Supercuts 2002 Annual Report Download - page 21

Table of Contents
Management Information Systems
The Company utilizes a retail point-of-sale information system in all its corporate salons. This system collects data daily from each salon and
consolidates the data into several management reports. The salon managers deposit all cash receipts into local accounts each night, which are
then transferred into a centralized bank account. This process limits the Company’s need for working capital as cash is collected in advance of
the payment of bills. Point-of-sale information is also used both to monitor salon performance and to generate customer data for use in
identifying and anticipating industry trends for purposes of pricing and marketing. The Company has expanded the system to deliver on-line
information as to sales of products to improve its inventory control system, including suggested monthly product purchase recommendations
for a salon, a monthly report of sales and a perpetual inventory. Management believes that its information systems provide advantages in
planning and analysis which are not available to a majority of its competitors which do not have management information systems.
Competition
The hair care industry is highly fragmented and competitive. In every area in which the Company has a salon, there are competitors offering
similar hair care services and products at similar prices. The Company faces competition within malls from companies which operate salons
within department stores and from smaller chains of salons, independently owned salons and, to a lesser extent, salons which, although
independently owned, are operating under franchises from a franchising company that may assist such salons in areas of training, marketing
and advertising.
Significant entry barriers exist for new chains due to the need to establish customer awareness, systems and infrastructure, recruitment of
experienced hair care management and adequate store staff, and leasing of quality sites. The principal factors of competition in the affordable
hair care category are quality, consistency and convenience. The Company continually strives to improve its performance in each of these areas
and to create additional points of difference versus the competition. In order to obtain locations in shopping malls, the Company must be
competitive as to rentals and other customary tenant obligations. The Company believes that because of its established relationships with many
leading shopping center developers throughout the country, its status in the hair care industry as a national rather than a local tenant, and its
financial resources, it should not be constrained in obtaining sufficient shopping center locations to continue its historical pattern of growth.
Trademarks
The Company holds numerous trademarks, both in the United States and in several foreign countries. The most recognized trademarks are
“Regis Salons,” “Supercuts,” “MasterCuts,” “Trade Secret,” “SmartStyle,” “Cost Cutters,” “Hair Masters,” “Jean Louis David,” “St. Algue,”
“First Choice Haircutters” and “Magicuts.”
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