At some point in time, beauty products sold in Kenya were estimated by the Kenya Association of Manufacturers to be worth approximately Kshs. 100 billion.
So clearly there is money in beauty. Such a big industry also comes with competition.
There are hundreds of thousands of small-scale retailers and this means if you want to invest in the same business and scale up sustainably then you have to do it differently.
Do it different
Consider a brand like Bestlady.
They are among the biggest retailers in Nairobi’s CBD and despite there being hundreds of other competing retailers, throngs of customers always line up at Bestlady stores. What do they do differently? What about Lintons? Why do they manage to pay rent for stores in high-end malls like Garden City? They are obviously doing something that other retailers are not doing.
The primary strategy of Bestlady is to be widely known as the most affordable source for a specific product. They are the number 1 source of artificial hair and they are so well-priced that even resellers come to buy from them in bulk. Their stores sometimes stock a portfolio of other items but their main focus is hair.
Making a beauty shop synonymous with a specific product is an easy way to penetrate a very populated market. Customers tend to trust that because you are selling a single product then you are an expert (and the best) in it.
Once you instill confidence in customers, it becomes easier to scale up via word of mouth and other buyer recommendation mechanisms. This is as opposed to setting up a shop that sells all things at once because competition is much higher in such a case.
Understandably, there are different factors that determine the success of the shop. It matters where your shop is located, the product range, the size of the investment, the target market, etc. However, even in consideration of these factors, using a single product to differentiate your shop from others is a safe bet.
Integrating backward
In business, there is a concept called backward integration.
This is where a supermarket for example starts making its own branded products. The supermarket, by manufacturing a product, is taking on a new role that should ideally be done by manufacturers.
A similar thing can be done with the supply chain. Instead of being simply a retailer, you can establish direct contact with the manufacturer and hence take over the role that a distributor does.
This is how shops like Bestlady can keep their prices lower than everyone else.
For example, if a hair distributor sells a single piece for Ksh 100, Bestlady could be getting it from the manufacturer at Kshs 70. So while other retailers are selling the same hair for Kshs 130, Bestlady can sell it for Kshs 100.
Integrating backward demands volume.
Most manufacturers will not sell a few pieces to you – as a retailer- directly but they can accept an offer where you are buying significantly larger quantities. This is where the idea of having a shop that is known for a single product pays off.
You can take large quantities of a product from a manufacturer and get a discount that allows you to sell cheaper than everyone else.
Also, even if the manufacturer will not sell to you, the authorized distributor will give you bigger discounts if you buy in large quantities. It is a win-win scenario.
Selling cheaper means you quickly gain customer traffic.
In the beauty industry, because customers are many, buying frequently and naturally looking for bargains, it is very easy to gain thousands of new customers by selling an item for a few shillings less than your competitor.
Once your shop starts commanding a large loyal following, you can introduce new items that supplement the primary product that you are selling. For example, if you are selling lipstick, you can add other face products.
