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Kerastase On Focused Path To Growth

NEW YORK -- Kerastase is aiming for the top -- the top 1 percent of U.S. salons, that is. Kerastase, a hair care brand that calls itself the "creme de la creme of hair care," looks to build a $50 million U.S. hair care business by 2004 despite being...

NEW YORK — Kerastase is aiming for the top — the top 1 percent of U.S. salons, that is. Kerastase, a hair care brand that calls itself the “creme de la creme of hair care,” looks to build a $50 million U.S. hair care business by 2004 despite being available in just 1,000 doors from coast to coast.

The executives at Kerastase, owned by L’Oreal, are betting that exclusivity, combined with a hard-core contract that outlines details such as how many retail hair care lines a salon can sell in addition to Kerastase, is how the brand can leap to the lead of the U.S. luxury hair care market.

Kerastase was born in Paris in 1964, but only first appeared in the U.S. in January 1997. It was then that L’Oreal tested Kerastase in two U.S. salons, Maximus in Westbury, Long Island and Noelle in Stanford, Conn. For 2 1/2 years L’Oreal executives searched for answers on everything from how they should “approach the luxury hair care market, to what type of salons Kerastase would do well in,” said Frederique Besson, Kerastase vice president. She said that included “pricing” and what it would take to grow “the hair treatment category in salons.”

Kerastase, a salon professional treatment brand with three different ranges and 31 stockkeeping units, ultimately rolled out to U.S. salons in 1999 with two major ranges, Kerastase Nutritiv, a maintenance line designed for normal to dry hair, and Resistance, a fortifying and strengthening line designed for weak hair. Nutritiv products, which are packaged in bright orange containers, are a 15-sku range. Resistance, which contains 10 sku’s, comes packaged in green containers. In May 2001, a sun range called Solaire, which is packaged in red containers, was launched, and includes six products.

Kerastase is available in 250 salons here, generating more than $10 million in retail sales, according to L’Oreal executives. By the end of 2002, Kerastase distribution and sales are expected to double.

As David Craggs, president, L’Oreal USA Professional Products Division, said “It’s extremely possible that with a brand of this quality you can achieve the same sales through 1,000 doors as through 5,000 doors.”

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Building on Kerastase’s core business, increasing salon distribution and introducing new brands are some ways to make Craggs’ goals happen. The other is to stipulate, line by line, just what salons can do to maximize Kerastase sales.

In order for a salon to carry Kerastase, the salon has to qualify and agree to a list of “musts.” Each salon must be full service, meaning it must have color and treatment offerings. It must also have an upscale image and be one of the most renown in its marketplace, a characteristic to be decided by the Kerastase team. The salon must have more than six hair styling chairs and must sell no more than five retail hair care lines, all of which must be upscale in nature. Kerastase competes with brands such as Phyto, Philip B., Renee Furterer, Frederic Fekkai and Bumble and Bumble, which generally retail for $20 and up for shampoo, in-line with Kerastase prices.

The contract also contains a diversion prevention policy and stipulates that Kerastase products must be prominently merchandised in stores. Besson added that salon owners are to not “cherry pick” their favorite stockkeeping units, but rather represent all sku’s equally “since it is a prescriptive line,” Besson said.

If a salon meets and agrees to the following criteria, the owner signs an agreement promising it will use Kerastase as its exclusive back bar line. The salon also agrees to order at least $4,000 (retail) worth of products each month, which translates to nearly 200 sku’s. There is no sampling of Kerastase to salons. “The way we sample it is when they buy in to carrying Kerastase, they get all back bar and styling treatments complimentary. Then, they have an ongoing back bar allowance of 10 percent off future purchases,” Besson said.

While the requirements to carry Kerastase seem stiff, Paul Sharnsky, vice president, general manager, L’Oreal Professional, said it makes good business sense to carry the line.

“Building the treatment business in salons” is being addressed, Sharnsky said. Add-on services, such as treatments, helps salons build sales.

Customers, such as the Julien Farel salon in Manhattan, seem pleased with Kerastase results. Roy Teeluck, editorial director for Julien Farel, said Farel has been carrying the line since the salon opened three months ago. Teeluck said he understands Kerastase’s rigid positioning. “You have these great big companies, like L’Oreal, who create this elite line for an upscale market. It’s not something you could just snatch off the supermarket shelf. It’s specially designed to work better,” Teeluck said, adding that, to date, Kerastase has been profitable for the salon.

While Kerastase is on a growth track in the U.S., plans for the brand in Europe are quite the opposite. “We want to narrow it down to a much more selective approach, get closer to the top 1 percent of salons, and then grow that core business,” Besson said. Kerastase is offered by the “top 10 percent of salons in France” said Besson, or approximately 5,000 salons. In Europe, Kerastase is carried by 30,000 salons. More than 700 stores in France are targeted to not carry the line after this year.

Order slips aren’t the only way Besson keeps track of whether salons are keeping to their contracts. Private shoppers help let Besson know who is, for example, performing the signature Kerastase hair-scalp massage. According to Besson, the 15 to 25 minute massage is crucial since it marks the introduction of Kerastase to the consumer. She said shoppers haven’t reported any negative experiences, so far.

Sales growth worldwide comes through building on its core business and word of mouth: Kerastase does not advertise. It does, however, sponsor celebrity-laden events such as the Oscars. Sales growth is also dependent upon new product launches. Scheduled to launch this October is the Dermo-Calm line, designed for sensitive scalps. All seven sku’s will be packaged in blue containers.