All hands on deck! How Miniluxe is disrupting the the nail salon industry with data
How a dynamic and data driven new company, Miniluxe, is revolutionising the nail salon industry
Started by Tony Tjan and John Hamel eight years ago in Boston, Miniluxe is a chain of nail salons that is applying data and analytics techniques from other industries to disrupt the traditional nail salon business and operating models.
The company now has 20 salons across the US and uses a combination of non-toxic products, high hygiene standards and innovative applications of technology to enhance the customer and employee experience, delivering value to both.
How is Miniluxe using data?
Forecasting demand and calibrating supply
Miniluxe has built sophisticated analytical models to better predict demand in their stores. Inputs into their models include the weather, time of day and historical trends. These models have led to novel insights such as the fact that rain doesn’t slow business and that they can expect to see a 5% increase in traffic in their stores for every 10 degree increase in temperature. [1] These insights are invaluable to improving the operating model in an industry which has traditionally been incredibly inefficient in utilizing labor leading to many nail technicians to spend hours waiting for customers to arrive (all unpaid).
Miniluxe has further improved their forecasting capabilities and thus staffing level accuracy by introducing the ability for customers to book ahead of time online and choose their preferred nail technician. [2] [3] In addition to improving the customer experience and reducing waiting times for the customer, this has also positively impacted the experience for employees by delivering more certainty that there will be work available when they are present at the store. As well as improving the productivity of employees (who won’t be expected to sit idly waiting for customers), this approach adds flexibility to the job, allowing employees to have control over their schedules. These improvements not only improve the quality of life for nail technicians but also allow Miniluxe to attract and retain the best talent.
Data determining expansion strategy
Miniluxe also uses its data to optimize its business model by determining the best locations for new sites. [4] They concluded from their analysis that ‘warmer temperatures translate into more pedicures’ [5] and thus have chosen to focus expansion on the Southwest.
How can Miniluxe continue to harness the power of big data?
Miniluxe’s data-driven approach has allowed the company to deliver on a more efficient business model. It has led to a better experience for both employees and customers with reduced waiting times, higher utilization and more flexible working schedules for employees. To turbo charge this model, I believe that Miniluxe should consider rolling out mobile apps for both customers and employees that introduce further features and collect valuable additional data.
A mobile app that allows customers to book appointments, manage those appointments and be rewarded for their spending through a loyalty scheme would unlock further benefits for Miniluxe. The data generated from such an app would allow the company to understand their customers better, rewarding the most loyal ones and incentivizing those visiting less frequently to come again.
Miniluxe could also go as far as to introduce a ratings system which would allow them to identify their top performing nail technicians and then reward them through bonuses and promotions. In addition, the ratings would give new customers guidance over which nail technician to choose when booking online.
With regards to pricing, Miniluxe might look to manage the supply of nail technicians available by creating monetary incentives for them to work during peak periods. To pay for this, Miniluxe could implement dynamic pricing for customers based on time, location and service required.
Finally, Miniluxe could also use their POS data to better forecast trends in nail colors, allowing them to optimize their inventory management and ensure they never run out of a certain color.
Conclusion
Miniluxe’s use of data to better inform their business decisions and optimize the experience for both customers and employees means they are positioned for strong growth over the coming years. Their embracing of digital technology across all facets of their business has given them a competitive advantage over their fragmented and technologically unsophisticated competitors. Expect to see a Miniluxe near you soon.
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Sources:
[2] (http://www.bostonmagazine.com/health/blog/2014/12/08/miniluxe-nails-national/)
[3] http://www.miniluxe.com/booking
[5] http://www.wbur.org/news/2015/05/18/miniluxe-nail-salons
This seems an extremely intriguing business, now want to try it! Although for what I read it seems that company is growing very fast and its operation is efficient, allowing it to cut costs and be more profitable, I wonder how much difference it makes to the consumer. Having a tech-saavy saloon must be very helpful but I am not sure if it replaces the focus on quality for the consumer. How much better are the attendants? Does this model incentivize them to perform better? I believe that in order to be sustainable they need to focus on the service provided too!
Great article. This is a very intriguing business model, in which we could see both (1) how the technology facilitated the interaction with the consumer (in a very tangible way) and (2) how the company used the data “behind the scenes” to improve its customer experience and operations.
My challenge for them going forward would be how far can data analytics actually bring them. There is a limit to how much the industry can grow in the US and if the overseas expansions is on the table, they still have a lot more work to do on understanding customer preferences (which vary a lot from country to country). Besides, it would also require a reflection on the business model itself ad the digital evolution is moving at slower pace in developing countries.
I appreciate the thoughtful explanation of how Miniluxe uses data to optimize their operating model. I particularly like the ideas for how they can further improve and believe it is critical that they do. As is, I am not sold on the Miniluxe model. Other nail saloons are utilizing online booking and the “insight” about rain and weather does not strike me as revolutionary.
I am not sure what the Miniluxe interface looks like, but I am familiar with MindBody and envision a similar software could work well at Miniluxe. From the employee perspective, I can imagine it being very beneficial – tracking your schedule, checking your ratings (in an uber-like fashion), communicating with clients, etc.
I hope Miniluxe does well, but as it stands today, I am not convinced.
Interesting post, Emma! I’ve never been to a Miniluxe in Boston, but now I’d love to try it. I imagine that Miniluxe’s prices are higher than competitors to support the higher costs associated with the technology use in the salons. As it currently stands, I’m not convinced that the value-add for the customer is substantial enough to support the higher prices. Miniluxe should do a better job of communicating to customers about its use of technology and how that translates into better service for consumers. If not, as a consumer, I’m likely to go to a peer who has lower prices and still does a great mani/pedi.
Great post Emma! As an avid MiniLuxe customer, I think it’s worth noting that analytics (the focus of this blog post, of course!) is only one of the value props that MiniLuxe offers customers, and only one of the drivers of the company’s slightly enlarged prices. The other critical element in their strategy is their focus on operating at the highest level of hygiene standards. Many of the comments above have questioned the validity of MiniLuxe’s business model, and I’d push back, citing these significantly higher cleanliness and health standards as a highly important complementary feature that benefit the company alongside its tech savvy management. I agree that technological innovation alone will not differentiate MiniLuxe from competitors, but paired with their stringent customer-facing hygiene standards, I actually think they business model is fairly special.
Agree that having a MiniLuxe app would be great, and I’d suggest one additional feature. As someone with super pale skin, I sometimes struggle to tell how a nail polish color will look on my nails (particularly nude shades or less traditional colors like blues or teals) – often a great nude shade that one of my friends with darker skin wears ends up looking awful on me, but it’s too late to request a color change. If MiniLuxe offered a feature like Sephora’s lipstick color tester, where customers uploaded a photo of their hand and tested various shades atop their skin tone, I think this could further enhance client satisfaction after manicures.
Thanks for writing such an interesting post Emma! Sometimes, it is hard for me to imagine how going digital could enable companies to completely change the way customers interact with an industry by setting new benchmarks. While I appreciate Caroline’s comment on Miniluxe’s hygiene standards, I do think, it is only a matter of time before every nail company starts using data to improve customer service and achieve operating efficiency.
I do also wonder what the cost-benefit analysis of substantial investment in digital technology looks like for Miniluxe because a lot of nail salons have identified the challenges of idle employees and inconsistent customer traffic, and they have designed ways to deal with the uncertainty. For instance, there are so many parlors that run only on prior appointments, that have walk-ins only during weekends, that offer multiple services and cross-train workers to ensure higher utilization.
I do love the idea of rating technicians, but honestly, I would just ‘yelp’ it instead of downloading a miniluxe app, and if I know who I want to get a manicure with – either based on past experience or yelp reviews, I will just call and book. Maybe, Miniluxe could look at ways in which it could integrate its existing reviews online with a booking system. It could also add a fashion element to its online presence and talk about latest trends in nail polish colors or what new nail art designs are in vogue.
I do understand why a dynamic pricing model could add value, but I don’t think the typical consumer is ready yet to deal with dynamic pricing in manicures and pedicures- I, along with several of my friends, have a budget for these things and like going to a place where the prices are stable with limited add-on charges for new colors and patterns.
Overall, I think it is a great business model, but Miniluxe will have to move fast to truly make digital a business tool rather than a cool technology initiative and establish a long-term competitive advantage.
Very cool. A lot of the business model decisions seems like no-brainers, so it’s amazing to see that they are the first company to be using them. A great example of a stagnant industry that is being revitalized through technology. I’d be curious to know more about the nail salon industry and how positioned they are to respond. Do you know if most salons are individually owned and operated, or are there large chains? I would imagine mom and pop shops would not be able to respond well, unless they utilized a service that offered them this platform externally (which I imagine many companies already exist that offers this). Does MiniLuxe have any competitive advantage other than first-mover and scale that their competitors could not copy?
Thanks for sharing! Reminds me I need a mani/pedi…
A great job summarizing the usage of data analytics in a very interesting sector of the market. This is one of those examples where technological and information development has a drastic impact in decision making for the business in streamlining and making their internal processes so much more efficient and cost effective. The consumer cannot visibly see the innovation in play but realizes the changes through increased efficiency and ease of use, which would definitely want them coming back for more. Making the processes easier and more accessible across the board for the consumer is a sure way to get repeat customers, and this can clearly be seen in MiniLuxe. Furthermore, the incentive method just mentioned will attract more technicians and retain the quality performers. All in all, I do believe that this kind of innovation in a very traditional sector is sure to give an edge to the company, which could allow it to become and retain position as a market leader.