Your Salon Suppliers Are Stealing From You

Your supplier calls themselves your partner. They're not. Let me show you exactly what they're Build your salon. I wanna share with you something that surprised me. We didn't come into white label products as a grand strategy. I came to it because I had started to fit hair systems for guys that were losing their hair. And there was nothing in our supplier range that was suitable for use on hair systems. And the products that came with from the hair system supplier were, to be honest with you a little bit, shit, they weren't the product quality that I would want to pass on to my customers. Were a premium salon. We charge high prices certainly for hair systems. Were charging a lot. I wanted the best and it just wasn't available from the hair system supplier, all the people that supplied all of our other products. So we went to a white label company. In fact, I went to a few and shopped around and had a little look at what was available and I was blown away because white label used to be terrible, terrible products if you could get hold of them, they're only really designed to go in hotel bathrooms. That's not the case anymore. And then I started to look at the numbers and what we were making on a white label product versus what we were making on the branded products that sit next to it on the shelf. And the difference is staggering. So we looked a little harder and then we started replacing some of those branded products with white label alternatives one by one. And we haven't looked back so much. So now that you won't find branded products on my salon shelves at all, and that's what I want to talk about today. Not just white labeling but the whole relationship between salon owners and their suppliers. Because I think most of that with that story that we've been sold about that relationship just isn't true. I'm Phil Jackson, your queen of salons coming all over the airwaves with another dose of my wise, our wisdom. How on earth are you as we steam towards the end of May, my goodness, nearly halfway through the year, the midsummer before you know it and then we can all get ready for winter again. What depressing thought? Some good stories though coming outta the group coaching program. As we get towards the end of the month, some triumphant totals being put in people's tills and I hope that's the same for you. Why not Reach out and let me know. I'd love to hear from you about what's going on in your salon business. Love hearing from my salon owner friends, plus I'm bloody nosy to be honest with you. Less face facts. Anyway, back to retail and what's going on here. So you've been told your entire salon career that your suppliers are your partners. And it's a lovely cozy idea that the brands that you stock are invested in your success. That they're working alongside you and you grow your business together. And they're not. The supplier's goal is to sell products, lots of products. Your goal is to sell your time and your expertise. Sometimes those goals align because sometimes when you do well they do well as well and sometimes they don't. And that partnership story starts to feel like a load of old flannel. And we've seen this with different manufacturers over the years. Naming no names but a certain skincare product that was never gonna be available outside salons. It was always gonna be something that was professional only. Suddenly it's in every airport around the world and suddenly it's on our high streets as well. And that partnership has been wrecked along the way. Or maybe there are other brands that you can think of that were supposedly so exclusive and maybe they even promised you exclusivity in your town until a multiple decided they were gonna put a branch in there as well. And suddenly you are competing on the same high street or all of those exclusive products that we're not allowed to sell online and we'll get told off for diverting products and yet suddenly they're available from the wholesalers online. Suddenly they're available on Amazon too. That partnership story is there to make you a more compliant customer. It's to make sure that you are fulfilling the minimum orders, making sure that you are willing to take on unproven stock, making sure that you are holding a full range of products even though you know bloody well that some of those products will never sell. Making sure that you are less likely to push back on those price increases, that you are loyal to a brand even when it's not particularly loyal to you or it's not earning its shelf space. Think about the last time a brand rep came in. I mean for some of you that doesn't happen anymore anyway. But think about the last time a brand rep came in all excited about a new product launch and a special introductory offer and you buy a certain amount, get a discount, maybe some display materials, maybe a couple of hours training and it feels supportive. But what's actually happening is that you are being asked to take on the risk of an unproven product. The supplier gets the guaranteed large volume sale, their commissions in the bag, their warehouse is a bit emptier, their risk is zero 'cause they passed it all on to you. And then you are left with boxes are something that your clients may or may not want. You are taking the risk on. You've tied up cash in products that haven't even earned their shelf space yet. And it's okay to not take the latest and greatest from your manufacturers. Why not just say to them No and we'll give it three months, give it six months, let's see how it's selling, then let's see whether our customers are asking for that product. Then we'll bring it in. That partnership mindset makes you buy with loyalty instead of using the data and that is costing you. There are three ways that suppliers make money out of you. The first is what we call margin pressure. So basically your supplier is competing for profit margin. There's only so much profit in a retail sale if a supplier's cost go up. So the raw materials or the shipping or whatever, they don't absorb it, they pass it on to you through wholesale price increases. But you can only charge your clients so much. So that increase comes directly out of your retail margin. If there's 20% profit on a retail product and your manufacturer's costs go up by one or 2%, it can only come outta that profit margin, especially if you are sticking to their recommended retail prices. And who the hell would do that for? Goodness sake, they're recommended for a reason. Second, they are also direct competitors. How many times can you recommend a product to a client only for them to go home and find it cheaper on Amazon and delivered next day? Your supplier is the one making that happen. It's not happening by accident. They have teams dedicated to selling direct to customers through online retailers. And the worst way that I'm seeing this, and you need to be so, so careful, is these manufacturers that are saying, don't carry too much stock. We'll send them straight to your customers for you. Your customers can just register with us. You'll get a commission so you're not carrying lots and lots of stock in the salon. So they're using your professional recommendation, your credibility to create desire for a brand and for a product. You are doing all the selling and then they get your customer details. I'm sorry, but if you don't think that they would quite happily cut you out of that picture one day and keep selling direct to your customers. You are delusional or diluted and being absolutely kidded by these manufacturers. It's gonna happen one day. You mark my words. The third is volume pressure suppliers are built on scale. They want you buying a lot of products, committing to new launches, taking on stock that may or may not move. 'cause every time you do, you are taking on that risk that we talked about in the introduction. A genuine partner shares that risk. A genuine partner would give you those products on sale or return. And let me tell you, most suppliers won't do that. So I want you to think about something which had a bit of a stinky reputation in the past that is white labeling. It's a really quick way to get off this treadmill. And I say this from experience rather than through theory. White labeling means working with a manufacturer. You put your own brand name on a professional quality product. You're not mixing anything in the back room. You haven't got a worry about labeling regulations, things like that. Your supplier will take care of all those things for you, but it carries your brand. And we came to it accidentally as I said, but once I saw the numbers it made sense to go a lot further. 'cause once you cut out your suppliers marketing budget, their sales team, their head office costs and you buy at the manufacturing cost, your retail margins improve significantly. Especially when you think that you can charge whatever you want for that product. So instead of making 20% on a product, you could be making 50%, a hundred percent, 200% on some of these products. That means that you get to run the retail promotions that you want to. You get to give those products away free if you want to. You wanna do a three for two, you can afford to do it. You wanna do a buy one, get one free. You can afford to do it because the margin is there. And most importantly, that white label product is only available from you. They can't get it from anyone else. You're not gonna be undercut on Amazon. It doesn't exist on Amazon. And every time your client steps into the bathroom applies that cream to their face or that shampoo to their hair in the shower, you're getting a little bit of brand reinforcement as well. And let me tell you, I have clients now who no longer come to me for hair systems or any other service, but they still buy our retail. How wonderful is that to have a product that you're not even carrying out service anymore, still putting profit in your bank getting started does not require a massive investment. The white label manufacturers that I use have a low minimum order. Sometimes it's as low as 12 units and that can be a mixed order as well. If you want one of 12 different products, they will fulfill that order for you. The only thing I'm gonna say, and I don't know if this is the same across all white labeling, the only thing I'm gonna say is the lead time is a little longer. You've gotta plan ahead. It's not gonna be something you can order and get on next day delivery. Usually it takes a little while longer. So do bear that in mind. But I think it's worth understanding as, because I think most salon owners have never been told about white labeling. It's never been explained to them properly and they haven't seen the potential yet. I do want you to start measuring your retail properly. Speed of sale is the formula that we're looking for. It's basically how quickly we are burning through a particular product so that we can replace it on the shelf. And at high speed of sale means a product is earning its space on your shelves. If it's a low speed of sale, things are hanging around too long, you've got money tied up in products for way too long. So start measuring the speed of sale. You can do it across individual products, you can do it across ranges. You can do it across your entire retail range if you want to. So it's units sold divided by the number of days stocked that tells you which products are earning their shelf space and which are tying up your cash. It's something that you really need to follow. And if you've got slow speed of sale, I would seriously think about discontinuing some of those products. If you've got very high speed of sale, well careful with that as well because sometimes that means that your clients can't get hold of products 'cause you've sold out. So a very high speed of sale means that we need to bring in a duplicate or an alternative product as well, or increase the number of a particular products that are on the shelf. So it's a really, really useful one to help monitor what's selling in your salon and to make sure that we're really making sure that stuff's sold through very quickly. If you're very clever and you've got terms of service with your suppliers, if you've got, let's say 30 days to pay, then hopefully we can sell some of those products before we've actually paid for the invoice too. Don't accept everything from your suppliers. Dead stock is a decision. It means that what's sitting there is just cash that you've tied up and you've chosen to leave there. If you've got stuff that's hanging around and your suppliers won't take it back, firstly, remember that next time you're ordering from them. And secondly, if you can't get a buyback clause, then I'm afraid it will be discontinuing that product. Sell it off cheap. And bear in mind that you probably don't wanna be buying as much from that supplier next time. So be a good customer. Pay on time, give honest feedback, acknowledge what's working, but be equally honest about what's not. 'Cause the relationship only changes when you stop taking on all of the risk and start having conversations based on the performance of those retail products. Your retail shelf is prime retail estate. Treat it like it is. So there we have it. And shifting that client, that supplier relationship rather. Come on Phil. We're nearly there. Shifting that supplier relationship is one of my 10 minute money fixes. There are five 10 minute money fixes available to you all for the price of nine whole pounds. None of them takes more than 10 minutes. The link is in the description. 10 minute money fixx.com. If that will be helpful to you, then please. I would love to be sharing in your salon success. It's designed to keep more profit in your bank and away from greedy suppliers and other people too. Just a few short days until I'm coming all over the airwaves again with another dose of my wise, our wisdom. And until then, take care.