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Facing the Growth

There’s bold, and then there’s going from 30 to 100 stores in a little more than two years.
That’s the plan for El Segundo-based Skin Laundry. The facial skincare operation is aiming to get to 60 clinics worldwide by the end of next year and 100 by the end of 2024. That’s close to three ribbon cuttings every month for the next two years.

Chief Executive Gregg Throgmartin, who joined the company in 2018, said two factors are driving the growth: one is that he believes he has helped shape the business operation to be able to facilitate the very rapid expansion, and the other is that the company has been able to raise enough capital to fund it.

“I think we’re all enjoying this challenge, and I think that it’s a fun time,” Throgmartin said. “A lot of people are pulling back, cutting or shrinking. It’s so invigorating for our team that we’re going to double our count in the coming months. We know there’s going to be challenges, but this team is up to the challenge.”

And challenges there will most likely be. One expert compared this level of expansion to one of America’s most storied brands, adding that it’s “very difficult” to replicate.
“Growth like that is like Starbucks-level growth, when they were starting to hit their rhythm and they had decades to figure out their business model,” said Kyle Murphy, a practitioner of strategy at the Graziadio Business School at Pepperdine University.

Left: Self-care: Some of Skin Laundry’s facial products.; Right: Skin Laundry chief executive Gregg Throgmartin at one of the company’s locations.

Getting its start

Skin Laundry, known for its trademark laser facials and “thermo fractional” facials – a proprietary method by which they use heat and motion to transfer thermal energy to the top layer of skin, to treat lines, wrinkles, acne scarring and hyperpigmentation – administered by registered nurses, formed in 2013 as a medical-based alternative to typical dermatological treatments.

The company has been bolstered financially by a team of investors who remain today. Throgmartin declined to name Skin Laundry’s investors or how much they had collectively invested.

Skin Laundry’s first clinic opened in Santa Monica in 2013. It has followed with stores throughout Southern California, Arizona and New York, along with locations in London, Hong Kong, Dubai and Kuwait. Skin Laundry opened its 10th Los Angeles-area location Nov. 18 in Studio City – bringing the worldwide total to 30 – and expects its next three ribbon cuttings in January. Nearly all locations are company-owned, while the two Dubai and one Kuwait stores are licensed.

Murphy of Pepperdine, whose background is in growth and expansion of midmarket and start-up tech companies, said the company’s growth plans would require a different style of management. “The ability to be an entrepreneur and find product markets to launch a company, even five-to-10 and up, the founder has to know everyone,” he said. “As soon as you scale beyond that, you have to be able to manage beyond using other tools because you won’t be able to know everyone.”

To be able to manage at that level of business, especially in a global market, a strong team needs to be in place to keep their fingers on all the pulses, he added. It’s especially necessary because the best-laid plans, of course, often go awry. Or at least suffer hiccups.

“When you start to scale, hopefully everything is going the way you want to, but things just start to break,” Murphy said. “I don’t think that’s surprising to anyone, but you can’t preplan it all out. Things are going to start to break, so with whatever amount of preplanning that you do, that team is going to have to be very quick and adjust for it.”

 

Operational improvements

Throgmartin – who previously was president of another El Segundo brand, Fabletics, as well as chief operating officer and vice president of Indianapolis retailer H.H. Gregg – is confident that changes to the operation under his leadership have brought them to this stage.

“The company’s founders had a great vision,” he said. “They weren’t operators. They kind of had a tiger by the tail and didn’t have the systems in place to really listen to the team and get feedback. Once you have a good culture in place, they’ll tell you what’s wrong.”

Taking that feedback and upgrading equipment to provide consistent service was one of the steps he instituted, Throgmartin said. Another was pivoting away from a model of selling a series of treatments at once and instead adopting a membership-based model – a decision that hit Skin Laundry financially at first but has since paid off, he said, because customers make longer investments there and have perks like inviting family members or coworkers to join or try out a session. Individual appointments run $250 for laser and $350 for thermo fractional, while memberships start at $150 a month.

 

Consistency is key

“To do that, just like seeing a personal trainer for fitness, you have to be consistent,” Throgmartin said. “Once we got some of those things worked out and the unit economics were good, we said, ‘Let’s do a few more of these.’”

Murphy noted that one advantage Skin Laundry might have is its relatively novel service. In the world of personal care, few have seized on facial skin care, he said. And the market of independent face-care boutiques peppered throughout the nation were likely hit hard by the Covid-19 pandemic.

“You can also be very inconsistent in going to independent shops, in terms of quality of work done,” Murphy added. “One of the things I assume Skin Laundry is offering is a very consistent quality to their training and their whole process in what they’re doing. I think that’s where the opportunity is.”

Throgmartin is proud that in the past several years the company began in-sourcing a lot of the company’s operations – human resources, technology, etc. – and hiring to fill those slots. In addition to the confidence he had in his corporate team of 38, one lesson he learned from past experience was to bring in lower-level employees early on so that when they’re ready to get their own clinics, they’re more prepared.

“Where most companies miss it, in my opinion, is that they want to bring people in 24 hours before, to save labor costs,” he said. “We bring people in extremely early. If we make that investment early, to me, everything is better. Your team goes in with confidence. They’re comfortable, and I think it really shows in our results.”

Next year’s growth will be entirely within the United States, and the company will add six states to the Skin Laundry portfolio – Colorado, Connecticut, Florida, Massachusetts, Nevada and Texas. The company’s investment partners are providing much of the equity in combination with store profits to fund the moves, and the company largely finances the bulk of its equipment, Throgmartin said. The in-house consumer data – “one of our greatest strengths,” he said – has helped fine-tune locations based on demographic and psychographic analysis. One simple yet beneficial move, Throgmartin added, was focusing on multi-store markets.

“At this stage of our growth, we are looking for places we can get some density,” he said. “There are some wonderful markets that are one-store markets that we will get to eventually.

“As our brand gets stronger, landlords are wanting to have us in their center,” Throgmartin added. “We drive a lot of regular traffic there. They’re coming a couple of times a month. They’re a good demographic, a consumer that these landlords love.”

Murphy again drew a Starbucks comparison when commenting on density-based expansion. “They wouldn’t go anywhere where they couldn’t have at least eight stores within a cluster,” he said. In addition to regional management efficiency, it also creates strong economies of scale in marketing investment.

As Skin Laundry moves forward, Murphy added, he would expect finances to remain tight at first as they bring dozens of stores online every quarter.

“They’re going to have to invest every little bit into new stores,” Murphy said. “It’s going to be very expensive and there’s going to be some unknowns as they expand to different markets and what that will look like.”

Paola Mendez
Paola Mendez
Paola Mendez graduated from Los Angeles Valley College, then transferred to University of California, and now serves as a Receptionist and Office Assistant to the Los Angeles Business Journal. Paola wears many hats in different departments and is trilingual in English, Spanish and French.
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