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With its hot pink counters and cheeky bons mots, Blo Blow Dry Bar is striding boldly into world markets.
Photo: Laura Leyshon
The Vancouver-born salon, which targets customers who will shell out for an affordable luxury, asks about half the price that full-service salons charge for a blow-dry and style. It has 24 locations, with 15 in Canada and nine in the United States. Next month, it will open two franchises in Manila, in the Philippines.
By early next year, Blos will open in New Orleans, New Jersey and San Diego. The company also has its eye on Europe.
The franchisees will follow a script that has served the company well: providing “catwalk-quality blow-outs,” as they say, and no more. No cuts, no colour, no nails, no spa. They sell confidence and convenience, catering to busy consumers. Shops open at 7 a.m. and close at 9 p.m., but make an appointment and trained stylists will be there, dryer in hand.
They do house calls, too, or Blo on the Go, as they call it. Need to spruce up between expensive salon visits? Blo dishes up ‘dos with names such as Holly Would and Red Carpet.
The company’s primary focus is expansion into the United States, says Ari Yakobson, president of Head Company Inc., of Toronto, which owns the franchise.
Yakobson says he is confident in the North American market, but finding real estate is a challenge.
“Rental rates in Canada have gone up by 40% over the last seven years. The reason is supply and demand. There’s a tremendous demand for retail and service providers in malls,” says Mr. Yakobson, who runs Head with business partner Paul Spindler.
The picture is slightly different in the United States, although in top markets such as New York, San Francisco and Chicago rents are high and finding a location is extremely difficult. “If you were to go and open up a store in Washington, D.C., you will be waiting a very long time to secure real estate,” Yakobson said.
But there’s no shortage of people who want to buy into the Blo vibe, he says. His company does not promote the sale of franchises – he doesn’t attend franchise shows or employ sales agents. “We simply wait for our phones and e-mails to go off,” he said.
The company receives 30 to 40 requests a week to buy franchises, he says, with 80 per cent of the queries coming from North America.
The other big challenge in the United States is market knowledge. Blo can be found in only four Canadian cities – Toronto, Vancouver, Edmonton and Calgary, all places that Yakobson knows his way around, and where it’s easy to determine the appropriate location for the business.
“When someone calls you about a location in New Orleans, it’s a bit more challenging,” he says.
Now that the company has broken into the U.S. market, Yakobson says he conceptually knows what feels right. After one or two miscues after he depended on a franchisee to determine the location, he now says it’s critical for one of the Blo principals to visit the city in question.
“I would say I’m now at a point where I could look at a location and drive around it for five minutes and tell you with 95% certainty whether I like it,” he said.
In large metropolitan areas he looks for an active downtown core with working women. In residential areas, he’d like to see upwardly mobile people in an area with an urban feel. Million-dollar homes aren’t that important: Blo doesn’t cater to the ultra-wealthy. Traffic to the site is important.
New York presents yet another challenge, Yakobsen said. “It would work there in 700 different locations.”
But sky-high rents, think $25,000 a month, are a problem. “Our service doesn’t allow us to pay rent in the same kind of capacity that the high-end retailers can pay,” he said.
One restraint on Blo’s growth is a shortage of team members who can scout potential new franchises. “Could we have sold more franchises in the last six months?” he said. “Without a doubt.”
As for expanding to Asia, it’s not as difficult as people might think. North American brands translate relatively well in westernized areas, he says. If the Manila locations do well, for example, Blo will look at Singapore, Hong Kong, South Korea and Japan, perhaps even Bangkok.
Europe would also be a good market, but bureaucracy and jurisdictional approvals would result in two-year waits to open locations, Yakobson said. If Blo does expand to Europe, it will probably start with Britain.
Staying only in Canada was not an option, with a population that is only one-tenth the size of the United States.
Once a business has reached its optimum size, it can continue to grow in two ways, Yakobson said. “You can grow by offering different services, or you can grow by moving to different jurisdictions. If you really want to stay in Canada, there would be no more than 30 locations. That’s just not enough.”
He’d like to think that Blo is part of a new wave of retailers that will triumph in the United States, after “a long and desperate history of Canadian retailers suffering in the United States and closing shop.”
Over the past four to five years, Canadians have not suffered financially as much as Americans, he said. “I think that our [retailers] have capital and the capital is being used for expansion.”
Such expansion is not only good for Canadian companies, Yakobson said. “We’re creating jobs for Americans, at a time when they need them. It’s a win-win.”