Sally Beauty Company, Inc. - National Growth in the 1980s

National Growth in the 1980s

Sally Beauty first focused on buying beauty supply operations in the South, giving it regional strength. It bought four Southern beauty chains in the early 1980s, including a Tennessee business with 20 stores and a Houston chain that had 26 stores and a warehouse operation. In 1982, Sally purchased Gibson Beauty Supply, based in Denton, Texas. That year, Sally moved its corporate headquarters to Denton. Alberto-Culver headquarters remained in suburban Chicago. In 1985, Sally bought two beauty supply chains near its parent's headquarters in Illinois. This moved Sally into the Midwest and brought the chain 50 more retail outlets. The Illinois chains also gave Sally two new distribution centers. In addition to acquiring competitors, Sally built new stores on its own. By the mid-1980s, it was opening six or seven stores a month.

By 1986, chainwide sales had reached $135 million. This was roughly a third of Alberto-Culver's total sales. Sally brought in about a third of Alberto-Culver's net income as well. By 1987, Sally Beauty had 440 stores spread across 24 states. The chain had grown very quickly, but it was still going strong. On the brink of becoming a nationwide chain, Sally had no national competitor. Its retail formula seemed to work well and to answer a real need. The Sally chain was able to buy in bulk from major suppliers, so it could offer attractive discounts to the professional beauty operators who made up the majority of its customers. It did not manufacture its own products, but some manufacturers produced special lines exclusively for Sally. The stores were generally located in strip malls, where customers could conveniently drive up and load their cars with boxes of goods. Though at first the stores focused on hair care items, by 1987 Sally was selling cosmetics and skin care products as well. Managers at the Denton headquarters assisted the stores with marketing, sending flyers to thousands of licensed beauty professionals within a new store's area. Sally's warehouse system was quite up-to-date and efficient, so the chain seemed able to absorb its rapid growth smoothly. By the mid-1980s, the chain used four warehouses, each of which was automated and computerized for quick fulfillment of orders.

Sally was handling its expansion so well that its president, Michael Renzulli, compared it to fast-food hamburger chain McDonald's. In 24 states by 1987, Renzulli planned to move into all 50 states by 1990. Coast-to-coast coverage took a little longer than that—Sally stores were found in 46 states by 1990. Nonetheless, it was clear that Sally had a winning formula, and there was plenty of room left in the market. In 1987, Sally began to test the waters overseas, again expanding through strategic acquisitions.