Ahead In the Market.

A FOCUS ON CUSTOMIZED SERVICE HELPING SPEED GROWTH OF COUPLE'S HAIR REPLACEMENT CHAIN

JACKIE and Doris Yu have what might seem like a problem -- the better they make their product, the less people notice it.

But in their business, that's evidence of success. For the Yus, owners of HairArt Inc., drawing the wrong kind of attention can be the kiss of death.

The Yus, marriage and business partners for three decades, own a chain of "hair replacement" studios whose growth is accelerating despite the popularity of shaved heads and close-cropped hair. (Don't even mention the word "toupee" -- the industry dropped that term, with all its embarrassing connotations, 15 years ago, the Yus say.)

Last year, the couple renovated their Mid-Wilshire location on Third Street and bought out competing studios on Wilshire Boulevard and in Anaheim. Now, they're planning to open a fourth studio in Sherman Oaks and scouting locations for what would be a fifth location in the San Gabriel Valley.

The couple now boasts 3,000 clients, including celebrities who work in television, music and the film world, willing to plunk down the $2,000 to $4,000 that a hair replacement system costs.

The Yus' secret?

Strikingly realistic replacements that use only real human hair and that are matched to a customer's remaining hair, without dye. The hairpieces are constructed at the company's factory in Bangkok

"You don't have one size fits all," said Jackie Yu, 50. "Every person's hair is a different color, a different density, a different type."

The only problem is, with rare exception, few are willing to talk about a product that is made to hide what they often consider an embarrassing condition.

"We don't get invited to a lot of Christmas parties," said Yu, a Shanghai native.

Roots of growth

The couple, who met during Yu's 17th birthday party, got their start in the business in the late 1960s when Yu, while still a teenager, opened a wig manufacturing plant in Hong Kong. He shipped the modestly priced wigs overseas but was forced out of the market in 1976 when Hong Kong's rising labor costs became less competitive.

The couple that same year immigrated to Los Angeles, where Yu met a former customer and began working in his hair replacement shop. By 1979 the couple had opened a shop of their own, called Unique Hair, in a tiny 400-square-foot Sunset Boulevard storefront.

Several expansions later, in 1984, they arrived at the current 3,000-square-foot headquarters, adopting their current name along the way.

Though the business had continued to grow, the Yus decided that the hairpiece quality was inconsistent.

So they decided to take matters into their own hands, spending $200,000 to open their own manufacturing plant in Thailand.

Workers there hand-sew each of the hairpieces, based on plaster molds taken of clients' heads in order to get a perfect fit.

"They tie the hair, one at a time, to a foundation," Yu said. "A quality piece takes a girl between five and seven days to put together."

The hair -- real human hair- comes from a network of seven vendors who cull locks from as far away as India, China and Russia. The vendors supply the hair at a cost of $10 to $100 an ounce, depending on its rarity. Black hair is the most common.

In addition to being in the hairpiece business, the couple has established as a sideline a wholesale beauty supply warehouse, and five years ago opened a small studio in main land China directly across the border from Hong Kong, a region to which Yu regularly travels for his warehouse business.

Planned obsolescence 

Chris Webb, publisher and editor of The National Hair Journal, an industry trade magazine, said that the Yus' approach -- particularly owning their own factory ----- is practically unheard of in the business.

"The product was unreliable to him both from a (quality) point of view and a cost-control point of view, so he decided he would take control over it," Webb said. "In terms of the technology he provides, he is as good as anything else out there."

Webb added that the Yus also have excelled in customer relations, key in a business where a good part of the profit comes from repeat business.

Unlike toupees, the Yus' hairpieces are not taken off at night, and have a life expectancy of two or three years. They are attached by a translucent dual-sided tape, making it possible to play sports and shower with them.

To keep the look natural and the hairpiece blending seamlessly with the wearer's ownhair, HairArt clients return every four to six weeks for a hair cut (their own) and to have their hairpieces cleaned, adjusted and repaired if necessary.

Doris Yu spends most of her time in the studios, managing the stylists who work directly with clients. Her sister manages the Wilshire Boulevard location, which, like the Orange County operation, is for the time being still operating under the name Image One, the business they acquired.

"It's challenging," she said. "You can make people change. They look better and they feel better."

Brenda Macias, a stylist who has been working at the Third Street studio for four years, said the work is different from her former job as a stylist at CBS, in that it requires a combination of technical expertise and artistry.

"Let me tell you, there are a lot of pieces out there you wouldn't even know (are hairpieces)," said Macias, who claims that several big-name musicians and wrestlers are her clients. "You do something and it's beautiful, and you feel like you are fooling everyone."

At least some of the Yus' clients don't mind acknowledging who they are. KNBC news anchor David Cruz, for example, has been on a mission to spread the word on the Yus since becoming a client in 1999.

"In my opinion, I think they are the best at what they do. I just wish there were more like them," said Cruz, 49, who has offered an unpaid testimonial for an upcoming marketing campaign. He added that he even recommends the studio to total strangers.

And yes, Yu isn't just an owner of HairArt. He's also a client -- and has been for nearly 14 years.

When he started losing his hair, he said, "I figured it was time for me to try my product on myself."

Spotlight

HairArt Inc.

Year Founded: 1978

Core Business: Hair replacement systems

Revenues in 1999: $900,000

Revenues in 2000: $1.5 million

Revenues in 2001: $4 million (projected)

Employees in 1999:14

Employees in 2001: 31

Goal: To accelerate growth by opening a new Sherman Oaks store this summer and an additional store in the San Gabriel Valley in the near future

Driving Force: Balding men's desire to look and feel better about themselves