Putting a polish on your business – nails inc’s story
In these uncertain economic times, booking yourself in for a manicure has become the affordable treat for busy people. So how has the nail industry become such a winner in the retail sector? We sat down with Thea Green, CEO and founder of nails inc, to find out about the challenges of setting up a business, keeping on top of fashion trends and the benefits of department store concessions.
“I’d seen nail bars in the States, but thought that they were a little too mass market, didn’t have any branding and no-one communicated with you when you sat and got your nails done. There was a real language barrier, but they did do a very good, efficient job in fairly average surroundings without any glamour – certainly without any kind of product sales. But I liked the idea.
I started nails inc in 1999 with a business partner – a friend who worked in advertising – and she was very good at doing things like focus groups and getting great research on the market etc. Women who’d never had their nails done were telling us they’d go to a nail bar every week if they were available in the UK – that’s a really big change in behaviour. We got very excited that it resonated with so many women in so many different income brackets.”
How easy was it to raise the funds you needed?
“In terms of raising money, we were up against the people starting up dot.com businesses. Venture capitalists were very engaging towards us, but only if we’d swap to a dot.com idea.
We ended up raising money for the business though private individuals, which basically meant me speaking to anyone I knew who had more than £1. In the early days I had absolutely no embarrassment in asking people to invest. I believed I was doing everybody a massive favour by letting them get involved in nails inc.”
How did you start the whole process of creating and manufacturing your own products?
“We found a manufacturer in the UK who was very supportive. Before we’d raised any money they did lots of initial sampling so we had something to show people. They invested a lot into the early developments of the nail varnish products. We also worked with a design agency because, again, you’ve got to show everyone what the product is going to look like. So there were lots of people putting money into the business because they were excited about it.”
How did the financial side of the business work at this stage?
“Our bank manager gave us an unsecured overdraft of £50k which meant we could press play on things once we’d got the investors signed up, even though the funds weren’t actually there yet. People had signed a basic piece of paper but all the shareholder agreements and legal side of things still needed to take place.
We got the money through lots and lots of individuals. Some people invested as small an amount as £10k and others as much a £50k and between these we raised £250k in total. And shortly after this we started employing staff and opened our first store in South Morton Street in London.”
Were concessions a different approach compared with finding retail space?
“It’s a great way for a new business to start operating, rather than working on a fixed rent basis. In the early days of a business, having an unexpected bill can be very difficult, especially at a time when you’re just getting your head above water.
The joy of a department store is the fact that it’s usually on a turnover percentage – so if you have a bad week, the store gets a small amount, if you have a great week, they get a bigger amount. And you also have another set of eyes on the business.”
How do you keep ahead of the curve with your product development?
“We work with a lot of fashion designers to match colours for specific shows and we have a lot of great relationships with beauty journalists and celebrity nail technicians. We also work with predictor agencies to look at trends and innovations which are coming out, and with a number of labs to find out what’s happening technically in the nail market.
A lot of the innovation over the past five years has been taken from the car paint industry. For example, when matt car paint came out we did a range of matt nail polish. Car paint is a massive influence.”
Did the nail industry weather the recession well?
“The nail industry has become an extension of the fashion industry and it’s a horrible time to be in fashion retail - people just aren’t buying. So people are looking to affordable beauty products for their retail therapy. Nail polish has trended in the way that lipstick trended in the last recession. Worldwide, the nail industry has out-performed every other beauty category.
Customers are buying nail polish in a way that they would never experiment with fashion or make-up. With nail polish, it’s a compliment to say that it’s disposable. You can put it on, experiment and then remove it. And it’s much cheaper than a statement item of clothing.”
What are your aspirations for growth outside of the UK?
“We’ve done a lot of expansion in the UK. We’re in pretty much every department store group in every major city. But our growth has really been about taking the products out of the nail bars. We work with John Lewis and Boots, we work with ASOS and with QVC. So we have very good wholesale business in the UK.
Internationally, we’ve just partnered with Sephora and have rolled out a 50-store trial across the US and Canada. Within a couple of weeks they told us they were going to put us in all stores, which was great. So we’re now in 300 stores in that territory, which is our biggest growth really.”
Where would you want to see nails inc in ten year’s time?
“I’d like us to be a worldwide cosmetic brand. I don’t think there’s a country or a market where our business wouldn’t be relevant. I’d like us to be in every good department store, with one to two good partners in every country. And I’d love to take the nail bars internationally as well – at the moment we’re only taking the product – so we had a flagship store in several key countries.”
You can read the full version of this article in the forthcoming summer 2012 edition of our Private Business magazine.
