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THE TURNAROUND

Turning Around The Homespa

Aired June 25, 2005 - 11:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


TONY HARRIS, CNN ANCHOR: I'm Tony Harris in Atlanta. "THE TURNAROUND" with Ali Velshi begins in 60 seconds. First, headlines now in the news.
Camden, New Jersey, police will update us this hour on the deaths of three boys. You are looking at a live picture there right now. The friends were found last night locked in the trunk of a car. Police haven't figured out if the boys climbed in on their own or if they were victims of foul play. We'll monitor the news briefing and have an update in 30 minutes. And we'll also have a full report in an hour on "CNN LIVE SATURDAY" with Fredricka Whitfield.

And Tehran's hard line mayor has won Iran's presidential runoff in a landslide. The victory by Mahmoud Amadinejad is a set back for reformers. The Bush administration says the vote was fundamentally flawed.

And remember, you can use CNN reports online. Just visit CNN.com and click on watch for free video and you can check out the most popular stories while your there as well. More news coming up at the bottom of the hour. "THE TURNAROUND" with Ali Velshi begins right now.

(BEGIN VIDEOTAPE)

ANNOUNCER: Next on THE TOURNAROUND. A spa owner in need of rejuvenation.

DEBBIE TOWNES, OWENER, THE HOMESPA: Somehow I'm always able to keep the business from just completely going under.

ANNOUNCER: A beauty power house who pampers people to perfection.

MARCIA KILGORE, FOUNDER, BLISS SPAS: When you look at her appointment book, there aren't that many customers coming in right now.

ANNOUNCER: They have three days to change.

KILGORE: You have three seconds to hook somebody.

ANNOUNCER: THE TURN AROUND begins right now.

ALI VELSHI, HOST: Skin soothing facials, tension melting massages: there's just two of the many treatments people pay top dollar for at America's spas. Between 1999 and 2003, spa revenues went from $5 billion to more than $11 billion a year. Most of the businesses generated by day spas where clients pop in for a few hours of pampering.

(on camera): Welcome to THE TURNAROUND. I'm Ali Velshi in Brooklyn, New York, where we're on our way to a spa that needs some help.

Our small business owner knows she's got to do something differently if she's going to make her place work. So, we are setting her up with someone who really knows the spa business.

After spending three days together, we'll see if they can't give this place a makeover.

TOWNES: Do not start a business. OK. I'm just kidding.

VELSHI (voice-over): Well, not entirely kidding. Seven years ago, Debbie Townes opened The Homespa in Brooklyn, New York. And despite long hours, she's found it hard to succeed.

TOWNES: There's way too much work for me. I'm doing everything. And, I'm not really able to get anything done with efficacy. Somehow, I am always keep the business from just completely going under. Never sinking, but always capsizing.

VELSHI: Debbie has two locations. First, her original Homespa where a diverse clientele can come to get treatment in a cozy setting.

TOWNES: The Homespa is actually one of the few spas committed to really making available relaxation and rejuvenation. All of the typical spa services to everyone. Nothing too fancy. Something that feels almost like comfortable as being at home.

VELSHI: Debbie rents another space nearby just to sell products. It's stocked and ready to go. She's got big plans to sell there, but she's yet to open the doors. And it's costing her $1200 a month.

TOWNES: Even though it looks like it's costing me the rent, in keeping it and persevering, I think that I should be able to make that rent back and more by just not giving up on it.

VELSHI: But right now, Debbie needs more than perseverance. She's losing money. And she want's a mentor she can relate to. And, who's armed with the know-how to put her business on the right track.

TOWNES: Someone who has a lot of energy, lots of creativity who would have gotten all of these opportunities to be incredible and fabulous but not just find themselves floundering.

VELSHI: One of the spa industry's biggest success stories ever is about to take on that challenge.

Marcia Kilgore is the founder and creative director of Bliss, it's a chain of spas that's made pampering hip and accessible.

KILGORE: I have always been someone who kind of blurts out what I think before I think about what I'm saying. So I don't think I'm going to have much of a problem just telling her what I think.

VELSHI (on camera): What's the feel that your products and your spas give?

KILGORE: It is high quality but still having a lot of fun.

VELSHI (voice-over): Marcia started with an one-room facial salon in 1996. She turned the tiny operation into a $30 million empire with four locations worldwide and a hot product line. In 1999, Marcia sold majority ownership in the company to LVMH, a luxury retail conglomerate. In 2004, the Starwood Hotel chain bought Bliss, with the intention putting the spas in many of its W Hotels. Marcia's eager to share experience to help Debbie find success and develop more focus.

(on camera): How are you planning to approach this?

KILGORE: Open, honest, immediate communication. There are some huge dreams that are very desperate and kind of all over the place and many ideas which is great. But at the same time, I don't know if what they are trying to provide is clear enough to me, clear enough to themselves, clear enough to the customer.

VELSHI: Right.

(voice-over): After reviewing Debbie's application tape, one issue that already concerns Marcia is Debbie's second space, that store front she pays rent for but doesn't use.

KILGORE: Having two locations, one of which the door was completely closed, is a waste not only of money but of energy.

VELSHI: It's 11:00 a.m. in Brooklyn. Debbie and her small staff know that a mentor is on the way, but they have no clue who it will be.

(on camera): What do you want to achieve?

TOWNES: I need to figure out how to maximize the potential of the business. But don't constantly flying by the seat of my pants. You cant be the co-pilot and the pilot and the stewardess and everybody all at the same time. But meanwhile, the plane is flying. There's a mountain in front of me. What do I do next?

VELSHI: I think the mentor you're getting will help you with that.

(voice-over): And the mentor has just arrived.

KILGORE: Hi.

Do you have any appointments available?

TOWNES: It's Marcia Kilgore.

I can't believe it. Oh my God. It's been saved. I've been saved.

I recognize her as Marcia Kilgore from Bliss. I was like wahoo.

I am very, very fortunate to have someone like her be able to even take a glance at this business.

After we met, immediately after we stopped hugging and kissing and all that kind of stuff, I took her on the tour of the spa, the four treatment rooms, the laundry area. And she cross her self before she went into the basement, because clearly there are issues there.

KILGORE: You need to clean up down here a little bit.

VELSHI (voice-over): Back in the front of the spa, Marcia spots another trouble zone, the shelf. Debbie has too many products in too little space and might be hurting her sales.

KILGORE: It's very important that there's not too much clutter. And also, incredibly important is that it's clean. No one wants to have their face touched or their pores cleaned out somewhere that is not spotlessly clean. Let's go look at your front window.

VELSHI: Here, Marcia sees more room for improvement.

KILGORE: I'm walking by in need of a leg wax. Is there anything out here that tells me I can get one here?

TOWNES: No.

KILGORE: Is there anything here that tells me my face can look younger?

TOWNES: No.

VELSHI: Then Debbie briefs Marica on her second location.

KILGORE: How many customers do you have walking in there every day?

TOWNES: None, none. The story with the shop right now is that it's closed.

KILGORE: And you pay rent on it?

TOWNES: I pay rent of it.

KILGORE: How much?

TOWNES: $1200.

KILGORE: Every month?

TOWNES: Every month.

VELSHI: Coming up, Marcia gets serious, fast. KILGORE: Want it is is a division of your energy.

VELSHI: The mentor triggers an important move, next on THE TURN AROUND.

(COMMERCIAL BREAK)

VELSHI: It's day one of this turnaround. Homespa owner Debbie Townes has just met her mentor, Bliss founder, Marcia Kilgore. Marcia has taken a good look at the business. She's focusing on what she considers a missed opportunity: Homespa's front window.

KILGORE: So you have tons of potential clients walking up and down this street every day without you telling them what you do.

Until you're a worldwide known bland, you cannot rely on people being curious about what you offer. You have three seconds to hook somebody. So, you have to make sure in that three seconds they get information to be interested in what you're offering.

VELSHI: To discuss what needs changing, the group along with Debbie's son Jason heads to a local sushi place. Marcia sits and listens.

(on camera): Before we put you through this turnaround, I guess it is useful to get a feeling for the passion for it and what drives you to it.

TOWNES: The passion that I have for it has to do with the fact that what we bring people is really meaningful. So what the Homespa provides is something that is really your basic spa, nonthreatening, all inviting. I try to make the prices affordable. That is the spa for everyone.

JASON TOWNES, SON: So it's been like a living room you walk in and, like, people are talking.

TOWNES: But it has to have a structure that's sound.

VELSHI: What are the things that occupy your time?

TOWNES: Cover the front desk, answer the phone, book the appointments, doing the payroll, cleaning the spa, advertising and marketing. I need to work smarter, not harder.

KILGORE: Yes.

TOWNES: That's what Jason told me.

VELSHI (voice-over): The mentor agrees.

KILGORE: She has just sort of become overwhelmed by taking on too much. When none of it is actually producing anything.

When you look at her appointment book, there aren't that many customers coming in right now. VELSHI: We take a walk over to Debbie's second location, the Homespa shop. She stocked it with some products, but she doesn't have the time or the employees to open it. For now, the shop just sits, locked, sucking up $1200 a month in rent. The shelves are holding products that Debbie could be selling back at the spa.

(on camera): What is the margin on your retail products approximately?

TOWNES: The mark-up?

VELSHI: Yes.

TOWNES: It's 100 percent.

VELSHI: 100 percent. So, you need to sell $2400 on retail stuff a month just to pay for this? Are you near selling $2400 bucks worth of anything at this moment?

TOWNES: Here?

VELSHI: No, at the other place. Are you even selling $2400 worth of retail at all?

TOWNES: No.

VELSHI (voice-over): Marcia now asks the question that helps Debbie realize once and for all that things have to change.

KILGORE: Out of your 99 hours a week that you are working, how many hours spent worrying about this store doing nothing? Five, ten hours?

TOWNES: A lot. A lot.

KILGORE: Five or ten too many. Can we move this to the spa?

TOWNES: I can't see it right now, the retail space at the spa. So, if you all can help me see where it would go, that would be beautiful.

KILGORE: Well, I think there's some room there that we can take advantage of. So, I think we should pack it up and take it over there.

TOWNES: But how?

KILGORE: Boxes. Literally. Must go.

TOWNES: Get to work, Jason.

JASON TOWNES: We can definitely move the stuff over?

TOWNES: So, that would be cool.

KILGORE: All right. VELSHI: Debbie's made the critical decision to empty the shop, but it's just the half the equation. She has got another problem, selling products to clients.

TOWNES: I just didn't want to beat people over the head to buy products. And I choose not to beat people over the head with products, so we never do. But what is kind of turned into is that we just never sell anything at all. And what was stopping me wasn't the clients' fear but my own fear is really holding it all back. So, I have got to get out of the way and that was a really great revelation that she kind of led me to.

VELSHI: Debbie also needs to be led out of her lease.

KILGORE: Are you going to try to get out of the lease by the end of the month.

TOWNES: OK. By the end of this month?

KILGORE: Yes.

TOWNES: OK.

VELSHI (on camera): OK. Well, we've got work to do. I'm starting to sweat now and I haven't picked anything up yet.

(voice-over): Everyone begins taking down displays and packing up product to move them to the original the Homespa location.

KILGORE: Anything you think we might be able to sell over in the spa.

VELSHI: As the packing continues, Marcia steps outside. She's planning a surprise.

KILGORE: We have got to give this woman a new start. Think you can bring some Bliss elves down and we can help pack up and move everything over? All right. Well, see you soon.

VELSHI: Within minutes, the Calvary arrives.

KILGORE: All right! We're moving out.

TOWNES: OK.

They're from Bliss. Oh my God, thank you so much.

KILGORE: They felt the need to help.

TOWNES: Four Bliss girls that came into the shop ready to work. I mean, I was so impressed. They're like elves, you know? It was amazing and everything got done.

KILGORE: I was a little bit worried that things (INAUDIBLE) moved out the door could cause a meltdown, but she handled it very gracefully. TOWNES: Just accept the fact that the shop is going and the retail area will be here. I think deep down, I'm so relieved.

KILGORE: It is always very scary but there's nothing more exciting than something new.

VELSHI (on camera): Well, as day one of this turnaround in Brooklyn comes to a close, Debbie has come to terms with the fact that this retail operation which was closed until today isn't doing anything for her business. So she's dismantling it, she's taking the merchandise over to her spa and she's going to see if it helps her bottom line over there.

(voice-over): Coming up on THE TURNAROUND, the mentor gets even tougher.

KILGORE: You need to repaint all these rooms. You need to clean the floors every night. It's unsanitary.

VELSHI: Next.

(COMMERCIAL BREAK)

VELSHI: Our small business owner is Debbie Townes. She runs The Homespa. Our mentor is Marcia Kilgore, founder of Bliss. So far, Marcia has convinced Debbie to consolidate her retail space from two stores into one. And get out of her second store lease.

She also wants Debbie to work on her front window.

(on camera): What have we got on the agenda. We need to deal with this.

KILGORE: We need to clean up the window.

VELSHI: Yeah.

KILGORE: Get the message out there.

VELSHI: And then we need to get the...

KILGORE: Retail shelving.

VELSHI: Right. We got to the product that we brought over from yesterday in here somewhere. We've got some wood, basically (INAUDIBLE)

KILGORE: I heard you have here a power saw...

VELSHI: I've got power tools.

KILGORE: Very exciting.

VELSHI: All right. Well, let's head inside and get started.

KILGORE: All right. TOWNES: Good morning.

KILGORE: Good morning.

How are you?

TOWNES: I'm good. How are you?

KILGORE: Good. Excited?

TOWNES: Yes. very.

KILGORE: How are you feeling after yesterday?

TOWNES: Exhilarated.

KILGORE: Yeah?

TOWNES: Really inspired.

VELSHI (voice-over): Debbie is eager to get things started. After spending just one day together, Marcia's leadership skills are already starting to rub off on her.

TOWNES: I'm waiting for you all to transform this reception area, because that's is the key.

KILGORE: For who?

TOWNES: For me. I'm waiting for me to guide you in transforming my reception area.

KILGORE: Yes.

TOWNES: Because I want to see this be the retail shop. This the Homespa shop right in here.

KILGORE: Yeah.

What we can do is figure out first, I think, where we can create more space for more linear shelf space. I think this will be a great area to use. And if we don't have to have this fireplace here, I think we should open it up and put shelving.

VELSHI: But before working on the inside, Marcia wants to work on the outside. She believes the shop window not only needs a good cleaning but that it's being underutilized. It's prime advertising space. And Debbie needs to do more with it.

KILGORE: We definitely want your message up there. I would say we want a list just sort of at eye level along the bottom, the different services that you offer.

VELSHI: Since opening in 1988, Homespa has received a lot of press in magazines, write-ups are a marketing opportunity.

KILGORE: This is good. The most heart-felt relaxation experience in New York City.

TOWNES: That's what I've been using on the brochure.

KILGORE: Which isn't -- yeah -- which is not bad.

VELSHI: After spending time looking around the Homespa, Marcia realizes she needs to reinforce the need for a clean environment at this or any spa.

KILGORE: The closer you get to someone's body, the cleaner you have to be.

VELSHI: Marcia decides it's time for a little spring cleaning. And everyone is put to work.

KILGORE: You need to repaint all these rooms. You need to clean the floors every night. You cannot let anyone leave when they're still waxing the floor. It is unsanitary.

TOWNES: I believe she was highly offended by some of the things that she saw.

KILGORE: It didn't seem like anyone was surprised it was so dirty.

Now, I also noticed that the door squeaks when it opens. Do we have some oil?

TOWNES: Hmm.

KILGORE: Hardware store.

Go.

KILGORE: Any WD-40 we could borrow? We have a squeaky door.

TOWNES: Thank you, Joey.

It's squeaking on the floor, though, right?

KILGORE: Yes, but it's also...

VELSHI (on camera): I have got a screwdriver.

KILGORE: It's creaky here.

VELSHI: Yeah, see what it is, you can see the little hinge. That's excellent, though. That going to help it.

Oh, that's a lot better. The squeak's gone.

TOWNES: Bravo, bravo. You're hired. You're hired.

VELSHI (voice-over): 11:45, Marcia brings in Bliss art director.

KILGORE: Oh, look who's here. VELSHI: Tom Rascoti to help Debbie with her new the window signing.

TOM RASCOTI, ART DIRECTOR, BLISS SPAS: Just try to consider all the things that that window is trying to say. And what we're selling through it.

TOWNES: Right.

RASCOTI: You know, we're selling experience, we're selling products, we're selling -- you know.

TOWNES: I think even just starting with the facials, massages, body treatments, waxing, that would increase things tremendously, at least, as far as just communicating to the client. And then the rest is whatever else creatively you can come up with.

RASCOTI: OK. So that's -- let me take a look at the window then.

TOWNES: Great, great. Thank you.

VELSHI: While Tom brainstorms, Marcia tries to get Debbie to overcome the fear about being too aggressive when it comes to product sales. Marcia holds a training session with Debbie and her staff, teaching them how to sell products effectively without offending her clients.

KILGORE: I'm going to do a little role playing. I don't want to put you on the spot, but you're on the spot. Ready? OK?

We're going to do this as a team effort. She is, of course, giving the massage. And I'm going to be the client. And you are your going to be your lovely receptionist self. You're massaging my arm. I knew I would get a free massage out of this. Wow. That feels good. It smells even better. What is that you're using?

UNIDENTIFIED FEMALE: This is the Homespa refreshing lavender lotion.

KILGORE: Wow. Very relaxing smell. I love that.

UNIDENTIFIED FEMALE: It's part of our own line.

KILGORE: Really? And I can?

UNIDENTIFIED FEMALE: And it's available up front if you would like to purchase it.

KILGORE: OK. Try never use the word purchase.

UNIDENTIFIED FEMALE: A little bit too aggressive.

KILGORE: No, no. That was not aggressive at all. That was so shy. OK. Now what she could do instead is say, you know what? We have that at the front. And then leave it on the front desk for you. And Erica will show you when you check out. OK?

Then you leave your room. And tell Erica that your client would love the lavender massage lotion. There it is. Erica, are you going to bring it down? Mrs. Smith, when she checks out, your going to tell her, I heard that you loved the lavender massage lotion.

UNIDENTIFIED FEMALE: During your massage.

KILGORE: Yes. Here it is. Would you like to take it with you? You can use it to moisturize your skin. Now, are you pushing anything on her?

UNIDENTIFIED FEMALE: No.

UNIDENTIFIED FEMALE: No.

TOWNES: Just watching Marcia's ability to just really recognize a problem, jump on it, get it done. And the next, go on to the next thing. That, I think, is going to benefit me a lot, because a lot of the stuff, too, I discovered isn't that difficult. But nothing's possible if you don't actually put some energy behind it and do it.

VELSHI: Debbie and the staff are inspired by the training session. And they're eager to make this turnaround a success.

TOWNES: All right!

UNIDENTIFIED FEMALE: Hoopa?

KILGORE: OK.

VELSHI: Coming up, Marcia gives Debbie a dose of reality.

KILGORE: Taking on your own products and your own packaging is not something you can do.

VELSHI: Next on THE TURNAROUND.

(COMMERCIAL BREAK)

HARRIS: I'm Tony Harris at the CNN center in Atlanta. THE TURNAROUND with Ali Velshi continues in 60 seconds. First, another check of headlines now in the news.

A tragic development overnight, the bodies of three boys missing in Camden, New Jersey since Wednesday were found inside the trunk of a car. The father of one of the boys made the discovery. And moments ago, investigators described the deaths as a horrible accident, adding the boys

Another case of mad cow disease has been confirmed in the United States. However, Agriculture Secretary Mike Johanns says the meat never entered the food chain, and U.S. beef supplies are safe. Johanns says the cow was destroyed and incinerated after it was classified as a downer, meaning it was unable to walk.

And remember, you can view more CNN reports online. Just visit CNN.com, and click on watch for free video. And you can check out the most popular stories while you're there, as well.

More news coming up at the top of the hour on CNN LIVE SATURDAY.

THE TURNAROUND, with Ali Velshi continues right now.

VELSHI: Welcome back to THE TURNAROUND. I'm Ali Velshi in Brooklyn, New York.

It is the middle of day two. And our small business owner this week is Debbie Townes. She runs the Home Spa. Our mentor is Marcia Kilgore. She's the founder of the much larger Bliss Spas.

Over the last day-and-a-half Marcia and Debbie have worked to redo the front of this spa so that she can sell more product and make more money.

Well, to do that they need some shelves, and I'm helping them with the shelves. And I'm running a little behind, so Debbie and Marcia have headed to one of Bliss' locations to see how they do things there.

Noon in Manhattan. Debbie Townes is visiting her mentor's flagship Bliss Spa, one of the hottest relaxation destinations in New York City.

MARCIA KILGORE, FOUNDER, BLISS SPAS: Hello. Welcome to Bliss. How are you? (UNINTELLIGIBLE) to join us.

DEBBIE TOWNES, OWNER, THE HOME SPA: Hi. It's so nice to meet you.

KILGORE: This is Debbie.

I thought it would be great for her to come down and see how we do things with our retail environment with one of our very, very best people - Jordan, the King of Bliss. He knows everything about all of our retail products.

The best service people are the best listeners. Jordan can explain something to someone who has a particular need, who is shopping for something, without pushing things on them.

TOWNES: That was a big thing for me. Is just making sure that they don't feel like they're - like we're shaking them by their ankles to advise them.

JORDAN STEIN, KING OF BLISS: Well, you can always approach clients suggesting. They always have the option to say no.

VELSHI: To teach Debbie how to sell more effectively, Marcia has her do some role playing, pretending to be a new Bliss customer. STEIN: When you've entered the spa, the first that you did when you came in was notice how well that it was and how surrounded by products you were.

Have you ever used any of the Bliss products before?

TOWNES: Of course. Hasn't everybody?

STEIN: Excellent. And (UNINTELLIGIBLE) mostly (UNINTELLIGIBLE).

TOWNES: If I were to come in here looking for - say, dehydrated skin ...

STEIN: If you have dehydrated skin, water, water, water. You need water, water, water. And Bliss water. There you go.

VELSHI: Debbie's learning first hand the importance of providing a friendly environment for clients.

KILGORE: Here's a basket here, just in case you want to collect your things in that.

STEIN: Thank you.

TOWNES: This is fun.

STEIN: Yes.

TOWNES: This is like making shopping fun.

STEIN: Perfect. And so, now you're ready to become a success.

VELSHI: Then the Bliss bosses demonstrate how to push retail without actually being pushy. Instead, they prove they've been listening.

STEIN: Are you using an exfoliant right now?

TOWNES: No.

STEIN: You have dry skin. Sometimes there's dead cells that may be lingering. You want to prevent dead cell buildup and also open up pores. And we have an amazing product to do just that.

TOWNES: It's so obvious. It's not brain surgery to engage the client in what is that they want, and how can you help them find it.

VELSHI: Jordan points out a detail that makes Bliss retail products customer friendly.

STEIN: If I hadn't been here and you had known that that was something that you were looking for, immediately, the package would speak to you.

KILGORE: Everything is really written as far as the benefits of each product, and that's something ... TOWNES: It's right there for them.

JORDAN: It also is learning tools for the staff, too. Because when there's downtime - if there is downtime ...

TOWNES: They can read.

VELSHI: Marcia also emphasizes the importance of having a variety of products that are not just luxurious, but clinically effective.

KILGORE: Having a variety of products that address needs, because you're doing skin care and body care. It may mean that you don't have so many handles. Have a good mix of face masks, cleansers, exfoliators, lotions, et cetera, et cetera.

VELSHI: Meanwhile, the work crew is still busy in Brooklyn making shelves.

Now, that is a sweet touch. Look at that.

KILGORE: I didn't know he was macho. I'm impressed.

VELSHI: Back at Bliss, Marcia and Debbie find a quick spot to sit down. It's clear the visit has had a big impact on the small business owner.

KILGORE: And what you want to do.

TOWNES: I learned a lot, saw a lot. Just even making the products communicate a little bit more, so making better choices with regard to how I do either the packaging, the labeling.

VELSHI: But Marcia wants Debbie to give up the notion of selling her own product line.

KILGORE: Right now, taking on your own products and your own packaging is not something you can do.

TOWNES: So, you recommend then just strictly having other people's products.

KILGORE: You need to buy third-party products that are reputable, that have legal packaging, that are bright on the shelves, that you can reorder quickly.

VELSHI: Marcia knows Debbie was impressed by Jordan, and she urges her to groom her own employees to perform at a higher level.

KILGORE: People are coming into your spa to get away from mundane things, to get away from the rat race. So, you have to make sure that your employees always have a positive attitude when dealing with customers, are never rolling their eyes.

If they're having a bad day, they can't let it show to the customer. VELSHI: Here is where Marcia makes a powerful observation about Debbie and her struggling business.

If they're going to fall in line, the Home Spa employees need a stronger leader.

KILGORE: You need to instill that in your staff. They are looking to you to whip them into shape.

VELSHI: Debbie sees she's been taking on almost every role at Home Spa except the most important one - being the leader.

TOWNES: Over the last couple of years, because I am spread too thin, there is no focused leadership. Now, really taking ownership again ...

KILGORE: And realizing that you're the boss. If there is wax on the floor, whose fault is it?

TOWNES: Mine.

KILGORE: Yes. If there (ph) ...

TOWNES: Mine. Everything there is my responsibility.

KILGORE: ... (UNINTELLIGIBLE).

TOWNES: Of course.

KILGORE: It is.

VELSHI: Marcia is serious about cleaning up the Home Spa.

KILGORE: By the time I get there tomorrow, that whole place should have been vacuumed. I don't care leaves.

TOWNES: There will (UNINTELLIGIBLE) late tonight.

KILGORE: Well, you're going to vacuum it all out. All your shelves should be dusted off. It's going to be a vacuuming and a dusting ...

TOWNES: For (ph) yourself (ph).

KILGORE: Exactly.

VELSHI: The mentor also assigns a new mantra.

KILGORE: No one is going to make it happen except you. So, tonight you're going to have to repeat ...

TOWNES: I can!

KILGORE: I can, and I am solely responsible for the success of the Home Spa, at least 30 times.

TOWNES: A billion times.

KILGORE: It's longer, so I won't make you say it as many times.

TOWNES: If I want to do this, I need to commit to actually taking the reins again, and being the first one to get out there and scrape all the wax off the floor, and to keep everything dusted.

KILGORE: I want to see tomorrow, Debbie saying, you know what? This is wrong. This rug needs to be sent out for cleaning. Those kinds of things.

VELSHI: Back at the Home Spa, amateur construction project is wrapping up.

And finally, these shelves are done. This is the end of day two of this three-day turnaround in Brooklyn. Tomorrow we'll see what Debbie Townes does with these shelves and with her business.

Coming up, will Debbie be able to step up and lead her staff?

TOWNES: She just dragged (ph) me by my hair (ph) through every (ph) ...

VELSHI: The final day of the turnaround - next.

(COMMERCIAL BREAK)

VELSHI: It's the final day of this turnaround in Brooklyn, New York. We're at the Home Spa, where owner Debbie Townes is being mentored by the founder of Bliss Spas.

Now, one of Debbie's goals over the last few days is to increase her retail sales without her staff seeming pushy. So, she's increased her shelf space.

And in order to find out how much profit potential she's gained by doing so, we're starting with an inventory.

Retail inventory (UNINTELLIGIBLE) in the open for customers to see, and hopefully buy.

This looks great. You've got 50 percent more products, so you have the potential to make that much more money here.

TOWNES: I think a good portion of it is in self (ph) sell (ph), because we have the space now. And we had all this stuff in the basement. And just by having brought it upstairs and put it out there, that's already - we don't even have to do anything.

VELSHI: Right.

TOWNES: Good morning.

VELSHI: Bliss founder Marcia Kilgore arrives, and takes in the changes.

KILGORE: I see the shelf elf has been here.

VELSHI: The shelf elf has been here, so we've extended the shelves a bit. That's great. So we have a little more space.

KILGORE: That is great. Yes. So you can merchandise that this afternoon.

VELSHI: Marcia's impressed with the way Debbie cleaned up the front window.

KILGORE: And sun. It's incredible in here, isn't it?

VELSHI: Yes. It's bright, it's fun.

KILGORE: It makes a huge difference.

Her window is 1,200 percent cleaner.

If you're not showing your customer that you care about the windows, then they will get the same feeling that you don't care about the cleanliness of the entire place.

I brought with me a little bit of grass to give the symbolic feeling of a new start.

VELSHI: Oh, I like that.

TOWNES: I love the fact that there's life in the window.

VELSHI: Debbie's big task today - to set up her new and improved retail space in a way that'll encourage clients to spend more money.

What did you take away from yesterday at Bliss in terms of what you might do differently here? Because now we're going to have to set up the stuff we took from the other place and (UNINTELLIGIBLE).

TOWNES: Right. One of the things that I think, no matter what you have going on in a retail space, is communicating to the client. We can be homey and all of that, but you still have to have the products say something clearly to the clients.

VELSHI: Marcia wants Debbie to communicate more effectively. She says posting a big list of spa services would encourage clients to spend more.

KILGORE: I think there's a nice space right here for us to make a poster.

Well, you know, when I stand here rebooking my next massage, and I look up and I see that you do eyebrow waxing or lip waxing or bikini waxing ...

VELSHI: Debbie sees what she's been lacking.

TOWNES: People who have been coming forever, like, oh, I didn't know you did that. VELSHI: Marcia hammers home the advice she gave Debbie the day before. Stop trying to produce and package her own retail products.

KILGORE: It will simplify her life to find a couple of more naturally based product lines, that fit in with her ...

VELSHI: That just - yes, that you can just buy and ...

KILGORE: Yes, and ...

VELSHI: ... keep on a regular ...

KILGORE: ... start 12 of this, six of that. You order them when they sell, and that'll (ph) do it for (UNINTELLIGIBLE).

VELSHI: Right now, Debbie has to stock her shelves with the products she already has.

Marcia gives her tips on displaying the stuff they hauled over from the other location.

KILGORE: It's the best place for your hottest products. And the things that you think are going to move really quickly or things that you want to move more quickly is eye level. No one likes to bend down to shop.

So, why don't we start with some of those easy, really popular items that your staff is very comfortable with, don't take too much explanation.

VELSHI: Another opportunity to sell lies at the front desk - the one place every customer stops.

KILGORE: This area here is very important, because a lot of retailing happens just right here.

VELSHI: So, what stays and goes from here?

KILGORE: Well, outgoing mail. Do we need to have it sitting on the desk? Your most valuable space.

VELSHI: Not only do products need to be in plain sight, they need to have prices.

KILGORE: So, how do people know how much they cost?

TOWNES: They ask us.

KILGORE: Well, that's too much work, isn't it.

KILGORE: This is beautiful, and it smells beautiful. How much are they?

TOWNES: Those are $1.25 each.

KILGORE: OK. Before (ph) you write $1.25, go for $1.50. TOWNES: One fifty?

KILGORE: Fly by the seat of your pants. And look, something to buy. That's all it takes.

TOWNES: And some might want ...

KILGORE: And what you might want to do, too, is mess it up a little bit. And this (UNINTELLIGIBLE) has bought some. If it's perfect, sometimes - because you don't want to touch it.

Now tell me, what else do you have that you think is really a hot seller for you? What about your (UNINTELLIGIBLE) rose (ph) flower (ph) oil (ph)?

TOWNES: That is like our most popular scent (ph). (UNINTELLIGIBLE) flowers (ph).

KILGORE: Do you have more than threes? I mean, threes are OK, but I like to display things in sixes. If you're displaying something on the shelf, what you want to give a feeling of is that you feel that you're stocking every six of them.

If everything starts to look like it's sort of hassled (ph) out, if there's only one left, or there's two, people will wonder, did you find them on closeout? No one likes to pick up the last one or two of something.

But you don't want to just jam-pack 30 of something onto a shelf either, because then it looks like you're in a bargain basement.

VELSHI: But dressing the place up can be a bargain.

TOWNES: What were you looking for?

KILGORE: Just a piece of fabric, kind of nestled in something.

VELSHI: That works really well.

KILGORE: I am Martha Stewart. I am.

VELSHI: I'm telling you!

TOWNES: Marcia is intense. What can you say? I can barely keep up with her, to tell the truth.

VELSHI: But Marcia's not done yet. Debbie wants to keep the Home Spa's homey feel.

But homey doesn't mean cluttered.

KILGORE: Can we take them downstairs, or do they need to be up here.

TOWNES: No, no, no. KILGORE: Whenever - I'd like to clear out this area as much as possible. No customer should be looking at this storage kind of stuff.

VELSHI: And the finishing touch?

I believe you requested a plant.

KILGORE: I did. I requested a live, happy, growing, thriving plant. And it's supposed to go there.

VELSHI: In there?

KILGORE: Yes.

VELSHI: All right.

KILGORE: Want to do the honors?

VELSHI: In the midst of the action, Debbie makes a secret phone call. Marcia doesn't know it, but Debbie is scrambling to get out of the lease on her second store.

TOWNES: I actually got on the phone, called my landlord and was able to just talk to him realistically and honestly.

VELSHI: Whether it worked remains to be seen. Right now, Debbie's made an appointment for Marcia, to observe a Home Spa facial.

TOWNES: I wanted her to, you know, just kind of see how we're doing things.

VELSHI: For Marcia, it's a chance to uncover more sales opportunities for Debbie.

KILGORE: Are there any other treatments that you wished that the Home Spa offered?

UNIDENTIFIED FEMALE: Oh, gosh. I have a pretty complete menu.

KILGORE: Do you go for manicures and pedicures anywhere?

UNIDENTIFIED FEMALE: I usually go down the street.

KILGORE: And if they had them here, would you probably come here?

UNIDENTIFIED FEMALE: Actually, yes. That's a good point. If they did, I probably would.

TOWNES: She's very generous. She doesn't impose any of her will on anything. It's always in a suggested type of way (ph).

VELSHI: Marcia pitches in one more time ...

KILGORE: Just want a (UNINTELLIGIBLE) to put in there. VELSHI: ... helping Debbie stencil on Home Spa's new sign - including a phone number, which wasn't there until now.

KILGORE: Ah, it looks great. You did such a great job!

VELSHI: Coming up, changes made.

TOWNES: Oh, it's so exciting!

VELSHI: And decisions revealed. Next on THE TURNAROUND.

DONALD A. GARDNER, DONALD A. GARDNER ARCHITECTS, INC: Donald A. Gardner Architects is a South Carolina-based architecture firm that sells house plans over the Internet.

A lot of small businesses are still daunted by the idea of the Internet. It seems new-fangled and high tech and not related to their concerns. And having a Web site is sort of a basic ticket to the dance.

If you want an easy way for your customers to find out who you are and to buy your products and services, you have to be on the Internet. It's easy, straightforward to do. It's something you can't afford not to do.

(COMMERCIAL BREAK)

VELSHI: It's the final day of this three-day turnaround. Debbie Townes has made a lot of changes, including moving out of her unprofitable second location.

But what about the lease she had for that shop?

KILGORE: So, you asked us to meet you over here?

TOWNES: Yes. Because I have a nice surprise for you.

KILGORE: What kind of surprise?

TOWNES: Well ...

VELSHI: Does it involve a listing or cutting you're doing? Anything like that?

TOWNES: No, you'll see. You're very good.

KILGORE: Sign, hammering?

VELSHI: Yes.

KILGORE: Nailing?

VELSHI: Could this be one of those surprises that we smile at?

TOWNES: Yes.

VELSHI: OK.

TOWNES: It involves listing and cutting and all of that. Only if you want to do that for perhaps the new owners of this particular site.

Because I was able to get my landlord to understand what's going on.

KILGORE: Your situation.

TOWNES: My situation. And he was very understanding. Home Spa Shoppe has now been let go from this location, and fabulously transplanted over to where it belongs to begin with - at 300 Court Street.

KILGORE: Congratulations.

TOWNES: And it's thanks to you. Thank you.

It's so exciting!

KILGORE: Yes, it is.

TOWNES: You want to go say goodbye?

KILGORE: Let's go in and say goodbye to the baby.

TOWNES: As I turned the key to walk in to say goodbye to the shop I thought, finally, some closure on something that I'd been floundering on for so long.

KILGORE: You must feel so relieved.

TOWNES: Very relieved. I'm very happy.

KILGORE: I think for Debbie it will be great to focus her business in one location.

TOWNES: Lock it up and let it go.

In closing the shop, part of what was able to happen was, all of this stuff that was there was able to be moved out of the shop, put into the retail space now at the spa.

Consolidating everything feels really, really good.

VELSHI: Well, that was a nice surprise for Marcia, that you were able to get out of that other location.

TOWNES: It seems it's meant to be.

VELSHI: Yes, it's worked out well.

Give me a chart of your range of emotions over the last three days. TOWNES: All over the place. I would say mostly exhilarating, confusion, hunger a couple of times. Just really inspired, I'd say is the one that I had the most. Motivated. Supported.

Just really feeling like I'm not completely alone in all of this. People understand. They're a plus. There are people out there that are actually willing to help, that are actually willing to like do some things.

I mean, you did a lot. You put up those shelves. You did things that, you know.

VELSHI: But you can't do things for people. You can't do things unless people want to be open to the idea.

TOWNES: That's right. Feel completely, that just by being open, you know, I can't imagine any other way of doing things. But if you want to work together, it's best to just be open and go for it.

KILGORE: I'm really happy and excited that I can help Debbie with her turnaround, because she reminds me a lot of myself. And looking at some of the same struggles that I had back in the past.

And being able to revisit those things and being able to see my way clear for her was exciting. It's always good to be able to give something back to people who need your advice and your help.

VELSHI: Marcia's advice for closing the retail shop has saved Debbie $1,200 a month. But Debbie's also leaving this turnaround with something more.

TOWNES: One of the things that Marcia was very, very clear about is making sure that I take ownership of this business, and making sure that my employees understand that the leadership starts with me.

Now I can actually follow through on some things, which I honestly - it would have taken me probably another seven years to get to where I've gotten to in three days, just because that's how sometimes life is.

VELSHI: So, it's not so much a turnaround as it is a kick-start.

TOWNES: Yes. I think that's what it is. I mean, now at least I've got the momentum. And all I have to do, really, is just keep on.

I'm looking forward to seeing the Home Spa grow beyond my wildest imagination.

VELSHI: And after being inspired by Marcia and facing the challenges of this turnaround, Debbie is setting her sights on a new goal.

TOWNES: I want to keep it together, learn what I need to learn, so that I can one day also help somebody through something and, you know, we can all benefit from it.

VELSHI: This turnaround was like a day at the spa. Debbie went in stressed out. She's emerged rejuvenated.

I want to wish you the best of luck.

TOWNES: Thank you very much.

VELSHI: We'll be watching out for you.

TOWNES: Yes. And come by the spa, too.

VELSHI: For my eyebrows.

TOWNES: Get those eyebrows done there. Get that uni-brow out of there.

VELSHI: That's right. Well, good luck to you.

In some ways, this turnaround ended up being about time and money. Because this second Home Spa location wasn't making Debbie Townes any money, she wasted no time in shutting it down and getting out of a lease.

Well, it's one of the lessons she learned from her mentor, Marcia Kilgore, also someone who is not about wasting time.

Well, Debbie learned a lot of other lessons over the last three days, and what she does with them is up to her. But it looks like she's on her way to a turnaround.

In Brooklyn, I'm Ali Velshi. See you next time.

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