Grooming Lounge To Focus On In-House Products

The good folks over at Beauty Independent (the premiere trade publication for the beauty and grooming industry) recently wrote up a quick little story about our company's history and the path we're taking forward.  So without further adieu...

Grooming Lounge Cuts Third-Party Brands To Boost Profits With In-House Products And Franchising by Erica La Sala

With an eye toward profit, Grooming Lounge is dropping third-party brands to focus on in-house products and franchise location expansion.

The moves will enable the e-tailer and barbershop to claw back margin it’s been giving to vendors to power its own business. They’re indicative of broader challenges in the retail landscape as shops and e-tailers confront market forces, from Amazon to consumer caution, that make multi-brand curation increasingly untenable. By March, the last remaining third-party brands on Grooming Lounge’s site will disappear. Currently, it carries 10 bestselling brands, including Jack Black, Kiehl’s, Malin + Goetz, Proraso and Billy Jealousy, down from as many as 40 previously.

“We found a way to consolidate our business. We’re going to come out of it with less sales, but be more profitable,” says Mike Gilman, founder and CEO of Grooming Lounge. “Everybody used to say, I’m going to grow to grow so I can sell my business. That’s just not the case anymore. Now, profit rules everything.”

Launched in 2000 during the dot-com boom, Grooming Lounge was early to selling men’s grooming products online, but recently its growth has stalled. In 2022, sales declined 10% after shooting up 20% in 2020 and 2021, and they haven’t returned to the 2020 and 2021 volumes. Before the pandemic, Grooming Lounge had two locations, but closed its Washington, D.C. flagship, which opened in 2002, after it got underway. At its remaining location in McLean, Va., service revenues have returned to pre-pandemic levels. Grooming Lounge offers hair and beard-trimming services, facials, manicures and pedicures, massage therapy and hair removal treatments priced from $43 to $175.

Available in roughly 25 independent shops and on Amazon, Grooming Lounge hopes to double wholesale revenues of its product line by adding indie retail accounts and boosting its Amazon presence with special bundles and exclusive products. To support wholesale growth, it closed its warehouse and switched to a third-party logistics provider.

Grooming Lounge’s in-house line has 25 grooming, skincare, body care, hair and fragrance products. The bestsellers are $26 Our Best Seller Body Wash, $24 Beard Master Shave Oil, and $26 Beard Destroyer Shave Cream. Grooming Lounge plans to extend the line with targeted face serums, masks, cleansing bars and deodorants. The line has been rebranded at least four times since its launch in 2004 in Grooming Lounge’s brick-and-mortar business, where the products are vetted and sold.

Grooming Lounge’s products were previously available at Ulta Beauty and Macy’s, but it’s steering clear of large retailers as it expands wholesale today. Its earlier experience at Ulta and Macy’s impressed upon Gilman that it’s difficult to achieve meaningful return on investment as a small player in a big retail environment.

“Generating awareness through large physical retailers is tough sledding. We’ve done it before and in our experience, by the time you provide the margin they request and pay for the extras, it’s tough to make it a profitable venture,” he says. “Sure, some can do it and perhaps endure some losses to generate buzz and awareness, but that’s not really doable for the little guy, at least not sustainably.”

On top of its wholesale drive, Grooming Lounge is working to amplify its brick-and-mortar footprint. It’s partnered with the law firm Jones Day to establish a franchise model and aims to open a dozen locations in affluent locales around the country in the next three years or so. Grooming Lounge has long had franchise ambitions, and there was a short-lived franchise location in Atlanta in 2014.

“The retail service industry is back, in some cases, better than ever,” says Gilman. “Guys want to take care of themselves. We’ve been able to really rightsize what’s required to run a business and make it even more profitable with better levels of service. I think we’re at the right spot to do that.”

In alignment with its attention on profitability, Grooming Lounge is avoiding expensive partnerships with influencers and social media advertising. Instead, it’s turning to marketing strategies like email and text to fuel awareness and conversion.

“The days of us spending $25,000 a month on Facebook and Google are over,” says Gilman. “We were doing it for a while and business was good, but the juice was not worth the squeeze in terms of the type of money we were outlaying for creative and ads.”

Men’s grooming projections have been bullish. For instance, the market research firm Global Market Insights predicts the global men’s grooming products market will advance at compound annual growth rate of 5.6% to go from $55.5 billion in 2023 to $89.8 billion in 2032. New survey research from market research firm Mintel shows that 52% of American men use facial skincare products, an increase from 31% in 2022. Gen Z in particular has adopted skincare routines, with 68% of gen Z men using facial skincare, up from 42% in 2022.

Gilman’s expectations for the men’s grooming market are relatively modest. “It is not this Shangri-La. People have been saying that for 20 years. It is certainly a good market,” he says. “Guys are super loyal and the market has been growing, but, compared to women’s, it’s a pond to an ocean in terms of the opportunity.”