A Hairdresser's Secret:

Nick Arrojo?

Nick Arrojo on tour at the International Beauty Show

In the annals of luxury beauty and hair care, the latest entrepreneurial insurgent is a 42-year-old Brit who left school at age 16, started working in a salon for £22 a week (about $40, then) because he "needed a job," and stayed because he "could meet girls and listen to music all day."

Today, Mr. Arrojo is stylist on the TLC channel's "What Not to Wear," owner of a New York salon, and plans to open a cosmetology school this summer. Last year, he launched a line of Arrojo hair products and also helps represent Procter & Gamble Co.'s Wella line. And forget the £22 -- he now makes $500 a cut.

Having parlayed his early passions into $5.8 million in sales last year -- and an enterprise that he owns in full with no investors -- Mr. Arrojo's next goal is to track the steps of branded beauty giants before him: Aveda Corp. was bought by Estee Lauder Cos. for $300 million. Frederic Fekkai & Co. sold to P&G in a deal valued around $400 million.

But it's a rocky road in a clubby industry plagued by high turnover and fickle consumers. I spoke to Mr. Arrojo recently about his strategies, including a coming "frequent flier" program (think, Arrojo Hair Miles), and the delicate act of keeping old alliances happy while growing.

Here are excerpts from that discussion:

THE WALL STREET JOURNAL: How does the economy affect hair?

MR. ARROJO: I completely believe that hairdressing is recession proof. People want to look good, feel good and it's always an investment in themselves. I've seen a very small percentage drop in business -- 2% -- but don't think that's the economy but the fact that we had some staff leave.

Of course, costs are rising. Plastic [for product containers] goes up. Energy. The electric bill is huge, about $10,000 a month, up about 10% from last year. And shipping; shipping our hair products to QVC [the cable home-shopping network] was $1,000 last September; now it's $2,000.

WSJ: Why post all your stylists' prices on the Web?

MR. ARROJO: There are a lot of salons out there who don't run as a unit. We are creating a brand people will be loyal to. Whether you have thin or thick hair, you know what you're getting into when you go to our salon. In most salons, when the client goes in, she then becomes a client of the hairdresser and when he leaves and goes to the salon down the street that pays more, the client leaves. It's not about celebrating the individual stylist here. These are clients of the Arrojo brand, not of Tom, Frank and John.

WSJ: How do your stylists feel about that?

MR. ARROJO: It takes 10 years to be a good hairdresser. We don't take away anyone's identity, and being part of a successful brand is now part of their reputation. When you start here, you don't have to wear a uniform; there are equal opportunities and you are part of the team. I train all my own staff meticulously and to the highest level possible. We have 10 classes a week, and you must do a minimum of two, but you are paid to go to class.

WSJ: So how do you handle stylists who leave?

MR. ARROJO: There are two ways to look at it. Get really upset and drive yourself crazy or overcome it by being smart. I don't need to be worrying about hairdressers; I need to worry about clients.

First, I have a [one-year] no-compete agreement that says stylists can't work in the immediate vicinity. I also have a client reward program that is being developed. My idea is to have Arrojo Hair Miles. You get points based on what you spend and they can be redeemed for discounts, services, merchandise and product. The other key is this creates an excuse to get client contact information.

For example, if you went to see Shannon, and then she left Arrojo, if you have 400 or 600 points you are invested here. And I'm going to have your information to reach you. So if you go across the street to Shannon, I can double or triple your points to get you back. And my brand can absorb the discounted service to keep you as a client.

WSJ: How long does it take to get a cut with you at $500 a pop?

MR. ARROJO: I still do more haircuts than anyone in my salon: 25 to 40 a week. When you build a business, if you let go of the reins too quickly, it falls down. People come from all over the country because of the TV show. If someone takes a picture they will show it to somebody, and then I could get a client. I also want to let the public know that what they see on TV is not just me, it's my team. You can get the same experience [from another Arrojo stylist] for $65 . You'll get a piece of Nick.

WSJ: You sell and use P&G's Wella brand in your studio and represent the brand at beauty shows. Why isn't P&G upset about you launching your own competing brand of Arrojo product?

MR. ARROJO: I talked candidly with the P&G folks. They want market share of the beauty industry in the States, and Nick wants to keep building his business and brand. I'm a little dot compared to their business. If I sold to other salons tomorrow, [he sells primarily online, in his salon and through QVC] I'd get them upset perhaps. I'm not planning to go down that road at present. Sure I might make some more money selling shampoo, but I wouldn't get to travel and the exposure and to be visible on stage. Don't bite off the hand that fed you; don't think you can rule the world.

 

 

Via - StartupJournal.Com