April 24, 2012 6:34 pm

Why Britain’s got talons

In a small salon round the corner from a fruit and vegetable market in Islington, north London, six Vietnamese women are clipping cuticles and buffing fingernails. Coral, blue and scarlet polishes line the shelves. These are busy times for Chapel Spa, which offers basic manicures for £10, the long-lasting gelac polish for £25, or nail art – including diamantes and leopard prints. Sindy Nguyen, a 28-year-old nail technician, loves her work. “It’s very creative and I like art,” she says. She is, she adds, very busy and has little time to talk.

Downturns mean designer handbags are left unsold and Michelin-starred restaurant meals uneaten, as budget-conscious women favour smaller, af­fordable luxuries. So ran the theory behind the “lipstick index”, a term coined by Leonard Lauder, chairman of Estée Lauder, the cosmetics company, to explain that sales of lipstick go up when recessions set in. Now it seems that nails are eclipsing lipstick as the new barometer of a downturn. As Bernd Beetz, chief executive of Coty, the beauty products company that has launched a bid for Avon, said recently, “the nail category is now surpassing lipstick”.

According to analysts Mintel, nail polish sales rose 14 per cent to £179m in 2010 as women, inspired by celebrities such as Lady Gaga and Rhianna, focus on their fingertips. In the UK, there has been a 16.5 per cent increase in the number of nail salons since 2008, according to Local Data Company, a retail consultancy.

Nail bars have proved a promising venture for aspiring entrepreneurs, thanks to the relatively low start-up costs. Stock typically represents a small fraction of the outlay. Meanwhile, rents are falling. “If you want to set up, now’s the time to do so,” says Matthew Hopkinson, director of LDC. “Rents have dropped 30 to 40 per cent on the high street as many properties are vacant.”

The confluence of low start-up costs and the popularity of nail fashions has led a diverse group of entrepreneurs to venture into nail salons. At one end of the scale are the Vietnamese immigrants in small high-street shops such as the Chapel Spa, which are helped by established community networks. Then there are the bigger, but still small-scale, operations such as Wah Nails, an urban nail bar based in east London. Set up by Sharmadean Reid, a 27-year-old hipster and former magazine fashion stylist who ran an online fanzine for fashionable, edgy young women, Wah Nails also has a concession in Oxford Street’s Top Shop store.

Nailing it: facts at their fingertips

With 58 nail bars across the
UK and Ireland, Nails Inc is the biggest independent operator in the UK – 95 per cent of nail salons are independent outlets, according to Local Data Company.

Nail make-up was the best-performing cosmetics sector, according to a Mintel report in 2011.

The trend is partly influenced by the styles featured on celebrities
in magazines and on television programmes including The Only Way is Essex, as well as pop stars such as Lady Gaga, whose personal nail technician Naomi Yasuda created a Lady Gaga branded range of press-on nails for Barney’s department store in New York, priced $45 to $225.

Ms Reid set up the business with a £17,000 loan from a friend and her fiancé. “Stock accounts for only 5 per cent of costs,” she says. “The [nail technicians] are what’s expensive.”

At the top end of the scale are market leaders such as 35-year-old Thea Green, the sleek blonde founder of Nails Inc, which has 58 nail bars across the UK and Ireland, including in leading department store Harvey Nichols. Ms Green, like Ms Reid a former fashion editor, was inspired to set up Nails Inc – her first venture – in 1999 after seeing the popularity of nail salons in the US. “The US nail bars were, and still are, very entrepreneurial,” she says. “The vast majority are independents who operate between one and three salons providing fast, af­fordable and convenient nail services. They spot an opportunity and set up on street corners where footfall is high to maximise convenience and drop-ins.”

She says nail bars expand by continuously innovating to attract repeat customers: “In nails you can be more outrageous than with cosmetics on your face.” Among its innovations, Nails Inc has introduced a polish using metallic particles that creates a pattern on the nail when a magnet is drawn over the fingertips. There is also the more extravagant Crystal pedicure, which places about 500 Swarovski crystals on toenails. Last year, revenues were £14.6m and anticipated turnover for this year is £22m.

Many Nails Inc salons are situated in department stores, which helps drive traffic: “As long as there is footfall in shops, we’ll have customers,” says Ms Green. “Department stores like having us there as there is a loyal customer base coming in weekly. Like a café, nail bars are a place that gives customers a chance to consider a big purchase elsewhere in the store.”

When she started the company, nail bars were relatively new. “At the time Nails Inc entered the market we were offering something new, a combination of product and service that created a sense of theatre not seen before in the ground floor beauty halls.”

She makes sure there is a variety of prices available. “There’s always been a £10 entry point. This way we get a young customer who stays with us,” she says. The low price was inspired by the $10 manicure in the US. “We wanted to have an accessible entry point to attract new customers and enable them to return frequently for regular manicures.” While price is key, it is not customers’ only concern, she says. “The market research I did before starting the business established that what consumers wanted above all else was the fast service with flexible timings so they could walk in off the street for a manicure and fit it around the rest of their day.”

Nails Inc’s presence in high streets and department stores is very different to Ms Reid’s approach for Wah Nails. Turnover is small – £325,000 in the last financial year. Despite the Top Shop concession and another outlet in the Westfield Stratford shopping centre near London’s main Olympics site, Ms Reid aims to keep Wah’s “community feel”. Her approach is to create customer loyalty by holding parties, mixing clients and friends at salons and encouraging customers to drop by to chat. “Wah sets itself apart by acting as a community first and foremost. We link girls through talks, creative endeavours and just the openness of the salon. We encourage a street, sassy sort of feminism,” says Ms Reid. “My advice to others setting up a nail bar is that it won’t make you a millionaire unless you have [your own branded nail polishes] or have a salon in every city. And if you have a salon in every city the quality is going to drop.”

Ms Reid, who has her nails done once a week and favours the “Downtown” style, which looks like a Keith Haring print – all zigzags and lines – has just brought out a how-to book, The Wah Nails Book of Nails, to increase awareness of the brand. “No other salon has a book. In my mind, Wah is me and I can control output like a book or a product range, rather than relying on several hundred girls up and down the UK to understand the brand message.”

Nonetheless, she confesses that the budget on which she is operating means she cannot keep up with demand.

“The only thing that could currently make us more money is having more nail technicians. However, it is very difficult to hire new staff and the process can take up to six weeks, with training, health and safety inductions. That’s not normal for all salons but what we do is quite different . . . the only thing that would destroy my business is losing its reputation.”

While Ms Green and Ms Reid have different visions for their nail businesses, both see prospects for growth. As Ms Green says: “While women aren’t changing their clothes, they
are changing their nails every few days. It’s an acceptable way to show personality within a corporate environment. It’s affordable and removable. Women always find ways to give themselves a treat.

Related Topics

Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.