Supercuts 2012 Annual Report Download - page 20

Table of Contents
The Company maintains its own design, construction and real estate department, which designs and supervises the leasehold installations,
furnishing and fixturing of all new company-owned salons and certain franchise locations. The Company has developed considerable expertise
in designing salons. The design and real estate staff focus on visual appeal, efficient use of space, cost and rapid completion times.
Salon Management Information Systems:
At all of its company-owned salons, the Company utilizes a point-of-sale (POS) information system to collect daily sales information and
guest demographics. Salon employees deposit cash receipts into a local bank account on a daily basis. The POS system sends the amount
expected to be deposited to the corporate office, where the amount is reconciled daily with local deposits transferred into a centralized
corporate bank account. The guest information is then used to determine effectiveness of promotions and the loyalty base of each salon that
feed into salon operational decisions. The information is also used to generate payroll information, monitor salon performance, manage salon
staffing and payroll costs, and anticipate industry pricing and staffing trends. The corporate information systems deliver information on product
sales to improve its inventory control system, including recommendations for each salon of monthly product replenishments. Recent
innovations to increase inventory cycle counts and install high speed connections at each salon are expected to improve stylist productivity and
improve guest satisfaction with the checkout process.
The goal of information systems is to maximize the overall value to the business while improving the output per dollar spent by
implementing cost-effective solutions and services. Management believes that its information systems provide the Company with operational
efficiencies as well as advantages in planning and analysis which are generally not available to competitors. The Company continually reviews
and improves its information systems to ensure systems and processes are kept up to date and that they will meet the growing needs of the
Company.
Historically, because of the Company's large size and scale requirements it has been necessary for the Company to internally develop and
support its own proprietary POS information system. During fiscal year 2011, the Company identified a third party POS software alternative
that has a system that meets our current and future functionality requirements including enhanced guest demographics. The Company began
implementing this new technology in our salons in fiscal year 2012 and will continue to implement as technology will allow, which will allow
the Company to stay current and meet guests' expectations.
Salon Competition:
The hair care industry is highly fragmented and competitive. In every area in which the Company has a salon, there are competitors
offering similar hair care services and products at similar prices. The Company faces competition from smaller chains of salons such as Great
Clips, Fantastic Sams and Sport Clips and within malls from companies which operate salons within department stores, independently owned
salons and, to a lesser extent, salons which, although independently owned, are operating under franchises from a franchising company that
may assist such salons in areas of training, marketing and advertising.
At the individual salon level the barriers to enter the market are not considerable; however, barriers exist for chains to expand nationally
due to the need to establish systems and infrastructure, recruitment of experienced hair care management and adequate store staff, and leasing
of quality sites. The principal factors of competition in the affordable hair care category are quality, consistency and convenience. The
Company continually strives to improve its performance in each of these areas and to create additional points of differentiation versus the
competition. In order to obtain locations in shopping malls, the Company must be competitive as to rentals and other customary tenant
obligations.
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