Upstarts: Children's Hair Salons

Little Clippers

Kid-centric haircut chains seek big profits from tiny heads

Any salon-industry analyst can tell you: children's hair care has never been what you'd call cutting edge. With customers who wiggle, wail, and may even bite the hand that shears them, it's a market that stylists and businesspeople have traditionally eschewed.

Hair care is a $45-billion, wildly fragmented industry. Of the estimated 350,000 salons in the United States, 80% are mom-and-pop operations and 20% are chains. Hair care for kids under 12 makes up just $5 billion of that market, tops. So servicing only the tykes excludes nearly 90% of potential customers, says Jeffrey S. Stein, a managing director at McDonald Investments Inc., in Cleveland, who tracks $1.1-billion Regis Corp., a public company that owns, franchises, and runs such hair-cutting chains as Supercuts and MasterCuts. From a business perspective, says Stein, that's tantamount to butchery.

The founders of several start-ups disagree. Since 1995 at least four new children's haircutting chains have sprouted up around the country. They join old-timers Cartoon Cuts, a $4.5-million, 16-unit outfit whose first salon opened in Fairfax, Va., in 1991, and $2-million-plus Kids' Hair Inc., which launched the first of 10 stores in 1992 in Edina, Minn. The growth spurt recalls that of children's specialty retail outlets like GapKids and Gymboree, which emerged in the mid 1980s to exploit baby boomers' lavish spending on their young. "They're popping up for the same reason that designers like Tommy Hilfiger are coming out with baby clothes: to capture those dollars that parents are willing to spend on children," says Stacey Soble, editor-in-chief of Salon Today magazine.

All save one of the current crop of kids' cutteries began as regional enterprises, but most have ambitions to expand nationwide, either as company-owned or franchised operations. Their home bases extend from Euless, Tex. (Cool Cuts 4 Kids Inc., which -- with 25 salons and revenues of $4 million -- is the largest), to Granger, Ind. ($2-million Treehouse Salons International LLC, which has 12 salons, 4 of them franchises); from Chicago ($1.1-million Kid Snips, with 4 stores) to Natick, Mass. ($1.5-million Snip-its Corp., also with 4 stores).

The exception to the regional rule is Cool Cuts, whose founder from the start envisioned a national chain with hundreds of outlets. "The question was, How do we replicate the concept efficiently?" says CEO Armand Phillippi, who opened the first Cool Cuts outlet in 1998 with $1.5 million from St. Paul Venture Capital. The answer is partly economies of scale: money in the bank enables Phillippi to order up to eight stores' worth of equipment at a time, reducing his start-up costs for each store from $100,000 to $70,000. And it's partly rigorous demographics research: computer systems at the point of sale capture customer data that Phillippi uses to learn each location's socioeconomic makeup. The customer data -- combined with sophisticated mapping that superimposes spending habits on demographic and economic data such as median home values, household income, and number and ages of children -- allow Phillippi to pinpoint the most lucrative spots for new sites.

Despite the chains' similarities -- they all claim dedication to superior customer service and consistent offerings -- each one plays its own variation on the we're-a-place-kids-can-call-their-own theme. Cool Cuts, for example, slices its waiting area in two. For kids 6 and under, a gated-in play space is stocked with Legos and videos of the Barney and Sesame Street ilk; for older children, there's an area lined with Nintendo 64 stations. Kid Snips sells toys (which account for about 20% of revenues) and splashes whimsical jungle creatures on its walls. Treehouse bills itself as a family destination, cutting the hair of little ones, their teenage siblings, and adults (customers aged 14 and over account for 20% to 25% of its business), and offers family-discount packages. Stylists at Cartoon Cuts wash as well as cut their customers' hair, dousing the suds with hoses that emanate from the trunks of green fiberglass elephants.

For the most part, though, the kidification of salons depends on universal elements. Crayons, toys, and videos entertain waiting customers. Televisions, with or without VCRs and video-game systems, dominate cutting stations. Specialty chairs -- a rocket ship, a jeep, a race car -- or standard salon chairs outfitted with booster seats are the furniture of choice. Stylists blow bubbles and proffer balloons and lollipops or small prizes.

The exception is Snip-its. That's because president and founder Joanna B. Meiseles knows that when you're building a brand, you have to be unique.

From shear to eternity
Meiseles knew even before launching her first store, in 1995, that she wanted a brand synonymous with children's hair care. Everything about Snip-its would be -- as at McDonald's and Disneyland -- proprietary and wholesome: the Snip-its characters, perched on a hot pink and lime green entry arch; the hair-care products; the games and stories loaded on funky, quasi-anthropomorphic computers at every cutting station; the books in the waiting area; the Magic Box that dispenses a prize in exchange for a swatch of hair at the end of a visit. "Everybody told me, 'Why don't you just put Nintendo in the computers or show some Barney videos?' " says Meiseles, whose theatrical bent may be an inheritance from her maternal grandfather, Jack Benny. "But I had this idea that I would have more equity if Snip-its were a brand. The kids would see the characters on the computer screens; they would see the characters as their prize from the Magic Box. And when they thought about hair care, they would think of Snip-its."