Highlights from HBA: The Changing Face of Beauty Distribution

HBA is possibly my favorite beauty industry conference. I remember attending four or five years ago, and listening to Sarah Kugelman, Founder and CEO of Skyn Iceland, present her story on a panel about indie beauty brands. I decided I had to somehow find a way to be a speaker – I wanted to be just like her (funnily enough, we had coffee at the Javits at this year’s show, as we now often do, and I told her that story). For the past three years, I have been invited to speak and moderate various panels, which is both a pleasure and an honor.

The panel I moderated on Wednesday was possibly my favorite to date. It was a “Part 2” of a panel I moderated in 2010 on shifting trends in beauty distribution. Last year, that panel was composed of  Shop NBC, Bloomingdale’s and  bluemercury – I was moderating and presenting the brand’s perspective on the various channels (home shopping, department stores, independent beauty boutiques).

In this year’s panel on “The Changing Face of Beauty Distribution,” only “virtual” channels were represented: QVC, Hautelook, and Dermstore.com. Karen Doskow, Industry Manager, Consumer Products Practice, Kline & CO., set the stage for us by presenting some data on the personal care industry. Three key data points:

–          The US personal care market reached $36.5 billion in 2010, surpassing pre-recession levels

–          Industry growth bounced back after a dip in 2009, and was up 2.4% in 2010

–          The direct sales channel (TV, internet, person-to-person sales) achieved a 5.2% CAGR and is the fastest growing channel over the past five years (in comparison, over the same persio, department store sales decreased 3.5%)

–          Within the direct sales channel, the internet posted the highest CAGR, 26%, followed by TV shopping, 19.7%.

No need to further explain why the panel was composed of Allen Burke, Senior Advisor for Beauty for QVC, Paula Scandone, Vice President of Beauty, Hautelook, and David Olsen, Vice President of Business Development, Dermstore. As Allen Burke said in his opening comments, “a significant shift in beauty distribution is the fact that only virtual channels are represented here today.” Indeed…

Here are some highlights from questions I posed to the panelists:

The most significant shifts in beauty distribution in the last three years were identified as:

–          Consolidation (including consolidation between bricks and mortar and internet businesses; think of Walgreens and Skinstore.com for example, or Nordstrom and Hautelook)

–          The advent of mobile shopping; as Allen said, “today it seems almost old-fashioned to be shopping on your computer.”

–          The rise of flash-sale sites such as Hautelook

New sampling business models have emerged, driven by Birchbox, which launched its curated and edited box of samples in September 2010.

–          Both Paula and Allen agreed that this offers an opportunity to expand the reach of certain brands, without the need to internally handle shipping and handling. Indeed, QVC has now partnered with New Beauty on two of its “TestTube,” and plans on continuing this successful association.

–          A slightly different model is Dermstore’s BeautyFix program, which provides consumers full-size products in a mystery box.

The next question centered on the integration of bricks and mortar channels and virtual channels. There was no true consensus, other than the agreement that the consumer is now shopping across all channels. Allen discussed QVC’s partnership with Sephora, and Paula presented the cross-marketing opportunities between Hautelook and its new parent, Nordstrom – in effect, leveraging different consumer bases, introducing Nordstrom consumers to Hautelook, and encouraging the Hautelook consumer to shop preferentially at Nordstrom.

From a brand perspective, I proposed that the two keys to a successful mixed distribution channel is strategy (for example, how do flash sales fit in to your mix, how many times per year, on which products, etc.) and honesty with your partners (let your spas know you are going to be on QVC ahead of time; let your retailers know when your products will be discounted on a flash sale site).

Most interestingly to me, we then discussed the key success factors for the various channels, which are so very different from the key success factors needed in the spa channel (think training, gratis for staff, professional-only products), or in retail (think GWPs, in-store support, ads).

For Dermstore, David identified the keys to success as a true strategic partnership with the brand, brand visibility, and sampling. For QVC, Allen suggested that innovation and the experience of the shopper are key: “It is not about a good demonstration, it is about the experience.” For Hautelook, Paula identified assortment, value, and brand recognition as the keys to success.

HBA is an international show, and TV and the internet are global. We thus had to touch on the three companies’ international plans and experiences. David mentioned that Dermstore used to own dermstore.ca, prior to selling the business to Rogers Communications. While the internet is indeed global, the rules and regulations affecting the sale of personal care products differ country by country, making internet sales abroad complicated. Paula spoke of foreign Hautelook-like companies, including VentePrivée, but suggested that given the young age of Hautelook (3 years old), her focus was still on the US. Allen spoke about QVC’s experience in Japan, Italy, Germany, and the UK. His conclusions were not far off from David’s. Indeed, while US brands tend to do fabulous on QVC UK, UK brands have not been successful on QVC US. Perhaps it is not just the regulatory framework that makes global beauty selling complicated, but also differences in beauty cultures and consumer preferences…

I left the most controversial question for last – how has discounting impacted the various channels? David explained that Dermstore, as a general policy, does not discount. However, the company finds other ways to compete, including free shipping and gift with purchases. Paula is all for discounting, after all, that is the founding principle of flash sale sites. She suggested however that her consumer, while enjoying the discounts, continues to shop at full price. From her perspective, discounting is here to stay, and is should be part of a brand’s marketing strategy (notice, again, the word strategy; think about when and how and why you discount, don’t just do it). Allen closed the discussion by stating that QVC does not offer free shipping because a consumer should understand and be ready to pay reasonable shipping fees for a quality product, and that QVC will not offer a brand at a price that is higher than it is commonly found in other channels.

As the session came to a close, we all agreed that we were all still friends, despite differing perspectives. We also all agreed that it is amazing how different the beauty distribution landscape looks today versus five or 10 years ago. And that is what makes our industry, and this panel, so interesting… I am already hoping for a shifting distribution, “Part 3,” at HBA 2012.

Mid-year goals evaluation

I cannot believe that we are almost in July… and that half of the year is gone. On a six hour drive yesterday I mentally revisited my 2011 goals, both personal and professional, and realized there is much to do still. I thought by putting in writing what I have accomplished this year so far, and what I have yet to accomplish, by sharing this with you and with the Universe, I would hold myself more accountable and move forward with more purpose. Feel free to periodically ask me how I am doing on any of these goals… knowing you might be a great motivator!

Ada goals:

– Drink more water: done! I now carry around a water bottle everywhere I go.

– Read more: in process. Current book: Atlas Shrugged by Ayn Rand.

– Learn to be a good wife: hmm… not sure about this one. Need to ask my husband.

– Build my art collection: in process.

– Develop a better morning routine: not done. I still read emails on my phone before even opening both eyes up. Need to stop doing that and start my day in a different way. Thoughts?

– Unsubscribe from emails I don’t read: in process. Hopefully you are reading this one and won’t unsubscribe…

– Do more yoga: definitely need to work on this.

Alchimie goals:

– Consolidate our partnership with Universal Companies: in process (the six hour drive yesterday was Abingdon – Washington DC).

– Grow sales: in process; in my mind, sales are never high enough and never grow fast enough

– Reformulate our products without parabens: in process

– Improve our sampling program: done! As of next week, we will have beautiful paquette samples of five of our best-selling products! So excited…

– Continue to generate national, international, trade and online press mentions: in process. Would you like to write about us? Email me!

– Relaunch our website: done! Have a look…

– Do more with social media: in process. Are you a fan on Facebook? Do you follow us on Twitter? Have you seen our various YouTube videos?

– Improve our sustainability practices: in process. We are reducing, reusing, and recycling. Our new brochure is printed on paper from managed forests, with vegetable dyes. Our new samples are aluminum, not plastic. We are working with the Arbor Day Foundation and Casey Trees to plant trees throughout our community. And we are having fun doing it!

– Find someone to join our Board of Directors: in process. Interested? Please email me to apply!

Sun, sunscreens, sunburns…

The sun is (or at least should be!) shining, it’s that time of year. And May is Skin Cancer Awareness Month. All in all, it is time to review sun, UV, sunburns and sunscreens. Here are some tips to help you separate fact from fiction when it comes to this burning topic (no pun intended…).

Myth: I don’t need to wear sunscreen on a cloudy day.

Truth: Up to 85% of UV can penetrate light cloud cover

Myth: I have a tan, so I won’t burn.

Truth: Having a tan is only the equivalent of about SPF 4, and does not mean you won’t burn.

Myth: I am young, I don’t need to worry about skin cancer.

Truth:  Melanoma (skin cancer) is the number one cancer seen in ages 25-29

Myth: I need more vitamin D so I shouldn’t wear sunscreen.

Truth: You only need about 10 minutes of sun exposure per day to get enough vitamin D for your wellbeing. (And remember, even with sunscreen on you will get sun exposure).

Myth: Getting just one sunburn won’t really harm my skin.

Truth: A single sunburn in childhood will increase the risk of melanoma. And it can take up to 5 years for the skin to fully recover from a single sunburn!

Myth: Tanning beds are sage.

Truth: UVs matter inside and out; indoor tanning may increase the chance of getting melanoma up to 75%

Myth: Sunscreen will block all UV

Truth: “Sunscreen is not enough” as said Dr. Karen Burke. Remember to layer your antioxidants under your sunscreen, so you have a second line of defense (try our Diode 1 + 2 serums for your face, and our Alexandrite gel for neck and bust for your body).

Other interesting facts about the sun and sunscreens…

UVA versus UVB:

  • UVA damage DNA and lead to skin cancer (damages not initially visible to the naked eye)
  • UVB lead to redness and ultimately wrinkles (the visible sunburn effects)

Chemical versus physical sunscreens:

  • Chemical sunscreens absorb the UV rays. These are typically lighter sunscreens.
  • Physical sunscreens (really known as sunblocks) reflect UV rays. Ingredients such as titanium dioxide and zinc oxide are used in physical sunscreens. The usual “thick, white, sticky” feel of sunscreens comes mostly from physical sunscreens.

Water-resistant versus waterproof sunscreens:

  • Water-resistant sunscreens maintain their SPF levels after 40 minutes of water exposure
  • Waterproof sunscreens maintain their SPF levels after 80 minutes of water exposure

The sun’s reflective powers are great:

  • 17% on sand
  • 80% on snow

If you want to learn more about the sunscreens I like, watch this week’s segment on Let’s Talk Live. And remember, no sun is safe sun. And you earn the skin you’re in!

Why did we create Alchimie Forever?

I have had more questions this week about “why did we create Alchimie Forever,” “what is your unique selling proposition,” and recently in Cincinnati from an ex P&G executive, “what is the unmet need your line is filling.” These are all million-dollar questions for a consumer brand, questions that I fall asleep thinking about, dream about, and wake up pondering. These questions are always at the back of my mind. I know the answers – let me share them with you.

Why did we create Alchimie Forever?
We created Alchimie Forever to make men and women feel better about themselves – and thus make the world a better place. My father’s dermatological career has been first and foremost about making his clients, male or female, look younger, look more beautiful. Ultimately, however, whether through treatments or at-home use of Alchimie Forever products, our goal is to make people feel better. When you look better, you feel better. When you look better, you feel more confident. When you feel better and feel more confident, you are happier, nicer, kinder, you smile more… you are, in effect, a better person. That is why we created Alchimie Forever.

The Alchimie Forever mission
Our mission at Alchimie Forever is self care through skin care. We work to encourage people to take better care of themselves. The disease of our century as we see it is the dearth of self care. We don’t sleep enough, we eat overly processed foods, we drink too much, we don’t exercise enough, we don’t take the time to take care of ourselves. The results of this lifestyle can be seen in obesity, stress disorders, depression, and more. While skin care is not going to solve all of these problems, Alchimie Forever products play a key role in reminding people to slow down; reminding people to touch and be touched; reminding people to take care of themselves, to spend a few extra minutes in their bathroom, to apply lotions and potions that will make them look better, hence feel better.

This is so relevant today, I believe David Cameron, the new Prime Minister in the UK said it best:
“It’s time we admitted that there’s more to life than money and it’s time we focused not just on GDP (Gross Domestic Product) but on GWB – general wellbeing.”

“Wellbeing can’t be measured by money or traded in markets. It’s about the beauty of our surroundings, the quality of our culture and, above all, the strength of our relationships. Improving our society’s sense of wellbeing is, I believe, the central political challenge of our times.”

Our Unique Selling Proposition and the Unmet Need
What does the beauty consumer want today? She wants it all. She wants to look as young as she feels (anti-aging results). She wants to use products that make her feel special (luxury). She wants products she can feel good about using (responsibility). In the crowded skin care market, numerous lines answer one or the other, maybe two out of three of these needs. We, at Alchimie Forever, fulfill these three needs in a single jar.

  • Results: Visible, immediate anti-aging results. Without side effects. Without inflammation.
  • Elegance: Products that look good, feel good, smell good, and that you want to use. Twice a day. Everyday. Forever.
  • Responsibility: A botanical approach to ingredients, a commitment to sustainability, and a commitment to community involvement. All at a reasonable price point.

Affirmations and accountability

If you ask people who know me to list 5 adjectives that describe me, more likely than not they all would say, among other things, reliable, accountable, and hard working. I think that comes with birth order, I am a pretty typical eldest child. Yet, one can always be more reliable, more accountable, more hard working. One can also always have a bigger vision, and work more effectively to make that vision a realits. In the last two weeks, I put in place two new systems in my life: affirmations and an accountability partner.

My husband thinks I have taken things to a whole new level of crazy, but I am enjoying it. For both of these new initiatives, I have to thank my girlfriend Anne, who is an inspiration and role model, and who taught me about these two systems.

First – affirmations. My Mom used to tell me when I was grumpy: “Force a smile, if you force it long enough it will become reality.” I think affirmations somehow follow the same concept  – say it out loud and it will become true. Affirmations are statements that either represent a current reality that needs reinforcement, or a future aspiration. Saying these affirmations out loud every morning somehow makes the statements truer, the goals more attainable, and generally shifts the energy in the Universe so that I behave more easily according to these statements. I have 18 affirmations. I wrote them down on small white notecards a week ago today, and I say them out loud (not too loud, I am still shy about them) every morning. They range from business, to family, to personal, and encompass goals (for example, “Alchimie is on the Inc 500 List”) as well as behaviors I want to live every day (for example “I am grateful for what I have.”).

Second – an accountability partner. We all have goals. My friend Heidi has 137 goals, broken down in annual, quarterly, monthly, and weekly milestones. I am not quite there yet, but working towards it. Goals are great. Goals are even if you make sure that every week you work to achieve these goals. Sometimes, life takes over, better and sometimes on a Sunday evening I find myself wondering what I accomplished all week that really mattered to me, to my family, or to the business – what have I done to reach closer to my goals? Now, I have Kassie, my accountability partner.  We have a weekly call every Friday morning, and a Google Goals Excel sheet that needs to be updated regularly. Every Friday, we discuss our past week’s goals, go down our lists, and have to explain to each other why certain things didn’t get accomplished. And every week, we discuss our goals for next week, and how we are going to accomplish them. Now, as accountable as I am to myself, it’s a whole lot harder to make excuses to another person… not wanting to have to explain to Kassie why I didn’t do something means that amazingly, this system has enabled me to accomplish a couple projects that have weighed on me for a long time.

Crazy? Maybe. Useful? Definitely. Fun? Of course. I encourage you to try both systems, and be amazed at the difference they make. Thank you Anne.