L'Occitane invests in US brand for makeup expansion; Forever 21 to roll out standalone beauty boutiques; Forbes taps beauty startups as a goldmine for women entrepreneurs; and Amazon circling pharmacy business.
L'Occitane invests in US brand for makeup expansion
Alcone started life as a New York drugstore in 1950, specialising in false eyelashes for showgirls. For the past 11 years, the company's Hell's Kitchen outpost in New York has been a go-to for professional makeup and "look altering" products for movie, fashion and beauty professionals. Two years ago, the company founded LimeLight by Alcone, an online company offering all-natural skincare and makeup based on "60 years of expertise".
L'Occitane has acquired a 40 per cent stake in LimeLight by Alcone to expand into the US colour cosmetics market. The French prestige skincare and well-being giant will also set up a joint venture, owning a 60 per cent controlling interest, to develop the LimeLight brand internationally. It's a two-way street. LimeLight will access L'Occitane's R&D and L'Occitane will speed up its expansion into the natural makeup category.
LimeLight operates in a similar way to Younique, which is 60 per cent owned by Coty, using so-called Beauty Guides for direct-selling. According to Michele Gay, co-founder of Limelight: "We appreciate L'Occitane's understanding that connecting with consumers in this new digital age is not just about programming another app, but also building and training a sales force that can capture a vast social media following and then help that following discover personal beauty solutions through out-of-store, one-on-one relationships". Check out limelightbyalcone.com.
Forever 21 to roll out standalone beauty boutiques
Fashion stores and brands worldwide have been hit hard by e-commerce, the expansion of category killer chains such as Zara and H&M and the longterm casualisation trend. Forever 21, the US youth-oriented brand which set up shop in Australia in 2014, is taking the bull by the horns in its home market. The LA-based company is teaming up with mall developer GPP Inc to roll out standalone Riley Rose beauty boutiques in 13 "top tier" regional shopping centres in the US. Ten are scheduled to open by the end of the year, followed by three more in 2018.
GPP has major retail muscle, owning and operating 127 malls in 40 US states. It's a win-win for both parties. The mall developer has a longterm strategic plan to shift its dependence away from supermarkets, entertainment and fitness centres. The addition of the Riley Rose boutiques will not only leverage the strength of the beauty category, it will springboard further diversification, says GPP CEO Sandeep Lakhmi Mathrani.
Like Zara and H&M, Forever 21 has dipped its corporate toe into the beauty sector before, selling makeup, skincare, haircare and a private label brand in its fashion stores. The Riley Rose boutiques will offer accessories, cosmetics and homewares in, "an experiential setting aimed at younger shoppers".
Forbes taps beauty startups as a goldmine for women entrepreneurs
There's nothing new about women becoming mega-rich through starting a beauty company. From the early 20th century, entrepreneurs such as Elizabeth Arden, Helena Rubinstein, Estée Lauder and many more to a lesser degree in Asia, Europe and the US have hitched their business stars to signature moisturisers, fragrances and lipsticks.
What's changed is that the path to fame and fortune is easier today, says global media company Forbes. Barriers to entry are much lower because cosmetics chemists and labs worldwide can develop formulations for anyone. You don't need an uncle's secret recipe for a "pot of cream" like Estée Lauder. Major beauty chains such as Sephora and Ulta in the US seek out and nurture small brands with a point-of-difference. OK, she's not the girl-next-door. But Miranda Kerr launched a four SKU range based on noni extract in over 300 Sephora stores across the US last week in a bid to take her Kora Organics brand global.
Too tough to go global without a world-famous name? The major seven multinationals – L'Oréal, Unilever, Coty, Procter & Gamble, Estée Lauder, Johnson & Johnson and Shiseido – are scooping up brands year-on-year to expand their already large portfolios.
According to CB Insights, 62 privately-owned beauty companies were acquired in 2016 – 38 per cent more than in 2015. The analytics firm reports that there have been 14 major transactions this year so far and experts predict that the same number of deals will be negotiated in 2017 – if not more.
Amazon circling pharmacy business
Any news that the online titan is thinking about disrupting yet another retail category sends shivers down corporate spines. Retailers and supermarkets are bracing for the arrival of Amazon and AmazonFresh in Australia. In the US, shares of pharmacy heavyweights such as Walgreens and CVS Health have slumped on revelations that Amazon is hiring major talent from the pharmaceutical industry, including a general manager to head up a pharmaceutical division.
The speculation has legs. Amazon bought a 40 per cent share in the online pharmacy website Drugstore.com in the late 90s and has recently started selling medical supplies and equipment in the US. Just over a month ago, the company began selling OTC pharmaceuticals and cosmetics through its Prime Now delivery service in Japan. Like many US companies, Amazon often test-markets services and products overseas to assess their chance of success on home turf.
The pharmacy markets in the US and Australia are tough nuts to crack because of regulatory and other requirements. Twenty years ago, when Amazon bought into Drugstore.com fears swept the pharmacy industry that the online retailer was poised to take over a big slice of the prescription and OTC market in the US. But it's much, much bigger now with huge worldwide clout.
Snippets from the wires
- Australia's online dating industry is currently worth $147.2 million, says IBISWorld, and is predicted to reach $171.8 million over the next five years. Australia is the second biggest market for US-based eHarmony, accounting for 10 per cent of global revenues in 2016.
- Australians have long paid through the nose for sporting gear, footwear and sportswear from leading international brands. French sports giant Decathlon plans to put an end to high prices for quality sporting goods. The company's online store has been available in Australia for over 12 months, but Decathlon is opening its first bricks-and-mortar super outlet in Tempe in Sydney in October – close to IKEA. A Melbourne store will open next year before a nationwide roll-out.
- Henkel, the makers of Schwarzkopf, has broken the 5 billion euro barrier ($AU7.5 billion) for quarterly earnings in Q1 of its financial year. The multinational's beauty and haircare business contributed 1.011 billion euros ($AU1.52 billion).
- PZ Cussons is reaching out to Gen Zers through its Sanctuary offshoot. Described as "bold, sassy and young", Being by Sanctuary will hit the shelves in Boots in the UK in June and Ulta in the US in October.
- In an effort to boost its South American business, Unilever has bought the personal care and haircare brands of Quala. Founded in 1980 and available in 10 countries across the continent, Quala's revenues hit $US400 million in 2016. Haircare and men's grooming are the company's key categories.
