Wal-Mart implants hair salons in more stores - Wal-Mart Stores Inc., leased hair care salons

Discount Store News, Nov 2, 1992

MINNEAPOLIS -- After a five-year flirtation with hair care service--hair cutting, coloring, and permanent waves--Wal-Mart is expanding the number of leased hair care salons in its stores, especially in its new supercenters.

The move is in line with Wal-Mart's goal of offering one-stop shopping convenience.

In one of two new developments, a hair care shop franchisor, Cost Cutters, was set to open it first Wal-Mart leased shop in an urban size discount store of 115,000 sq. ft. in Savannah, Ga.

For the past five years, Cost Cutter franchisees have been operating hair care shops in the four Wal-Mart Hypermart USA hypermarkets, and the franchisor has just renewed their leases for five more years. The Savannah shop, covering 700 sq. ft., marks the first expansion of Cost Cutters shops into conventional Wal-Mart stores.

The hypermart hair care shops range from 700 sq. ft. to 1,500 sq. ft.

In a separate development, MEI Salons, an operator of some 1,950 company-owned beauty salons, opened Family Style Salons in two Wal-Mart supercenters last month: Searcy, Ark., which had a soft opening Oct. 28 and Yukon, Okla., which opened on a soft basis Oct. 22. MEI and Cost Cutters are both headquartered in Minneapolis.

Initially, Family Style Salons will offer hair care service, but can expand into other beauty shop services, such as nail care, if demand warrants.

In addition, a franchisee of Fantastic Sam's, a hair care franchisor in Memphis, Tenn., has just opened its 33rd leased shop in a Wal-Mart in the supercenter in Jasper, Ala., and opened another in the new supercenter in Claremore, Okla. The franchisee expects to open additional supercenter shops in Paducah, Ky.; Kirksville, Mo.; and Dickson, Tenn.

The franchisee, Stefanart Inc., Memphis, opened its first Wal-Mart leased hair care center in a conventional store in Oklahoma City, Okla., in March 1991 and expects to operate 48 by the end of 1992, including shops in conventional Wal-Marts and supercenters.

Stefanart also operates Fantastic Sam's shops in Wal-Mart Supercenters in Conway, Ark., and Edinberg, Harlingen, and Mission, Texas.

Stefanart intends to open 40 or 50 more Fantastic Sam's hair care centers a year in Wal-Mart stores, said vice president Richard Repacki. About half of the shops, averaging 1,500 sq. ft., will be in supercenters and the other half in conventional Wal-Mart stores.

"Wal-Mart is a master at providing service and convenience to its customers," Repacki said. Fantastic Sam's also is a family business, and dad and the kids can get their hair cut and styled while mom shops, he said.

Fantastic Sam's, named after its founder and former owner, Sam Ross, charges $9.95 for a woman's or man's cut, style and finish, including a shampoo and blow drying. Competing shops charge $10 to $18 for the same service, he said. Kids' haircuts are $5.95.

Perms at Fantastic Sam's range from $24 to $60, Rapacki said, compared to a range of $30 to $150 in other shops.

Family Style Salon will charge $13 for a cut, style and finish, including a shampoo, against a range of $17 to $23 in similar quality beauty shops. Perms will start at $29, compared to $44 at competitors.

With the addition of a hair care center, a Wal-Mart Supercenter will look more like a one-stop shopping destination.

At the Searcy supercenter, the Family Style Salon will join a Wal-Mart operated one-hour photo service, pharmacy, a vision center and auto service limited to fire mounting, alignment and quick lube service in what Wal-Mart calls Tire Lube Express center.

The Yukon supercenter also will offer one-hour photo, pharmacy and Tire Lube Express, but no vision center.

Wal-Mart obviously wants its stores to be one-stop shopping destinations, said Walter Loeb, founder and principal of Walter Loeb Associates, a retail consulting firm in New York. "It will add all the services it has room for to maximize opportunities," Loeb said. "It's hard to predict what other services it might add. They could be anything from a flower shop to car rental."

MEI Salon is a subsidiary of MEI Diversified and operates beauty salons in department stores, specialty stores and hotels in the United States and Canada. It claims to be the largest single operator, as opposed to franchisor, of beauty salons in North America.

MEI and Wal-Mart are negotiating to open salons in additional supercenters, the company said.

Cost Cutters, no connection to the deep discount drug chain using the same name, also is talking to Wal-Mart about leasing space for shops in additional stores, said John Fox, vp, franchise development.

Wal-Mart is talking to a number of beauty shop operators because not every one can go where Wal-Mart needs it, Fox said. Cost Cutters turned down the Yukon supercenter because it had no franshisee in the area, Fox said.

Besides opening the way for more beauty and hair care service revenues, the deal capitalizes on Wal-Mart's large market for retail sale of hair care and beauty products, said MEI Salon president Gary Hollister.