling and massages to all the traditional beauty treatments such as facials, hair removal and manicures.”

Express Services

Kirkel notes that the demand for quick services has led to ‘express’ innovations such as 20-minute facials and manicures. “We have definitely seen an increase in the demand for shorter, quicker treatments’ and we are responding by offering an increasing range of these.”

As we can see, the beauty industry encompasses a wide range of products and services, and franchising plays a major part in bringing them to the consumer. As the industry continues to grow and evolve, profitable opportunities are plentiful.

Sales trends

Beauty industry sees growth at its fingertips

Nail varnish has become the top-selling fashion accessory, replacing lipstick as an affordable indulgence in austere times and leading to a boom in sales as consumers flock to buy bright-coloured bottles.
Industry insiders predict nail colour will be the fastest-growing beauty business in the next few years, providing a small yet promising pocket of growth for beauty groups such as Coty and L’Oreal which have led the rush to snap up independent brands.

In France, over the whole of 2010, perfume sales in department stores rose 2%. Over the same period nail colour jumped 42%, according to global market research company NPD.
Nail polish is still a small sub-sector of the global beauty industry compared to other make-up items such as lipstick, and looks even smaller when compared to perfume, but it is on its way to becoming an important business, analysts say.

“We are seeing an explosion in many countries,” said Karen Grant, senior global analyst and vice-president of NPD’s beauty division.
She likened the trajectory of nail varnish sales to that of lip gloss, a niche business which saw sales grow tenfold over the past decade. “If the nail polish market continues to grow, it could also become a big category,” Grant said.

Nail bars, which have mushroomed in many big cities, target women seeking a small morale boost at a small price.

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Sector Focus

3 Tech Trends Your Franchise Should To Keep Up With During The 2018 Restaurant Revolution

For the first time in history, the majority of consumers are – arguably – more interested in how they buy instead of what they buy, according to research. Catch up quickly by responding to this in three ways.

Diana Albertyn

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How many ways can you customers choose an item, order it and pay for it in your restaurant? Mike’s Kitchen, Spur, The Baron, and other sit-down restaurant franchises across South Africa have widely started accepting mobile payments using the Zapper app. If you have too, you’re on the right track, because convenience reigns in the restaurant industry, especially where trends are concerned, for your current and future customers.

“In the last two years, there’s been a 50% increase in restaurants using technology. Almost 80% of guests say restaurant tech improves their guest experience, especially when it makes service faster,” according to a recent study focusing on diners and technology.

Here are three of the top trends influenced by consumers’ mounting affinity for experience over your menu items, décor or prices:

1. Self-service via touchscreen kiosks

Who wouldn’t appreciate skipping the queue and enjoying a consistent enhanced ordering experience? Add rich imagery and food customisation capabilities and you can see why self-service is poised to make a huge impact on the QSR industry in 2018.

Related: How Your Fast Food Franchise Can Attract Quality-Conscious Consumers

While kiosk aren’t a new form of technology, combined with loyalty programmes, touchscreens for mobile order pick-up and – in the near future – facial recognition to identify and service customers accordingly, they’re about to become a mainstream addition.

What’s in it for you though? Well, besides happy repeat customers, your order accuracy will improve and staff will be free to attend to more strategic activities within the business.

2. App-enabled ordering and pick-up

Research by QSR Web found that digital restaurant ordering is growing 300% faster than dine-in traffic.

Because “restaurant consumers are aggressively gravitating toward concepts that offer the greatest level of convenience and control across ordering, payment and distribution,” according to analysts from Wells Fargo, mobile ordering technology requires your franchise to go a level higher than its current system.

Consider implementing features such as dedicated drive-thru lanes to for app orders. Or what about outdoor locker systems activated by a mobile phone, enabling a customers to receive their order without interacting with restaurant staff?

3. Analytics aiding personalisation

Even better than mobile ordering though, is using AI to leverage apps including Facebook Messenger or simple SMS to take customers’ orders, for a personal touch. Not only does the chatbot record orders, but based on individual customer data, it’s able to predict what they may choose to eat based on various factors including age, gender and even mood.

Related: The Only How-To You’ll Need To Start A Restaurant

If you’re wondering how the mood is detected, fried chicken giant and search engine firm Baidu have established the answer: Facial recognition technology piloted in Beijing that predicts customer orders based on their face displayed in the kiosk screen.

“Restaurant technologies that capture data, such as customer orders and preference will businesses better understand their target audience. Hence, they will be used extensively in 2018,” according to Indiez, the company that developed Domino’s pizza’s app.

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Sector Focus

How To Start A Funeral Business

Running a funeral business can be lucrative, but you must determine whether it’s the right venture for you.

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In South Africa, burial remains the most popular end-of-life choice.

“Just how many burials take place is difficult to measure because there is a formal and an informal funeral industry in South Africa,” says Rey von Ronge, secretary of the National Funeral Directors’ Association, an industry watchdog organisation specialising in resolving disputes between undertakers and the public.

This following guide explains how you can open your own funeral home in South Africa and covers these topics:

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Sector Focus

The Pros & Cons Of Owning A Restaurant Franchise

Do you have what it takes to be a successful restaurateur? Our franchise expert offers some words of wisdom.

Jeff Elgin

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There are many different types of business format franchises, but when most people think of a franchise business, their first thought is of food. The success and growth of the many big brand-name fast-food franchises makes this a logical first stop in the thinking process.

When evaluating restaurant franchises, you must focus on the characteristics of the business from a franchisee’s perspective to determine whether this industry is the right one for you.

There are some wonderful advantages to having a food business, but there are also some challenges you need to be aware of before proceeding in this industry.

The advantages

restaurant-layout

In assessing a food business, the main advantages are typically considered to be:

Built-in Demand

Consumers have been trained to look for franchise food outlets, which can represent a big advantage for a start-up. You need to make sure the product offering of the food franchise has “staying power” in the marketplace rather than being a fad or fringe product.

Related: The Only How-To You’ll Need To Start A Restaurant

Ease in Financing

Traditional lending sources are very familiar with the real estate and equipment needs of a prepared food operation, which may ease the challenge of obtaining start-up financing. These sources also like the relatively high revenue production of a typical food franchise.

Track Record of Success

Many food franchises have multiple units and have been operating for a while, making it fairly simple to determine and verify their track record of success. That can help you make an informed decision about the business prior to getting involved.

Prestige

Whether valid or not, many people associate a high degree of glamour with a person who owns a food franchise business. The fairly high degree of status associated with this occupation is important to many prospective franchisees.

The disadvantages

restaurant-plating

In assessing a food business, the main disadvantages typically include:

High Initial Investment

Most food franchises require a significant investment to get started. Food preparation stations, sinks, stoves and ovens, grease disposal systems, venting requirements, customer seating and bathroom areas – the list goes on.

Zoning and Code Compliance

The government tries to ensure that any food business meets numerous codes and guidelines so the food product is safe for the public to consume. Complying with these regulations can initially can be time consuming.

Virtually any food franchisor will provide extensive assistance to a new franchisee in terms of dealing with zoning, permits, code compliance and all other site-related issues, because the new franchisee probably doesn’t have a clue how to do this whereas the franchisor has lots of experience on these matters.

If a food franchisor doesn’t offer extensive support on these matters (you can determine this during your conversations with existing franchisees), pick a different one.

Related: 10 Business Ideas Ready To Launch!

Labour Challenges

Most food businesses require the services of a significant number of low paid employees to conduct their business. Turnover of these employee positions is normally very high, and recruiting and retaining a sufficient number of acceptable quality employees is typically listed as the number-one challenge in any food franchise.

Relatively Low Margins

In food operations, the franchisee has both the cost of goods sold and Labour costs to contend with in an environment that is very price sensitive, especially in fast-food outlets. The net margins of most food businesses are not nearly as high as other (particularly service-related) franchises, and you’re also dealing with spoilage, theft and other issues that you don’t find in many other types of franchise businesses.

Quality of Life

As mentioned above, many people associate a high level of status with owning a food business, at least until they understand the facts of a typical food franchisee’s life. The hours can be very long, as you’re often the first to arrive and the last to go home. The Labour challenges can be very frustrating and are the main reason owners cite for wanting to leave this industry. Then there’s also the issue of what a person smells like after spending long hours each day in a food franchise.

In conclusion

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The obvious question, assuming you don’t have previous experience running a food business, is “how do you know whether you have these skills and aptitudes?” The best answer, and one that is actually required by a few of the most successful food franchises, is to go to work in an existing unit and shadow the present owner until you’ve gained enough experience to know for sure.

This isn’t going to be a process involving an hour or two – more likely it’ll take at least a few weeks to know for sure. The time commitment involved may seem high, but it is infinitely better for you to find out early (and without risking your life savings) if this business is not for you.

A final consideration related to food franchises is this: Some food franchises run very simplified operations and can provide a business model that avoids a number of the disadvantages listed above. These are typically businesses that don’t involve cooking a product, at least not on site. They may use a commissary system to deliver ready-to-serve products, or products that only have to be assembled in order to serve, to the franchise outlet. These types of businesses, like a Subway outlet, can avoid many issues but almost always still have to deal with the employee issues discussed above.

Give some serious thought to the franchisee role in terms of the tasks required in a typical day or week, the hours worked, the investment and the possible returns. Make sure you know what it takes to succeed and that you possess those qualities. Then you’ll know whether being a restaurateur is right for you.

Evaluation Tip

The secret to success in evaluating any food franchise (or any franchise for that matter) is to clearly identify the skills necessary to succeed, then make sure you either have them or go do something else. The food business can be very rewarding to a person who has the special blend of skills and aptitude to make the business work, and these operators are among the most respected in all of franchising because of their success.

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