Seven years ago, engineer Ilnaz Nabiullin quit his job at one of Russia’s largest chemical groups of companies to open his own budget jewelry store. As the years went by, he began to really enjoy entrepreneurship and came up with ‘fast hair’, hair salons where one appointment takes around 15 minutes, the rate is fixed and affordable to most people. The first Japanese-style hair salon, Chio Chio, opened in the spring of 2017. Now Russia’s largest hairdressing chain includes 250 salons in more than 100 cities. The Kazan startup also operates in Kazakhstan and the Kyrgyz Republic. Recently, the first Chio Chio salon opened in Manhattan.
Ilnaz Nabiullin recalls that he had his first business experience at the age of 16. After graduating from high school, he started producing nails in a garage and invested $4K saved by his parents for college. The A student was admitted to university tuition-free so the money was spent on nail-making machine and wire. However, cost-intensive makeshift nails did not find their customer. This did not discourage the young man from further business endeavors. As a fresh graduate of a chemical technology university, he got a job at Kazanorgsintez and opened his own men’s jewelry store, Gentlz. The store was first intended as a business for his wife but Ilnaz became so involved that eventually quit his nine-to-five job. Later, the couple decided to also sell budget women’s accessories and launched Zifa, a fixed price shop and basically an offline competitor of AliExpress.
That was Nabiullin’s first experience in renting space in Kazan shopping malls and his first attempt to sell a franchise. Ilnaz admits he faced some obstacles. Competitors tried to move his corner shops from areas with bigger customer traffic and he also had to deal with some dishonest franchisees.
Even so, Nabiullin sees the franchise model as the main driver of small business. So when he had the idea of an innovative barbershop, he developed it with an eye to a franchise.
Chio Chio walk-in salons use no administrators. Take a ticket from a terminal and get into a chair – your hairdresser will need to meet the time limit of 15 minutes. To cut the time, washing the hair after the haircut has been replaced with dry treatment. Payments are made through a terminal, which supports contactless and mobile payments.
“We banked on the speed of service and the price segment below average,” says Ilnaz Nabiullin. “Many Russians cannot afford to visit beauty salons, but they still want to go to nice modern barbershops, which comply with the sanitary standards, and the price tag does not exceed their daily earnings. It was also important to make getting a haircut more accessible in the literal sense – the location should be convenient enough to drop in along the way.”
The business idea took shape quickly, with express services and economy class prices. As soon as Nabiullin found out that such chains are quickly developing in Japan, he traveled to that country, but failed to find any partners there, so he had to build the business himself. The only thing the trip brought was the name – Chio Chio, a “Japanese Hair Salon”. They planned to attract customers with a bright and unusual name.
The businessman admits that the project was adventurous, as he had no experience in the hairdressing business, not even in the beauty market. He collected all important information while searching for a manager for his future salon – by conducting interviews, recording things and then analyzing them.
Nabiullin had no doubts about picking the hairdressing business: numerous opinion polls reveal that even during the crisis period, when over half of citizens choose to tighten their belts, only 10% are ready to drastically cut expenses for hairdressing services or even to opt out, while those forced to cut their food bills exceeds 50%, and 25% of Russians have started skimping on footwear and clothing.
“At the moment, we see a vast number of new budget shops starting to operate, in particular, numerous affordable barbershops. I think that businessmen act this way in an attempt to make a profit off of reduction in citizens’ income and the reputation of popular economy class barbershops,” CHIN UP men’s hair salon founder and managing director Stanislav Ryabiko says.
Hair stylist and self-employed entrepreneur Anastasia Balutsa agrees that budget barbershops are popular, adding that they are literally putting small businesses out through dumping, just like convenience store chains do in the retail market.
“Monopolists leave no chance for small business owners in the mid-segment,” she lamented.
Launching the first Chio Chiosalon, together with developing the business plan and the logo, required RUR 1.7 mio ($27K). Later, through the use of their own furniture after Ilnaz started kaizen cabinet production line, the company managed to reduce the launch costs to RUR 350K and the preparation period to 8 days.
Standardizing hairdressers’ work and introducing strict key performance indicators was an important step. This methods, however, has its opponents.
“Identical haircut will not look good on everyone as heads come in a variety of shapes, with different volume and structure of hair. A professional hairdresser first identifies hair type and qualities and then offers a haircut to the client that would hide flaws and accent advantages,” Stanislav Ryabiko emphasizes. “The ‘conveyor’ type of hairdressing fails to be so meticulous, just like an unfit shirt that looks out of place.”
But Ilnaz Nabiullin disagrees: “I often hear that hairdressing is an art form, therefore hairdressers should not be limited to anything. I believe that a haircut is pure geometry. When looking at the client and assessing their face shape, the haircutter can pick one of many standard hairdos that suit the client best. So it is a conveyor of sorts; it is easier to work with than with a creative style. Our experience shows that it is possible to do 160 haircuts in just one day.”
Chio Chio currently employs 1.5K hairdressers and five robots. The latter are charged with selecting rooms and staff, and also accompany business operations. In the past two years, Chio Chio has opened 250 salon franchises in Russia and has become the country’s largest network with salons operating in Kazakhstan, Kyrgyzstan and even the US. Ilnaz Nabiullin has recently opened his first Manhattan salon.
“We want to compete for the world’s largest network,” he says. “The current leader, Great Clips, now has 4.3K hair salons. This is a huge number; it will take us several years to catch up with them, even if we open several salons each day.”
According to Stanislav Ryabiko, “The men’s beauty market in other countries has long been formed, and their men know more about haircuts than men in Russia. So it would be not wise to offer them a low or medium quality product. Russian brands that offer quality products to foreign markets are successful, but they can hardly be called mass market.”
In the meanwhile, the businessman plans to open kids’ hair salons, barbershops and beauty coworking spaces where nail artists, cosmetologists and massage therapists will be able to rent equipped workspaces by the hour.
By Anna Oreshkina