Beauty secrets ; Bucking the crippling slowdown, the beauty services industry is growing at 25 per cent annually. How is it happening?

After honing their skills at Kishore Biyani's Future Group, RahulBhalchandra and Rajeev Bopaiah bit the entrepreneurial bullet in2008 and ventured into the beauty services industry. Backed by Rs 20crore in venture funding from Helion Ventures, the duo's firm YLG(You Look Great) Salon and Spa has opened eight units last year andplans to launch one new salon every month in 2009.

Growth driver

The beauty services market is pegged at Rs 5,070 crore

It is growing at an estimated 25 per cent annually

Domestic and foreign companies are expanding their networks

VCs such as Helion Ventures are now investing in this industry

Only 5 per cent of the industry is organised

Lower rents and attrition are helping companiesA recent L'Orealstudy says the industry was worth Rs 5,070 crore in 2008 and growingat 25-30 per cent annually. It costs us Rs 2,000 per sq. ft to setup an unit of 1,500 sq. ft, says Bopaiah. While the company startedits operations from Bangalore, it is set to expand nationally overthe next two years.

YLG is not the only salon on a launch drive. Chennai-basedCavinKare's group company In Vogue has two brands Limelite and GreenTrends both planning new launches. We will expand by 25 to 30 percent over the next couple of years, says C.K. Ranganathan, CEO ofCavinKare. Kaya Skin Clinic, which has 76 salons in India, hasannounced plans to add another 15 in the next quarter. People liketo look good during all seasons, reasons Rakesh Pandey, CEO of Kaya.

The boom has also helped beauty product makers such asSchwarzkopf Professional grow by 80 per cent in the last four years.Jean-Claude Biguine, the well-known French chain, too, plans toinvest Rs 100 crore in a 50-outlet chain in India. L'Oreal one ofthe biggest players has seen its business touch the Rs 600-croremark here, growing at 40 per cent annually.

However, some bottlenecks such as shortage of trained manpowerremain. To solve the crisis, many chains now have their ownacademies to train employees. Around 600-700 trainees go through ourprogramme annually, says Kaya's Pandey. At YLG, too, no one isallowed to tend to a customer before completing a 10-week rigoroustraining programme.

Rahul Sachitanand