Soakinuptherays

Don,

Have you noticed the war brewing between Big salon operators vs Mom and Pa salons.

I see that major salon operators have being offered direct pricing deals by lotion companies while small operators are suck dealing with price control discounts from distributors.

Price controlled discounts cap out at 35% on JA with other brands being much less of a discount.

The bigger operators are getting 40%, 50% or greater discounts on those same products meaning the major chains have a clearly profitable advantage over smaller salons.

I am only active in the lotion sales area of out industry but I would assume that this extends to beds, bulbs and other supplies.

What do you think?

Don Smith

Greg:

There is no question but that the "playing field" is not level and the larger operations (chains and franchise) have a "cost of goods" advantage over smaller tanning salons.

PL can help level the playing field.

Lotions that are not sold other than to indoor tanning salons can help level the playing field.

Michael Chunn's "Big Dog" may be able to help level the playing field.

Forward thinking companies like puretan offer special discounts to ITA and TSO members and this helps level the playing field.

Small salons (like ours!) just have to resolve to work harder to keep up with the big guys. And don't forget that this is still a service business and us little guys can still hold our own in this regard!

Don

Soakinuptherays

Don,

Soakin' Up The Rays, Inc does not offer ITA member discounts at this point. I am not a member because of the unfair dues structure.

I still do have my TSO discount program of Soakin' Up The Rays (R) at 50% off salon cost and Private Label products at the 192 product pricing level on any purchse.

I agree that the playing field is unfair.
_________________
Greg Klesius
Soakin' Up The Rays, Inc.
1-800-935-7625
www.Soakinuptherays.com[ This Message was edited by: Soakinuptherays on 2002-05-13 09:21 ]

Don Smith

Greg:

May I respectfully suggest that you should offer the same discount to ITA/Smart Tan members notwithstanding the fact that you are not an ITA member. Why? Because you are showing respect for the member and not necessarily the organization.

BTW, most ITA/Smart Tan members are the same ones who are TSO members.

Don

Soakinuptherays

I will do that:

I will now extend the TSO discounts to ITA and Smart Tan members.

Don Smith

Greg:

Thanks for thinking about this issue from the salon owner point of view.

You're starting to get the hang of this!

Don

Robbie

Don,

I thought you would have known better than to use the Marxist term “level the playing field” when you know I’m active on the boards. (or maybe, that’s why you did use the term).

Anyway, what you and Greg fail to acknowledge is the EARNED privilege of larger chains to buy direct or at deeper discounts based on volume purchasing.

You wouldn’t ask Michael Jordan to play with one hand, just because he’s better than the rest, even though it would level the playing field…or would you?

Robbie

Sheila in Minnesota

~ Hey Greg, I just wanted to jot a quick note on the value PL gives to salon owners and the perceived 'unfairness' of large client 'sugar' on direct from MFG sales . . ..

Greg - you must certainly give extra love'ns to a really BIG client of yours? Sweeten the pot just a tad - to say " Thanks " . . .

I do it all the time in my salon ~ it’s good business and helps me retain a client that may be tempted away for cheaper prices.

Your services have a great value to many of the online community ~

And ~ as a resident 'Small Fry' Salon . . . I support the premise that Big Dog could very well be the only option (unless my boy Larry gets his certification for Goo God National Private Label quick ) for a smaller salon to get a better deal on products and lamps - - and also give something BACK to the industry to help it grow . . .

For those of us that would prefer to grow a buying power and work towards enticing those companies that we support with sales to squeeze out a matching % for the Nat'l Ad - - - I would gladly pay more for my products to see this happen.

I also see no need to get a level playing field . . . if the BIG salons protect the perceived value of the product and not whore it out . . . let their bank account be larger - - - it will regardless.

Smaller salons can not order or store the amount of product required to be 'direct' with a MFG . . . volume is always the key to your turn around ~ we just don't have it.

Work instead under the reality that this is TRUE in every Industry . . . not a personal disrespect to us little guys. Then decide to support the groups that can best help you - either Private Label, or a combo of PL and major brands thru a large buyers group.

It is quite possible that Big Dog could grow so big - it will need a bigger kennel ~ ~ imagine the volume in that . . . imagine the potential 'sugar' you would be able to get - - - imagine if it really becomes a viable source of HELP for this Industry . . ..

Exciting ~ no?


Sheila

Don Smith

Robbie:

VERY rarely is the "playing field" ever level. Those with an "advantage" try to keep it that way and those who are at a "disadvantage" try to change things. It may not be "right" but that's just the way things work!

Fortunately, in a "service business" like an indoor tanning salon, a small player can, by dint of excellent customer service, good location and hard work, compete with their larger competitors.

A "single location" tanning salon does not (currently!) have the same volume purchasing advantages that you do; thus, they must, if they are to succeed, find other ways to remain competitive. Sometimes they succeed, sometimes they fail (as is indicated by the small businesses that Walmart has forced into extinction).

So, Robbie, while your size and visibility gets you the "sweatheart" deals from Max, there is nothing "earned" about them; rather they are more a reflection of the frenetic attempt by Max to "revitalize" California Tan than anything else. When he has attained his "objective" the "deal" you have now will probably disappear (does that mean that you then failed to "earn" it?). He is "using" you (and Dan) and you are "using" him.

What "mystifies" me is that since it is the "unlevel playing field" regarding purchasing discounts that FORCES smaller operations to develop their own PL lotion line and to participate in "buying coperatives" like BigDog, why do the vendors then get upset when a large portion of their market disappears? After all, it is the "duty" of the small guys to try and "level the playing field" isn't it? In the hospital business, the small operations "banded together" into a purchasing coperative that made it possible for them to almost completely narrow the gap between what they paid for products and services and what the large hospital chains were paying. The same thing will happen in the indoor tanning industry in the very near future.

In addition, small tanning salon owners will "band together" and pool their accumulated knowledge and experience in order to help each other compete with the growing "power" of the "chains" (like yours) and "franchise" operations. This "movement" will grow in direct proportion to the speed of the success of chain and franchise operations. Why? Necessity!

And don't forget that a "paradigm change" in technology can change things in a hurry!

So enjoy your "favored status" with Max and California Tan (and the other vendors) while it lasts but don't try to give me "jive" that you have earned it.

Finally, it is becomming increasingly obvious (to me at least) that your business model is "predatory" in nature and, like Walmart, many small tanning salon owners will be destroyed in order for you to succeed. Surely you understand that this fact of life will increasingly "alienate" you from mainstream tanning salon owners don't you (just like it has in Canada with Fabutan).

The "bottom line" Robbie, is that all of us in the "online community" will begin to take a little more critical "look" at what you are saying and start paying more attention to why you are saying it.

Don

Don Smith

Sheila:

Let an "old fart" who has been through "market share wars" many times before "splain" something to you.

It is INEVITABLE that the large chain and franchise operations will use "forward pricing" techniques in order to "capture" market share. What that means in plain language is that they will offer your clients prices (at the start!) that you cannot meet and stay in business. They will "justify" these low prices as a part of the "entry" into YOUR market.

And, when you get two or three of them "competing" for the same market (yours!), it will be a real "blood bath" for all concerned.

So keep your eyes open, kid. You "ain't" seen nothing yet when it comes to price wars! Just look at Robbie's "predatory pricing" in Houston if you want a "glimpse" of the future.

The question, then, is "can small opeations succeed" in the coming years? The answer is that they can but not without "banding together" proactively.

I've been on both sides of this equation, Sheila, (the "ee" or the "or" side - you can supply the rest of the word - LOL) and so I know of what I speak!

Don