Sally Beauty Looks to Ramp Up Customer Loyalty, Engagement Initiatives

In the wake of a disappointing fiscal first quarter, officials at Sally Beauty, the largest retailer of professional beauty supplies in the world, have taken steps to enhance their loyalty program and customer engagement and conversion initiatives.

Sally Beauty President and CEO Chris Brickman said during the company earnings call on Thursday that the core Sally business was negatively impacted by the challenging retail environment and promotional activity that failed to drive sufficient traffic to the stores.

Evan Magliocca, marketing manager, Baesman Insights & Marketing, offered his views to Loyalty360 regarding the challenging retail environment that many marketers cite after poor fiscal performances.

“Many retailers in their quarterly briefings are citing strong headwinds or the challenging retail environment as an impediment to their current revenue streams,” he explained. “But truthfully, those ‘headwinds’ are the new normal in retail. This is now the market we operate in and marketers are going to need to dig deeper to find results. That means deeper customer-centricity, evolved loyalty programs, and, most importantly, true innovation on the store experience.”

Due to the less than stellar fiscal performance, Sally Beauty officials announced a comprehensive restructuring plan and other aggressive cost reduction initiatives aimed at lowering the company’s cost structure, without compromising its ability to serve the customer and execute on its strategic priorities.

Sally Beauty’s restructuring plan is expected to generate annualized pretax benefits in the range of $17 million to $19 million, with pretax benefits in fiscal 2017 estimated in the range of $10 million to $12 million. Other cost reduction initiatives, not included in the Restructuring Plan, are expected to further reduce planned operating expenses by approximately $20 million over the remainder of fiscal-year 2017.

What’s more, Sally Beauty finds itself in a very challenging segment. Is Sally Beauty headed in the right direction?

“Sally Beauty is taking the right steps to enhance its performance by re-evaluating some inefficiencies and investing in more targeted, sustainable programs like loyalty,” Magliocca added. “It has some serious loyalty competition with Sephora, which is, arguably, one of the best loyalty programs in retail.”

Sally Beauty faces the same headwinds as most in the retail industry, Magliocca noted.

“Heavy promotions are simply unsustainable long-term and many retailers are turning to loyalty to help offset those issues,” Magliocca explained. “While it can help, companies need to be truly dedicated to being loyal to their customers, not just the other way around.” 

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