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Great Clips breaks $1 billion mark by sticking to the basics

The secret, according to CEO Rhoda Olsen, is knowing what works for its customers and doing it well.

Rhoda Olsen

What’s it worth to stick to the basics? About $1 billion, if you’re Great Clips.

The Edina-based hair salon franchisor passed that annual revenue milestone in 2013, ending the year at $1.03 billion. In the process, Great Clips logged its 37th straight quarter of same-store sales growth.

The secret, according to CEO Rhoda Olsen, is knowing what works for its customers and doing it well.

“We want to be comfortable, convenient, with great locations,” Olsen said. “Great haircuts and great prices. We want to keep the energy around that very narrow focus.”

Great Clips doesn’t offer coloring or other upscale hair treatments. Its customers — 70 percent male and mostly between ages 20 and 60 — just want a reasonably priced haircut with as little waiting as possible. A basic haircut at Great Clips costs around $14, and the chain’s 3,530 salons cut about 83 million heads last year.

I grew up in the dark ages for haircutters: the ’60s and ’70s, when long hairstyles for men must have driven many a barber to drink. Olsen said today’s trends favor shorter, tighter styles: “a lot of nice, clean short haircuts that require a three- to four-week week haircut cycle, which we love.”

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The company kicked off the new year with a couple of key leadership changes. Steve Hockett, who started as a Great Clips franchisee, is the new president, and Rob Goggins is the new chief operating officer.

“In a way, we’re a boring business,” Hockett said. “We don’t change a lot. We know people want a convenient location with convenient hours. They want no appointments. They don’t mind a limited menu, because the pricing’s moderate. And that hasn’t really changed in 30 years. Even when the economy was bad, the haircut cycle didn’t lengthen at all.”

Great Clips is moving quickly to adopt new technology, both for its consumer-facing business and its internal operations. The company offers an online check-in system that’s used by about 14 percent of its customers and a mobile app that’s had more than 2 million downloads.

“I think our industry has been slow to realize that customers want to communicate with us,” Olsen said. “The range of communication desires that customers have has never been broader. How do we communicate with them, in what kind and in what degree: email, mobile, text, web? We believe we’re well ahead of the competition on the tech side. But nothing is more important than the haircut.”

The company’s internal data analytics have helped to quell unease among franchisees worried about competition, the Wall Street Journal reported.

With roots in the Midwest, Great Clips is looking to expand its presence on the coasts, Hockett said: California, Texas, Florida and the Northeast. The company opened 235 salons last year.

But there’s one very specific customer Great Clips has yet to reach: Olsen’s husband, Greg.

“My husband is 64, and he stopped cutting his hair when he was 50,” she said with a laugh. “He has a long, gray ponytail. It’s pretty embarrassing to go around with him when you’re in the haircutting business.”