The long and short of it: An interview with Great Clips
While at this year’s International Council of Shopping Centers at (ICSC) RECon conference, I ran into Steve Hockett, President of Great Clips, a hair salon which has enjoyed healthy growth and loyal patrons. Great Clips typically sets up shop in neighborhood or community shopping centers, Kimco’s sweet spot, and the chain currently has 57 locations throughout our portfolio.
Steve took some time to speak with us about how the chain has become so successful and their plans to further expand in the next few years.
Tell us about Great Clips.
Steve Hockett: Great Clips is a franchise company in the no-appointment, walk-in hair care space. Our first salon opened in Minneapolis in July of 1982, and our first franchise salon opened in July of 1983. Right now, we have over 3,700 salons open and we are 100 percent franchise-owned. We’ve got 1,200 franchisees, who employ around 35,000 stylists in salons. We operate in 170 markets in the U.S. and Canada and we did 90 million haircuts last year, across all of our salons.
In the last few years we’ve opened over 200 new salons a year and we continue to expand. We’re very proud of finishing up our 43rd straight quarter of same-salon sales increases. It will also be our 38th straight quarter of same-salon customer count increases. So while we’ve been growing our salon base and opening in markets and expanding our presence across the U.S. and Canada, first and foremost is growing the existing salons, which we have now been doing for 11 years in a row. It’s been quite the accomplishment and we’re very proud of that.
Who are your customers?
Hockett: We serve both male and female customers. We’re probably 70 percent male, 30 percent female in the average salon, with all age ranges included. Historically, we’ve gone into areas where there have been families and economic growth, but we’re also opening more and more salons in dense urban areas. Everybody that’s willing to pay for a haircut is our potential customer. They’re already getting their haircuts somewhere, we just want them to come into Great Clips.
Great Clips has a long history with Kimco. How did that relationship start?
Hockett: Back in 1996 not many in Ohio were believing the Great Clips story, given our small size and newness in Cincinnati and Dayton areas. It was very affirming and greatly appreciated to have developed a relationship with [property manager] Marcia Roush from Kimco. This gave her comfort to take a risk on Great Clips, believing in Great Clips as a brand, accepting Great Clips and our franchisees as people who stand behind their word, and helping the Great Clips system open a salon in Dayton back in 1996 when not many others in Ohio were yet as comfortable with the risk of renting space to a Great Clips franchisee.
What type of locations do you seek when opening a new salon?
Hockett: Our intent has always been to look for centers anchored by shops like Walmart, Target, and similar stores. But we also do very well in strip centers that have great visibility, and good ingress and egress in a retail area. Good retail areas are where we want to be. In many ways, we’re the destination where people go out just to get a haircut, but we also know that that’s not always the only thing that they’ll do in the shopping center. Our average customer comes in every four to six weeks, so if we can be where people are consuming and where retail is building, we know that they’ll come in and see us when it’s time for a haircut because they pass by us when shopping at other stores.
We’re a Heartland company; we started in Minneapolis in 1982 and so we’ve grown very extensively throughout the middle part of the country in major markets, small towns, urban areas, and rural areas. We’ve also got a presence on the coasts, although our presence isn’t as great on the coast as it is in the Heartland cities, so that’s where our growth opportunity is. It’s really everywhere, but primarily in newer markets along the coast.
What’s your upcoming growth strategy?
Hockett: We’ll continue to open over 200 new salons a year. We see that that’s very realistic and I would say that’s our plan for every continuing year for a long time. We signed over 270 leases last year and in 2012 and 2013, we signed over 290 leases each year. Some of those leases are for relocations, but primarily they’re for new salons, so there’s no reason that we can’t continue the 200+ pace on new salons.
How do you attract customers to your stores?
Hockett: Well we’re really aggressive in marketing. We very much believe in acting and thinking like a retailer. Franchisees contribute five percent to an advertising fund in every market, and we work closely with the franchisees to plan out how that money is applied for the benefit of the salons. Our whole approach is to drive customers to the shopping centers where we’re located, through our front door and we do that in many different ways. A matter of fact, we’re different than most retailers in that our goal isn’t to expand the average invoice or the lines per ticket. Our goal at Great Clips is to serve more customers and get them to come in for a haircut so that we have more tickets. If they happen to purchase some product or do another service, great. But we’re all about haircuts and that’s how we want to grow.
We try to be a great tenant for landlords in that we’re constantly working and marketing to bring more customers to our front door rather than less, and we want more customers rather than more dollars per customer. We think that’s healthy for the franchisee, we think it’s healthy for the brand, and we think it’s healthy for the other tenants in the center if we focus on that. Aggressive marketing is a big part of it, but we’re also into applying technology to a commodity business, and so our online check-in service that we rolled out three years ago has completely changed our business. It creates loyalty in ways that we’re only now beginning to understand. In the last few months over 22 percent of our customers use online check-in and on the peak weekend periods that probably pushes well above 30 percent on a system average. Some of the highest volume salons, over half their customers use online check-in. What we’re trying to do is make it convenient for customers. If you pick up your phone and hold it in your hand, we view that as our front door. So the more we can connect with customers in their life and lifestyle through technology, on our smart phones or even on their desktop, that means we’ve taken the front door of your center and we’ve pushed it out to where the customer is, and if they open it there, it’s great for business.
Tell us about the creation of your philanthropic division, known as the Great Deeds program.
Hockett: We’re in big cities, small towns…in growing areas, rural, so we’re really everywhere and we want to continue to be in these places, and so we believe in giving back and being part of the community. We trust in sharing great things to help the communities that we serve, work, and live in. Great Clips always wants to strengthen the people and communities that our franchisees serve and that’s what Great Deeds is all about. It’s really a call to action for salons, employees, partners, and friends to keep remembering what makes Great Clips great, which is the communities that we live and work. Great Deeds is really all about helping make the communities we live and work better places to be, better places to live. And then we have a number of programs that fit underneath that really try and project Great Clips as just a real solid contributor to the community.
How do you choose which charities to donate to?
Hockett: Well we have some of them that we do on a broad base scale, such as Children’s Miracle Network, and we’ve been supporting Children’s Miracle Network Hospitals for 10 years. Last year, the participating salons raised around $850,000 for Children’s Miracle Network Hospitals. Also, the local franchisees choose the charities they want to support. Here in Minneapolis, where Great Clips is headquartered, we support Children’s Miracle Network Hospitals. We have a Cut-a-Thon for cancer in Chicago; Ronald McDonald House has a big local market support in other areas; as does Habitat for Humanity. Great Deeds doesn’t force the franchisees in the markets to only do broad-based system-wide or national programs. It’s really focused on local, community-minded programs, even down to supporting Little League teams.
This has been an installment of StoreFront, an interview series with leaders of successful retail businesses. For more interviews, visit the StoreFront page. To learn how you can be featured, email us. We’d love to hear from you.