Out Of My Mind On A Wednesday Mornin’

What is your favorite Thanksgiving dessert?

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Sally Beauty Holdings (SBH) reported their latest quarterly results last week. The results were dismal enough to send the stock to a 52-week low. Is SBH a victim of the pro beauty industry, Amazon, terrible business plan or a combination of all three?

I recall vividly back in 1991 CND cut us off because full-service distributors didn’t like us shipping into their territory. Same thing occurred in 1997 with OPI. Back in the day full-service distributors ruled the world with exclusive distribution agreements that made them financially secure for life. Competition was non-existent.

During this time, Sally was buying OTC beauty suppliers . Sally grew quickly through acquisitions and became the dominant beauty retailer well before Ulta opened its first store. While Sally was creating a monopoly in its niche, the then CEO decided to start a new division that would eventually dominate the pro beauty side by acquiring as many as full service distributors as possible. Hence the creation of BSG/Cosmoprof. (L’Oreal got into the game late as it didn’t want BSG to control its brands so it started Salon Centric to compete and bought as many full service distributors as possible as well).

Fast forward to today and what to do we have? While Sally has more than 3000 stores, Sally’s business is declining. BSG/Cosmoprof is flat and that is with its monopoly on key hair care brands. In what used to be equal number of stores to DSC’s, stores are now more than 2/3 of the mix. Meanwhile virtually every distributor has been bought so growth is not an option through acquisitions.

Some say Amazon will buy SBH to get a foothold into the beauty business. Then again, anything is possible as Amazon ponders getting into medical/dental distribution, auto parts, fresh food and just about any business that has margin it can eat. Perhaps a more intriguing question to ponder is the fate of SBH the fate of the pro beauty business? One clue: The demise of DSC’s.

One thing is certain, SBH is in survival mode. Look no further than their email blasts advertising new lower prices, BOGO’s, 25% off everything and a deal of the day that makes one ponder what their pricing strategy really is. And here is the thing about today’s economy: No one cares if SBH survives or not, their products will always be available somewhere else with free shipping and two day delivery, sooner or later.

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Thanksgiving is tomorrow and my favorite holiday of the year. Plenty of great food, family fun, sports on TV and the Turkey Trot. But what about Black Friday this year? Never before have so many retailers advertised weeks in advance their Black Friday deals. Add to the fact that there are no must have gifts this year, it’s going to be a shootout on the OK Corral. Who is going to win? Walmart for sure, the rest, we will see. Cyber Monday? Who else but Amazon? We are more conditioned to buy from Amazon than at any other time even with the economy firing on all cylinders. 2018 will certainly be a watershed year for many retailers. And as far as football goes, does Detroit have a chance against Minnesota?

I just got done watching Big Little Lies on HBO. The story focuses on parents in Monterey, CA that have first-graders. Who knew how much drama could come from six-year olds. No wonder stress and high blood pressure is at an all-time high.

And yes just in case you were wondering, pumpkin pie is still my favorite Thanksgiving dessert, candied sweet potatoes favorite side and a little dark and white turkey with a touch of gravy makes the perfect plate.

Enjoy!

The New Big 3: Amazon, Apple and Samsung

Do you own a tablet and smartphone?

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Growing up everyone knew the Big 3 as GM, Ford and Chrysler. Cars were the world  and the engines to economic growth. There are more than 90,000 Interstate miles in the USA alone built for cars.

Fast forward to 2012 and the Big 3 are now Amazon.com, Apple and Samsung. Instead of 4000 pound hunks of materials with engines and thousands of parts provided by hundreds of suppliers, the new economy is focused in the cloud. There is no longer any need for the 90,000 Interstate miles. Heck, there is no need for cars if you are talking about the economy. And if you really think about, there is no need for stores, malls, parking lots and everything else built in the 20th century.

It’s kind of scary.

Best Buy and Target both recently announced they are matching online prices. Walmart recently announced same day delivery. And whom do they all compete with? Amazon.com.

Barron’s magazine recently featured the death of the PC on the cover and even featured a gravestone. Who needs PC’s anymore? Remember the Big 3 during the 1980’s to 2000? It was the Wintel: Microsoft, Intel and Dell. When was the last Dell computer you bought? Now everyone uses their smartphones or tablets to go online, text, access Facebook, make reservations, play games and so forth. And whom does those companies compete with? Apple and Samsung.

It’s more than scary.

ABC Warehouse, a Michigan based retailer of electronics and appliances recently started selling mattresses. Really? What do mattresses have to do with TV’s? Oh, you watch TV in bed so why not offer mattresses! Fact is, they have these huge stores and need something to put in them that Amazon.com can’t ship so easily. Mattresses appear to be the cure. But for how long?

All Apple devices connect to the iCloud. Amazon makes more money in the cloud business than selling goods out of its distribution centers. Samsung uses Google’s Android technology for FREE to power up its phones and also utilizes the cloud for storage. Remember thumb drives? Remember discs? Remember battery back-ups? Yikes, I still remember CD’s, DVD’s, cassettes and VHS’s.

It’s Halloween all the time.

What’s left that the Big 3 can’t touch? Food and services. But wait, Amazon.com is testing same day delivery of food in Seattle. But wait, SIRI is now accepting reservations and carry-out orders at your favorite restaurants. However, they can’t cook the food or provide an experience, yet. Services are also safe such as medical, health, beauty, dry cleaning, auto repair and so forth. Apparently those 20th century things have no interest to the Big 3 at this time. Eventually though, time will tell.

I’m happy to be in the beauty business.

Happy Wednesday!

P.S. MSU and the Detroit Lions. Really? At least we have the TIGERS! Go TIGERS!