World's Oldest Salon Chain Diversifies Into High-Margin Retailing Business

Truefitt & Hill, the salon chain that has been cutting people's hair for two centuries, is diversifying into retailing to build a meaningful revenue stream and remain profitable in the growing men's grooming space.

"Products, I believe, have the potential to become a far bigger business than services," said Prannay Dokkania, managing director at Lloyds Luxuries Ltd., which owns the master license for the Truefitt & Hill's chain in the country.

The acceptance of men's grooming products is impressive, which probably explains why so many brands have their eyes set on the space, Dokkania said.

"Male grooming, as a category, has grown exponentially in the last five years, with more and more men becoming more conscious about how they are looking and what they are wearing," he said. "We see huge interest in Indian men to be groomed and pampered, so we want to ensure our products are accessible in every nook and corner of the country."

In fact, the luxury market is also getting a boost from the country’s small towns with the explosion of e-commerce, said Dokkania. "Over the last six months, we have been partnering with several marketplaces and have also set up our website — all of which would take some time to reach this level. But as we scale up, we expect products to contribute in a big way to sales."

Currently, products comprise just 25% of the business.

The other reason why products have the potential to surpass services is sheer volume. "For instance, if just 2% of the country's 140 crore population, or 2.8 crore, consumes our products online, there is a bigger volume game in play, but that can't happen in services."

Truefitt & Hill is also in talks with third-party retailers to sell its products through physical outlets. "Discussions are on with the likes of Nykaa, Shoppers Stop, and Tata's beauty shopping app Tata CliQ Palette to expand our footprints... all these are a work in progress," Dokkania told BQ Prime.

Established in 1805, Truefitt & Hill has been certified as the oldest barbershop in the world by the Guinness Book of World Records. Its former clients include King George III and some former prime ministers. Charles Dickens and William Thackeray mentioned the shop in their novels.

It is known to have groomed nine generations of the British royal family, and according to Dokkania, several products manufactured by Truefitt & Hill were recovered from the ocean bed when the Titanic sank in 1912.

Inflation has been driving up the prices of everything in the country, ranging from food and fuel to fashion. Now it has also impacted the basic men’s haircut.

The uber-luxury heritage brand currently charges Rs 1,900 for a basic haircut, with no such extras as colouring or conditioning. And if you are looking for a "royal" haircut, then you will have to shell out Rs 2,900, excluding taxes. These prices are 15% higher than the previous year.

It also runs an annual membership model, which costs Rs 1 lakh.

Post-pandemic, the company has seen cost inflation of 20–25%. "We have passed on a part of the burden to consumers while absorbing the rest to maintain margins," Dokkania said, expecting margins to normalise by the end of 2024.

But "we offer a fair for the kind of services we give," he said.

"We use products that the industry is still warming up to. For instance, a pre-shave oil, which is being imported from England, the experience starts in a private room for customers in an extremely serene environment. Unlike many other barber visits, which often feel like a chore, Truefitt turns a haircut into a thoroughly pleasant experience," he said.

In times of double-digit inflation concerns, an expensive haircut may prove counterintuitive. Dokkania is nonetheless surprised by the increase in demand for its services, which has led to the company expanding its footprint.

The trend also underscores the general boom seen in sales of luxury goods, thanks to the inflation-insulated scions of the super-rich.

"The Covid-19 pandemic had a major impact on the hair salon industry. Reduced demand due to the forced closure, followed by fear of contracting the virus, weighed on revenue and profit significantly," according to him.

But it has bounced back, Dokkania said, adding that the next three decades belong to India. "Factors like higher disposable income, the increasing propensity to spend on services such as haircuts and additional hair care treatments, and as people return to work, we expect the salon business to grow, and there's no two ways about that," he said.

Truefitt & Hill entered India in 2014, and since then it has grown from one to 31 stores, aided by a thriving male grooming market. Its revenue rose to Rs 34.5 crore as of March 2023 from Rs 20 crore in FY20, or pre-Covid level.

Almost 70–80% of the customers are repeat customers, said Dokkania. Currently, Mumbai is the largest market for the company, but it expects Delhi to overtake it as it opens more stores in the capital.

Overall, the company plans to have at least 50 salons by 2025.

"Because we are a niche player even within the luxury segment, we plan to open a limited number of stores," he said. Currently, Truefitt & Hill is present in Mumbai, Delhi, Chennai, Hyderabad, Bangalore, Kolkata, and Surat.

"But we will now focus on tier 2 cities, as I am pleasantly surprised to see the surge in male customers and their willingness to spend in these markets," Dokkania said. Last month, it opened a salon in Guwahati and has plans to open a salon in Bhubaneswar in the next two to three months. However, it is unnecessary to scale up its services business beyond 50 doors over the next five to seven years as the market becomes saturated, Dokkania said.

"We don't think India needs more than 50 outlets in the next five to seven years, so we will instead focus on grooming products that have a larger opportunity."

Other than India, Lloyds Luxuries holds the rights of Truefitt & Hill for six more countries, viz., Nepal, Bangladesh, Vietnam, Sri Lanka, Bhutan, and Myanmar. Truefitt & Hill Worldwide is in 15 countries and is present in the following cities: London, Canberra, Sydney, Baku, Toronto, Beijing, Shanghai, Prague, Seoul, Salmiya, Sharq, Kuala Lumpur, Moscow, Singapore, Bangkok, and Chicago.