Sally Beauty Supply 2011 Annual Report Download - page 21

leading professional beauty product brands, intended for use in salons and for resale by the salon to
consumers. BSG stores provide a comprehensive selection of between 5,000 and 10,000 beauty product
SKUs that include hair color and care, skin and nail care, beauty sundries and electrical appliances.
Certain BSG products are sold under exclusive distribution agreements with suppliers, whereby BSG is
designated as the sole distributor for a product line within certain geographic territories. Through its large
store base and sales force, BSG is able to access a significant portion of the highly fragmented U.S. salon
channel.
Store Design and Operations
BSG stores are designed to create a professional shopping environment that embraces the salon
professional and highlights its extensive product offering. Company-operated BSG stores, which primarily
operate under the CosmoProf banner, average approximately 2,700 square feet and are primarily located
in secondary strip shopping centers. BSG store layouts are designed to provide optimal variety and options
to the salon professional. Stores are segmented into distinctive areas arranged by product type with certain
areas dedicated to leading third-party brands; such as Paul Mitchell↧, Wella↧, Sebastian↧, Goldwell↧,
Joico↧ and TIGI↧. The selection of these and other brands varies by territory.
Professional Distributor Sales Consultants
BSG has a network of approximately 1,116 professional distributor sales consultants (‘‘DSC’’ or ‘‘DSCs’’),
which exclusively serve salons and salon professionals. The following table sets forth the number of
consultants in the BSG network during the last five fiscal years:
Fiscal Year Ended September 30,
2011 2010 2009 2008 2007
Professional distributor sales consultants(a) ......... 1,116 1,051 1,022 984 1,002
(a) Includes 411, 395, 300, 328 and 317 distributor sales consultants of our Armstrong McCall
franchisees at September 30, 2011, 2010, 2009, 2008 and 2007, respectively.
The increase in the number of DSCs in the fiscal year 2011 reflects approximately 70 distributor sales
consultants employed by Aerial Company, Inc. (‘‘Aerial’’) prior to the Company’s acquisition of Aerial in
October 2010. The increase in the number of DSCs in the fiscal year 2009 reflects approximately 90
distributor sales consultants employed by Schoeneman Beauty Supply, Inc. (‘‘Schoeneman’’) prior to the
Company’s acquisition of Schoeneman in September 2009.
In order to provide a knowledgeable sales consultant team, BSG actively recruits individuals with industry
knowledge or sales experience, as we believe that new sales consultants with either broad knowledge about
the products or direct sales experience will be more successful.
BSG provides training to new sales consultants beginning with a two-week training program, followed by a
program of continuing media-based training, delivered through audio, video and web-based e-learning.
The program is designed to develop product knowledge as well as techniques on how best to serve salon
professionals. In addition to selling professional beauty products, these sales consultants offer in-salon
training for professionals and owners in areas such as new styles, techniques and business practices.
An important component of sales consultants’ compensation is sales commissions. BSG’s commission
system is designed to drive sales and focus consultants on selling products that are best suited to individual
salons and salon professionals. We believe our emphasis on recruitment, training, and sales-based
compensation results in a sales force that distinguishes itself from other full-service/exclusive-channel
distributors.
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