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ENTERPRISE–Salon Chain Provides More Than Just a Haircut

Comedian Ray Stevens once sang a song warning his audience never to get a haircut out of town. You might end up with the biker barber, the logger barber, or worse, the born-again barber.

A San Diego-based entrepreneur hopes to change all that. As her fledgling chain of salons prepares to go national, Celeste Dunn wants to standardize the business, revolutionize the industry, and do for tresses what Starbucks did for coffee.

C. Spa Salon will open its third location in early summer; by the end of the year, there will be about a dozen C. Spa Salon locations throughout the Southwest. At the end of next year, Dunn hopes to have 50 stores throughout the country.

Dunn, who owns C. Spa Salon with her partner, Ted Hilling, notes hair care is a market that’s ripe for expansion. Although it’s a $100 billion industry, there aren’t any businesses which have strongly established themselves. The largest company is Regis Corp., which owns Supercuts and a few other chains. They have less than 2 percent market share, she said.

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But Dunn isn’t out to copy Supercuts. Instead, she frequently cites as her model the coffee giant Starbucks.

Like Starbucks, C. Spa will have similar d & #233;cor throughout its branches, giving the salon an identifiable image. But the similarity doesn’t end there. Dunn hopes her salons become a gathering place, where people come to meet.

“There’s nowhere to go anymore and connect. It used to be the office; now everybody works out of their home or out of their car,” she said.

‘Sensory’ Process

“We have to produce in C. Spa that sense of feeling, that camaraderie, or we’re not going to be successful, because it’s got to be a place where people feel connected.”

Part of that process is what Dunn calls a “sensory,” which will become standard practice at all future branches. That process , five complimentary minutes of massage when the client walks in , is for more than just relaxation.

“We work so closely with the person, we are a part of their bodies for a short period of time. It’s only natural that we would want to see much, much more inside that person,” said Charles Williams III, master stylist at the salon’s 5th and Laurel location. “Most of the time, they just come to talk about things that have happened to them during the day.”

Dunn hopes that like Starbucks, C. Spa Salon will become a household name. Already, she’s getting 200 new clients every month at each location , even though she hasn’t yet spent any money on advertising.

For Dunn, all this is a tremendous career change, having come into this line of work almost by accident. Five years ago, she never thought she would walk away from a six-figure income, plus stock options, at Compaq to get into an industry she called “non-sexy” and “low-tech.”

Cross-Country Research

While Dunn was doing market research for Compaq, she traveled across the country to talk to families. Dunn kept hearing complaints about how people felt isolated, she said.

Another frequent complaint she heard was there was never enough time in the day. Women complained about their hair or their nails, but if they wanted to get a haircut, facial and a massage they had to drive around to three different places since no one place provided all three services well, she said.

Eventually, Dunn noticed that two themes kept coming up, no matter where she went. People wanted a gathering place, and they wanted to be pampered. Dunn began thinking about hair salons as early as 1994 , but only as an idea to pass on to somebody else.

By 1997, she was traveling cross-country constantly, and the job was making her feel a bit isolated. So she began looking for something else.

She remembered her earlier idea about hair salons, and did some research. The more she dug, the more she felt this was something she could do. The industry has no real brand leader, and there will always be a demand, she said.

“It’s not an Internet dot-com thing, where you’re going to be hot one minute and you’re going to die tomorrow, and you’re going to have highly inflated values. This is a business where regardless of recession, the economy, ups and downs of life, people need these services,” Dunn said.

Improving ‘Dinosaur’ Environment

What’s more, there’s plenty of room for improvement in what she called a “dinosaur” environment. The industry hasn’t changed much in the past 50 years , in 97 percent of the shops, they still fill out hand tickets.

Also, hair stylists are not employees, but instead are independent contractors. That means no salary, no benefits and , in an industry in which fashions are constantly changing , no paid training to learn the new styles, Dunn said.

But what motivated her decision was meeting with hairdressers themselves. Working as much as 70 hours a week, with no time off on vacations and no chance for advancement, they had lost their resolve.

Dunn saw a chance not only to make money for herself, but also to improve the lives of her workers. As an employee, a worker could earn vacation time, train for a managerial position if a new C. Spa opened, create a retirement fund, and even keep a job if he or she had to move across the country, and there was another C. Spa location at the other end.

These are things people take for granted in other industries; in hair salons, it would be up to Dunn to create it.

Culture Shock

“What drove me to the business was not the business itself. I’m not like some closet hairdresser, or some closet aesthetician , someone who’s always had a passion to do that. I have a passion to meet the needs of the consumer, and I really saw this as an opportunity that no one was pursuing,” she said.

Still, she had a huge amount of culture shock to deal with , like going from high-powered board room meetings to what she called “the Salon Association meeting , at Denny’s.” At first, she began to feel that she’d made a huge mistake.

She also had a bit of difficulty selling her new concept to her potential employees.

“You’re asking people who’ve kept all their clients on 4-by-6-inch index cards in a plastic box and you’re asking them to give you that box of cards and put it in a database that you own. Pretty scary, because that’s their livelihood. So what they think is you’re just going to take that database and run,” she said.

Fortunately, she met Gino Benson, a well-respected hairstylist who was closing his hair salon. He had come to the same conclusions that Dunn made, but didn’t have the economic wherewithal to create it.

“I talked with him, and he said, ‘You know, you’re either really, really crazy, or really, really smart.'”

First Hires

Benson became her first employee; his wife, Pamela, was the second. He then introduced Dunn to many of the people he knew, and Dunn hired them to work at her prototype store in La Jolla.

That store opened in May 1998; it broke even in about a year. Last October, she opened her second location just north of Downtown San Diego , a location she deliberately chose because the demographics were entirely different. Dunn wanted to test whether her concept was portable, she said.

Within the first quarter, the second store was performing at the same level as the first. But more importantly, Dunn saw the numbers were identical , the age of the clients, what they bought and how much they spent.

What’s more, her customers have become loyal to the brand name , something she had hoped would happen. Customers who live in La Jolla and work Downtown come to both locations.

The next C. Spa will open in Poway in June. Two other locations, in Orange County and Encinitas, are under construction.

After that, Dunn will open three more stores in Los Angeles and Orange County, four in San Francisco, and one in Scottsdale, Ariz. By December 2001, Dunn hopes to have 50 stores open in Atlanta, Boston, Dallas, New York and Seattle.

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