Sally Beauty Supply 2013 Annual Report Download - page 23

between Sally Beauty Supply locations. Store formats, including standard size and product selection, for
Sally Beauty Supply stores outside the U.S. and Canada vary by marketplace.
Sally Beauty Supply stores are segmented into distinctive areas arranged by product type with signs
allowing its customers to easily navigate through its stores. Sally Beauty Supply seeks to stimulate cross-
selling and impulse buying through strategic product placement and use of displays to highlight new
products and key promotional items.
Merchandise
Sally Beauty Supply stores carry an extensive selection of branded and exclusive-label professional beauty
supplies. Sally Beauty Supply manages each category by product and by SKU and uses centrally developed
plan-o-guides to maintain a consistent merchandise presentation across its store base (primarily in the U.S.
and Canada). Through its information systems, Sally Beauty Supply actively monitors each store’s
performance by category. We believe Sally Beauty Supply’s tailored merchandise strategy enables it to
meet local demands and helps drive traffic in its stores. Additionally, its information systems (implemented
primarily in North America) enable it to track and automatically replenish inventory levels, generally on a
weekly basis, allowing it to maintain consistently high levels of in-stock merchandise.
In addition, Sally Beauty Supply offers a comprehensive selection of ethnic products with specific appeal to
African-American and Hispanic customers. Its ethnic product offerings are tailored by store based on
market demographics and category performance. We believe the wide selection of ethnic products
available in Sally Beauty Supply stores is unique and differentiates its stores from its competition. Sally
Beauty Supply also aims to position itself to be competitive in price, but not a discount leader.
Sally Beauty Supply’s pricing strategy is differentiated by customer segment. Professional salon customers
are generally entitled to a price lower than that received by retail customers. However, Sally Beauty Supply
does offer discounts to retail customers through its customer loyalty program (please see ‘‘Marketing and
Advertising’’ below).
The following table sets forth the approximate percentage of Sally Beauty Supply’s sales by product
category:
Fiscal Year Ended
September 30,
2013 2012 2011
Hair color ...................................... 22.9% 22.2% 22.5%
Hair care ...................................... 22.1% 22.3% 21.3%
Skin and nail care ................................ 15.6% 15.7% 15.2%
Brushes, cutlery and accessories ...................... 13.8% 14.2% 14.5%
Electrical appliances .............................. 9.9% 10.2% 10.6%
Ethnic products .................................. 7.5% 7.5% 7.9%
Other beauty items ............................... 8.2% 7.9% 8.0%
Total ........................................ 100.0% 100.0% 100.0%
Leading Third-Party Branded Products
Sally Beauty Supply offers an extensive selection of hair care products, nail care products, beauty sundries
and appliances, featuring leading third-party brands such as Clairol↧, Revlon↧ and Conair↧. In addition,
Sally Beauty Supply offers an extensive selection of exclusive-label merchandise. We believe that carrying
an extensive selection of the latest premier branded merchandise is critical to maintaining long-term
relationships with our customers. The merchandise Sally Beauty Supply carries includes products from one
or more of the leading manufacturers in each category. Sally Beauty Supply’s objective is not only to carry
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