Steve Underhill

TOUCH OF COLOR

Demand for a year-round bronze gives tanning salons their moment in the sun

By Rodger Brown
You can tell indoor tanning is an industry in transition by eavesdropping on Internet forums dedicated to the business. When an enthusiastic newbie recently posted a message on TanTalk.com asking for advice on running his new salon, one veteran offered a cynical suggestion.
“Hey, $200,000 and I’ll sell you mine,” wrote UltraSun1. This old hand said that he was getting out of tanning and that he was thinking of buying a few Great Clips hair salon units. His reason: “Oversaturated business and on the decline every year.”
Tanning saturated? Maybe. On the decline? Unlikely.
Since its early days as a novelty cottage industry in the 1980s, the business of tanning has become more popular and lucrative. Even the perennial warning about the link between skin cancer and overexposure to ultraviolet light has not damped the desire for that “healthy glow” of a tan among the pigment-deprived. In fact, recent news touting the vitamin-producing benefits of a little sunlight has boosted the business, which can now hawk its services with health claims alongside the cosmetic ones.
The mainstreaming of indoor tanning is evident in its shifting demographics: Previously practiced almost exclusively by women in their late teens and early 20s, today 30 percent of tanners are men, with the median age being about 30. According to industry research, this cohort of customers is aware of the risks, sworn to moderation, effusive in its appreciation of the tanning experience and, one independent study shows, possibly even physically addicted to ultraviolet light, that part of the spectrum that stimulates skin to tan.
This increased acceptance has swelled the business. In 1987 there were 11,000 salons nationwide. Today there are more than 25,000 offering expanded services and convenience to the 29 million — mostly women — who are expected to patronize tanning salons this year, according to the Jackson, Mich.-based International SmartTan Network, a trade association for tanning salons.
Where some see oversaturation, others see a perfect opportunity to consolidate the $6 billion industry under one dominant, national brand. Something similar happened to the video rental business in the 1980s and ’90s when Blockbuster conquered a sector once dominated by mom-and-pops, notes Steve Berkman, vice president of franchise services at Palm Beach Tan, based in Farmers Branch, a suburb of Dallas.
“If you look at the tanning industry today and look at the video industry in the late 1980s, they’re very similar,” Berkman said, explaining Palm Beach Tan’s strategy to dominate a sector in which 95 percent of the salons are independent and 5 percent are operated by chains.
“It provides a great opportunity for a true brand to step in and start consolidating the fragmented industry,” he said. “And that’s what we intend to do.”
Such ambition is nothing new. Since the late 1990s, Executive Tan, Planet Beach, Hollywood Tan and similar chains and franchises have promoted their brands to potential investors with pitches much like that of Palm Beach Tan: “It’s not every day that you happen upon the new Blockbuster, Starbucks, or Gold’s Gym opportunity.”
Palm Beach Tan’s goal to emulate Blockbuster’s success might be made all the more tangible by the fact that Berkman is a former Blockbuster executive, and numerous others with Blockbuster résumés have followed him to Palm Beach Tan since his arrival in 2000. “So there really is a unique connection between the two,” Berkman said.
It is ironic that Blockbuster vets have entered the tanning world just as video rental faces increased pressure from online vendors, because it was indoor tanning that many independent video retailers added to their stores to slow the steamroller back when Blockbuster was remaking their industry. Five years ago Worth magazine reported that some 2,000 movie rental outlets had put in tanning beds as a way to increase revenue using existing retail space. Videos and tanning seem an unlikely pairing at first glance, but it made sense: Both are examples of the convergence of technology and lifestyle by means of which early adopters reap high-margin profits.
But wherever mom-and-pop pioneers go to make big bucks, big business is soon to follow.
At the heart of Palm Beach Tan’s franchise model is the superstore — a large, spacious facility, about 3,000 square feet, offering more convenience and a full range of tanning services.
“We saw an opportunity for a superstore concept to build a national brand,” said Scott Pirnie, a Palm Beach Tan franchisee in the Austin-San Antonio area. “Currently, there’s no national brand out there in the space.”
“The superstore concept is all about choice, less waiting and integrity,” said Berkman. The supersize salons offer a full range of tanning options inside facilities that are about twice as large as the traditional 1,200-square-foot to 1,800-square-foot stores.
Tanning comes of age
Palm Beach Tan was launched in 1990 and began franchising in 2003. “The difference now is that we’re expanding across the country with very sophisticated area developers and very experienced retail area developers,” said Berkman. The company is signing on such savvy retailers as Donald Zale, former president and CEO of Zale Corp., as franchisees.
To make the salons successful, developers are locating them in high-end, high-traffic shopping centers that can handle the roughly 250 tanners per day.
“We build salons that are beautiful, attractive and convenient, and we put them into class-A malls or shopping centers,” said Glenn Wilson, director of development at Palm Beach. “We look at our salons as a class-A salon, and we certainly want to be associated with those.”
Berkman says an emphasis on integrity helps cultivate that class-A reputation and is critical for dispelling the image of tanning salons as shady operations. “A lot of landlords have a vision about what a tanning salon looks like,” he said. “We often find it challenging to get that first premier location in a market, but once we do, we can bring other landlords and leasing agents to see how different our salons are.”
The company’s commitment makes it a desirable tenant, says Sandy Owens, vice president of finance and development at Carlisle Interests, a shopping center development firm in Dallas. Owens worked with Palm Beach Tan to build a salon at a Carlisle shopping center in the Dallas-Fort Worth area.
“They made a large investment in the store themselves, and when a tenant will do that, generally they’re committed to that site,” she said. “From a landlord’s perspective, that’s always encouraging.”
Still, will any national brand eventually drive out all the independents?
“Not at all,” said Stephen Underhill, a business consultant who has run salons and sold tanning equipment, and who now advises tanning startups. He points to the high cost of entry — nearly $500,000 to open a salon with the services and image necessary to be competitive — as a barrier to the domination of any one particular superstore brand. Underhill speculates that the technology, utility and space requirements would prevent any superstore franchise from achieving a ubiquity comparable to Blockbuster.
“I don’t think there’s a chance in the world there’ll be a chain with the same exposure as a Starbucks or a Blockbuster, and I’ve been in this industry since its inception,” said Underhill.
For all the diversity of ownership, though, shopping center landlords should be less skeptical about tanning salons, he says. The image problem, for one thing, is long gone. “Used to be when you said ‘tanning salon’ you thought ‘massage parlor,’ he said. “But we overcame that image more than 10 years ago.”
Instead of rejecting tanners outright, Underhill says, shopping center owners and leasing agents should ask: “ ‘Do they have a plan, a program? Do they have a template for success? Or are they just an individual who may be going from being a tanner to deciding, “Gosh, I can do this.” ’ Shopping center owners should ask to see their business plan.”
Say, let’s get a tan!
Underhill says there is plenty of opportunity for success in indoor tanning, though it is anything but foolproof; without a sound long-term plan and deep pockets for marketing, salons will fail.
“The last thing a shopping center owner wants is a business that opened and then closed,” said Underhill. “It doesn’t look good for them, and it doesn’t look good for other tenants if businesses go in and fail.”
To be successful, salons need plenty of parking, easy access, high visibility and lots of electricity and air conditioning, Underhill says.
“A piece of tanning equipment puts out as much heat as an oven,” he said. “Let’s say you open one of the supersalons with 20-plus pieces of equipment. Imagine 20 ovens sitting there running all the time. Tanning is a business that requires more electricity than any other business you can put in a shopping center.”
Once infrastructure is covered, a salon needs to do a lot to attract new clients. Locating in a shopping center that already has high traffic as well as other vanity-industry businesses, such as women’s apparel, fitness centers or nail salons is good, Underhill says, but that is not enough — skillful marketing is needed to bring people in and keep them coming. “Tanning is a destination business,” he said. “Nobody is just strolling through a shopping center and sees a tanning salon and says, ‘Oh, I think I’ll get a tan.’ ”
The upside for a shopping center is that tanning salons bring in customers to the benefit of other businesses, observers say.
“People coming to a tanning salon are people who are out spending money,” said Wilson. Tanning salons work well with everything from grocery stores to jewelers, he says. “Remember, these are people who are paying to tan. They have money to spend on luxuries. That’s who you want at your shopping centers.”

2tan

holly cow thats alot of writing. Franchises are no new thing. How about some 80's franchises, Tan and tone, European tan spa, sporta tan, southern exposure, european tan spa, planet tan, celcius and the new ones planet beach, la tan, executive tan, and yours palm beach. I understand the blockbuster reference with yours but world domination of franchises i will have to see. Im betting on the 95 percent.

unity

I cant seem to recall the last time I went into a video store and chatted with the clerk about the weather or talked for 10 minutes trying to find the right video by seeing "samples".

I think people can deal with the way video stores are. You want a specific video and you certainly don't expect or usually want any help.

Tanning salons are still expected to have the human touch.

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OMG! I made a post! :)

Shantilly

^^^^^^
agreed!!

chicago76

This is an old article........at least 2 years old.

2tan

well did the franchisors take over the world?

DakotaFL

Hello--There are many mom and pop superstores too!!!!