Doing Personal Care Product Business in USA A Brief Overview

Presented by Mike Nave President – PBD / BIR, Inc.

Who is Mike Nave ?

 50 year career in beauty products industry • Distributor • Publisher • Dot com company VP Communications • Free lance writer for industry trade pubs. • Sales and marketing consultant

Size of U.S.

PBD

Personal Care Markets



Mass retail market segment sales excluding Wal Mart*

•

Total Haircare sales $4.3 billion -1.5%

• Total Ethnic HABA sales $107 million -7.5% • Total Hair Coloring Products sales $1.09 billion +4.4% • Skin Care sales $2.79 billion +4.9% • Grooming aids sales $1.11 billion +.04% • Shaving needs sales $1.81 billion +4.9% • Deodorants sales $1.26% +1.9%

*(52 week sales total through May 14, 2005 (Source AC Nielsen)

Size of U.S.

PBD

Personal Care Markets

• Annual revenues of salon services

and product sales $60+ Billion.

• Total salon industry professionals

754,000

• Natural/Organic personal care sales

$4.3 billion projected to reach $6.6 billion by 2010

Market Segment

(A brief description)

      

Mass Retail Market Department Stores (Federated, Nordstrom’s, Saks Fifth Avenue) “Masstige” (Ulta, Sephora) MVRs (Costco, Sam’s, Target, Wal Mart) Grocery (Safeway, Albertsons) Chain Drug (Rite Aid, CVS, Walgreen) Specialty (Bed Bath & Beyond, Hot Topics, Bath & Body Works) Electronic Retailing (QVC, HSC)

Market Segments

(A brief description) Professional Beauty Market

     

Independent Salons (45,000) Chain Salons (25,000) Salon beauty stores (2,000) Distributor’s professional only beauty stores (1,800) OTC beauty stores general market (3,000) OTC beauty stores Multi Cultural market (9,000)

     

Sally Beauty Supply (2,800 stores in U.S.) Distributors (350 exclusive and open line) Spa (5000 estimate) Nail Salons (60,000) Barber (85,000) Beauty Schools (1,500)

Alternative Marketing Initiative

Direct On-line Manufacturer Sales, a new marketing concept of manufacture selling on-line direct to consumers while at the same time establishing distributor/retail relationships.

Marketing to the US Mass Retail and Pro Beauty Markets



a Good News/Bad News story!

First, The Good News

(The Reward)



Awesome opportunity selling to the world’s largest market in terms of buying power.



U.S. consumers are major shoppers always looking for something new and innovative.

Now, The Bad News

( The Challenges!)

  

Huge marketing challenges due to consolidations in all major market segments Surviving Mass Market Retailers’ shelf space is a premium. You want it you buy it! Or more accurately, you rent it! In mass market payment terms can stretch out 6 months or more. (Being paid promptly – Forget It!)

Now, The Bad News

( The Challenges!)

    

In order to have credibility with large account retailers you must be represented by a high profile broker.

Pro beauty field consists of multiple submarkets with overall limited sales potential requiring two step pricing accessed primarily by rep groups and distributors Both segments require large margins to cover high cost of doing business. Your product line must be unique and different, or address a untapped market niche.

There must be a compelling reason for your product line’s existence.

What Accounts Expect

        Need manufacturer to create product demand Need manufacturer to promote product Need manufacturer to bring consumers into stores Need US distribution center for timely replenishment Need complete timely shipments Need professional sales representation Want company decision maker on the key sales call Require $5 million product liability insurance

Payment Terms

 Standard terms 2% 30, net 31  Introductory first order 2% 60, net 61  Seasonal terms  • Pay at end of season, return remaining product • % payment in 60 days, balance end of season Major accounts: • Pay on scan • Expect free goods

Product Returns

 Guaranteed Sale  Return product if it does not sell  Failure Rate on New Products is 75%!

 Product fails, company goes out of business, chain stuck with inventory

What Brokers Expect

 Plenty of Samples  Professional Sales Materials  Compelling Sales Story, reason for being: • Patent, previous success, strong advertisings, excellent packaging and displays, timely shipping  7-10% commission paid promptly  Long Range growth opportunity  Company responsiveness and professionalism  Factory field key account sales support

What Brokers Do

 Represents a large number of companies  Regular sales calls on food, drug & mass accounts  Handles all paperwork  Checks stores for distribution, pricing, location,  Speaks to buyers frequently  “Eyes, Ears, Feet”— extension of manufacturer  Brokers respect what manufacturers inspect

Barrier to Entry

 Lack of knowledge of the market  Major investment required  Need to have US point of distribution • Public Warehouse • Joint Venture • Company Owned Operation  Meeting US Customs import regulations

How to Market

    Gain adequate working knowledge of the U.S. marketplace by doing the preliminary investigative activities • Attending trade shows • Contacting trade associations • Hiring a marketing/sales consultant Create strategic marketing plan Choosing right broker or rep organization Using public relations versus advertising to start

How to Market

(Exhibiting at Trade Shows)



Pro Beauty Market

• Major salon trade shows (4) • Rep association sponsored shows (2) • ISPA Spa Show plus additional smaller

spa shows (6)

• International Esthetics Cosmetics and Spa

Conference (2) plus half a dozen other esthetics shows

• Professional nail shows (5)

How to Market

(Exhibiting at Trade Shows)



Mass Retail Market

• NACDS (chain drug) • GMDC (grocery) • ASD/AMD (general merchandise 6) • ECRM-EPPS (one-on-one apts.

with major retail accounts 30+)

ECRM-EPPS

 Guaranteed 20 minute meeting with buyer and/or category manager in a 4 or 5 star     hotel room setting  60 retailers in attendance  Food, Drug & Mass  Perfect way to jump start distribution in mass market

How to Market Packaging Make sure it meets U.S. market requirements from both a regulatory and marketing effectiveness standpoint.

Important Information



Key Trade Associations

• NACDS (National Chain Drug Store

Association)

• PBA (Professional Beauty Association) • ISPA (International Spa Association)

Important Information

(Mass Retail Market Publications) 

Chain Drug Review



Drug Store News

 Mass Market Retailers  Supermarket News  NACS Magazine

Important Information

( Pro Beauty Market Publications)  American Salon  Modern Salon  Salon Today  Beauty Store Business  OTC Beauty Magazine  Beauty Times  Skin Inc  Derma Scope  Day Spa  American Spa  Nails  Nailpro  Launchpad

Important Information

( Pro Beauty Market Publications) 

and last but not least, my newsletter the

Beauty Industry Report

.

Download Complete BIR About this eNewsletter Develop your eNewsletter Subscribe to BIR!

Contact Us Email Mike Nave

News Articles

Pravana’s Super Shape’s sales are sizzling Company has a Good Hair Day Jim Fisher returns to Jungle at Nexxus Lafayette Jones’ Multicultural Column Access Brands keeps salons’ phones ringing Expo Latino opens doors to new sales and marketing opportunities for beauty biz IESCS mirrors skin care category’s growth Bob Oppenheim: “Manufacturers don’t want to control diversion” Mr. and Mrs. BIR make a quick escape to Santa Barbara to cover show

Feature Sections

Consultants' Corner

by Mike Nave

editor BIR is in “rehab” after spending five fast and furious days and nights in LV covering the third annual Cosmoprof North America Show and all the other happenings during the show weekend. Cosmoprof Bologna it’s not! But maybe given time, Cosmoprof NA will reach its potential. Read about the happenings in the September issue.

In this issue, BIR covers the Santa Barbara Beauty Expo and Latino Expo. BIR also drove out to Malibu to interview Michael Apstein, president/CEO of Access Brands, to learn more about his 1-800 THE SALON new client referral program for salons. Last month the salon industry lost a wonderfully creative hair stylist with John Sahag’s passing, and in this issue, Dwight Miller, a close friend of John’s who worked Marketing lesson By Bob Salem Marketing represents the greatest opportunity for independent salons to fuel their future growth — but not in its current state. Marketing is most successful when it results from a fully integrated strategy that is specific to the brand and importantly, when the immutable laws of marketing are respected. We experience the power of marketing every day through the choices we have in the products and services we consume. For each of those choices, the marketing intent is to create a memorable and motivating image. At the same time, marketers attach attributes to that image to elicit your trust in its performance. Everything leading to the creation of trust is specific to the brand, its image and its

Get Your eBIR Free Trial Subscription Complete the Hand out form and submit to Mike Nave or Fax to: 001-818-222-7828 or email Mike Nave with your request to [email protected]

Remember, if you ain’t reading the “Blue Thing,” you know NOTHING!

Important Information

(Valuable Resources)

• • • • • • •

Reshare Corporation, a provider of patented channel management software. ( www.reshare.com

) Katherine Frank Creative, a full service marketing and trade show management group. ( www.katherinefrank.com

) Kirschner Group USA (Sales rep organization covering the pro beauty market on national basis. ( www.kirschnergroup.com

) John O’Maley & Associates, Sales & Marketing Consultants covering mass retail market on national basis. (www.omaley.com) Fred O'kasick Sales Inc. Sales rep organization that covers the U.S. Chain Drug Store market. ( www.foksales.com

) Joni Rae Russell/JRA Associates. Full service marketing organization specializing in product development and packaging design. [email protected]

ECRM-EPPS Efficient Collaborative Retail Marketing - Efficient Program Planning Sessions a business process that streamlines the consumer packaged goods sales and marketing supply chain (www.ecrm-epps.com)

So where do you go from here?

    

Use a knowledgeable consultant to gain sufficient information to make an intelligent decision, whether to market in the U.S. or not.

Do the necessary home work Visit trade shows Do store checks Contact trade associations,

Thank You for the Opportunity!

PBD / BIR, Inc.

Publisher of the Beauty Industry Report International Representive Master Broker Consulting

Michael Nave

President 22287 Mullholland Hwy. Suite 403 Phone: 818-225-8353 Calabasas, Ca. U.S.A 91302-5157 Fax: 818-222-7828 [email protected]

Mobile: 310-614-9880