Good news comes in the most unexpected forms. When CK Kumaravel stopped by at the Naturals Salon Spa at Coimbatore’s Race Course Road last year; his franchisee’s personnel assumed he was a client and politely asked him to wait because he didn’t have a prior appointment. “We are fully booked, sir,” he was told. The ‘client’ could not have been a happier man.
When CK and his wife Veena set up the first Naturals Salon & Spa at Chennai’s posh Khader Nawaz Khan Road, all they wanted was to have a business Veena could manage (“now that the kids were in school”), and earn at least ₹60,000 per month. They had no other business plan in mind. But Naturals was slightly different from the salons in Chennai then — not only was it completely air-conditioned, it was also a unisex spa. It took some time for the southern city to warm up to Naturals.
Three years, to be precise. Naturals didn’t look back after that, opening branches not just in Chennai, but in small towns and cities all over India, from Pollachi and Nellore to Bhopal and Jammu. From six branches in 2007, Naturals now has 135 branches in 10 states, most of them in tier 2 and 3 locations. “The growth starts in the metropolitan cities,” says Kumaravel, co-founder of Venus Salon and Spa, the company behind the Naturals brand. “Once we are recognised as a big brand in a big city, it’s easy to find acceptance in the non-metros. First of all, the competition is less fierce there, and we are easily accepted as the first movers. Second, there’s a lot of awareness and aspiration — tier 2 and 3 towns are hungry for brands.” He then adds, almost ruefully, “This was a much bigger business than we had ever imagined.”
It costs ₹30-40 lakh to set up a salon; turnover averages ₹4 lakh after the first six months, break-even follows in three-four years. “Capacity utilisation during weekdays is the trick,” says Kumaravel. Revenue across all branches is around ₹80 crore and the company claims a gross profit margin of 25-30%. It’s not hard to see why salons in smaller towns are a paying proposition. The average ticket price at a Naturals Spa is the same across metro and non-metro branches — about ₹600 for men and ₹850-900 for women.
The elongated ‘bridal season’ — comprising 100 muhurat days, and that’s just for the Hindu weddings — is crucial to the sector. Brides in tier 2 and 3 towns routinely splurge more on their big day than their urban counterparts and the clientele in tier 2 and 3 branches comprise more men than women. “Smaller towns are exposed to the same media as the metros and share their aspirations,” says Ramanujam Sridhar, founder-CEO of Brand-comm, a Bengaluru-based brand consultancy. “It’s important that brands are not only aspirational but also able to connect with the consumers of the smaller towns.”
Expanding into smaller towns isn’t too easy, though. Finding the right people remains the biggest challenge and the Kumaravels are involved in training even franchise staff. Four training academies have been set up in Chennai, Hyderabad, Bengaluru and Siliguri, with plans to open two or three more in the North East. “Without our staff, we are nothing,” says Veena Kumaravel, the CEO of the company. “We want to create 50,000 jobs and work with 1,000 women entrepreneurs [many of Naturals’ franchises are headed by women],” she adds. “That’s our Vision 2020.”
But investors have been slow to come by, although the duo is now in serious talks with venture capitalists whose interest comes on the heels of their tie-up with Bharti Retail to establish 250 salons in the next three years — Naturals will be the beauty services provider alongside Café Coffee Day, ICICI Bank and Subway retailing their wares at all Bharti stores across the country. And Kumaravel, a man who confesses to not having known the difference between a manicure and pedicure when they started, says: “The question before us is no longer ‘what to do?’ but ‘where next?’”