Out Of My Mind On A Wednesday Mornin’

DeSantis or Trump in 2024?

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Cosmoprof North America show is only a couple months away and less than 50% of the booths are sold. Most of the “exclusive” areas like natural, CBD and others are empty. None of the major hair or nail companies are exhibiting. Can anyone tell me why the show is still going on and who will possibly attend? Cosmoprof is a true indicator of the professional beauty market and its demise. This show used to be held twice annually due to demand, new manufacturer’s entering the space, new distributors excited to sell to salons and overall growth of the industry.

What factors precipitated the demise of the pro beauty industry? I have been on this subject for a few years and it is so sad because this was once a vibrant and exciting industry. Why? It featured entrepreneurs eager to get their new products into the market; entrepreneurs went to beauty school to learn their craft whether it be hair, nails or spa and then went to open full-service salons; consumers eager to enjoy being pampered and spending time and money on beauty services and products.

Eager to cash in on the explosive growth was retailers. Diversion was already a big issue but never controlled as manufacturers loved the extra sales. Diversion was the first nail in the coffin. Then Sephora opened in 1998, Amazon Pro Beauty in 1999 and Ulta in 2000. This was the second nail in the coffin.

The third nail in the coffin was the manufacture rep groups, the same ones that called on distributors (and ironically still do). They saw the opportunity with the Big 3 and went after them. When this happened, diversion was no longer an issue for manufacturers, they went direct and controlled their products and prices. Who got screwed? Distributors and salons. Call it greed, call it whatever you want, bottom line, it’s business.

Fast forward to today and what is state of the pro beauty business? Most full-service salons are at 50-60% capacity due to the fact so many of their employees quit and moved to booth rental and even more recently due to the pandemic, work at home. Many salons have closed. Salons and spas are begging for nail techs and massage therapists. Spas that are open are only open for limited hours due to staffing issues. Salon retail is dead in the water. As I predicted long ago, services are what matters and demand for services, especially at the high end, are as good as ever.

Amazon shares are now on sale for less than $2500 a share and you don’t have to be a Prime member to buy them. What happened? They reported their slowest sales growth since 2001; Bezos bet a few billion on Rivian and that bet failed; supply chain and inflation issues; and overcapacity. However they are on track to crack $450 billion in sales this year and most likely $500 billion in 2023. Their cloud business is still soaring and their advertising unit is mostly all profits. If there is any company I would not bet against, it’s Amazon.

It’s time for a commercial break and here is one of our latest products that I love, love, love. ForPro Expert Reusable 100% Organic & Bamboo Cotton Pads are best in class and actually made with certified organic cotton. I did a bit of research and found that virtually all reusable cotton pads that claim to be organic are not. Same goes with cotton rounds. These are now available!

ForPro Expert Reusable 100% Organic & Bamboo Cotton Pads

I was at Kroger shopping and checking out baked Frito Lay chips and a Frito Lay stocker was in the aisle. I picked up the bag of chips for $3.99 and said to him that bag is so small, it’s like a snack bag now. He said to me, “July 1 we have another price increase coming” and he couldn’t tell me if the bag was going to get smaller. Brownberry bread is over $5.00 a loaf. Food inflation is here.

It’s no wonder large chain restaurants are doing well. In some instances, it’s cheaper to go out if you don’t order alcohol. Chains have buying power and are better at keeping employees. Alas, small restaurants and small chains are closing at a record pace and this is after they survived the pandemic.

If a Supreme Court document is leaked, is anything sacred and trustful anymore?

Trump is licking his chops after a couple nice primary wins. If you had your choice of Trump or DeSantis, who would you choose?

Have you thought about chartering a bus? Don’t! Here is another industry decimated by the pandemic. What once cost $3000/month to insure a bus is now more than $7,000/month. Diesel is more than $6/gallon but the real pain is that there are no bus drivers around. It’s not like Generation Z kids are graduating high school and bragging that they are going to be a bus driver. Average pay is $200/day regardless if the driver drives two, four or eight hours and some companies are paying $300 and over just to get drivers. But even at that, they can’t find them.

Happy Wednesday!

Pro Beauty Trade Shows R.I.P.

Are you vaccinated?

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It was only a matter of time.

When Amazon decided to get into pro beauty, that was the first kiss of death for pro beauty trade shows. Virtually every big brand signed up much to the dismay of salons who for more than 40 years supported entrepreneurs by retailing their goods to their clients. The business was too big to pass up and they decided that the salon business wasn’t important enough.

As Amazon continued to expand its offerings, pro beauty offshoots started struggling. Now the brands were focused on advertising on Amazon, who needed magazines anymore? All the nail magazines folded; Modern Salon is down to 48 pages if that; and even the “blue” newsletter disappeared. The big brands that put the magazines in business all left.

Now the big brands that put the trade shows in business are gone as well. They no longer need to exhibit at a trade show to try to win over a salon, a distributor or a retailer. They have Amazon and most likely, Sephora and/or Ulta. Gone are the days that Paul Mitchell, L’Oreal (Matrix, Redken and such), OPI, and so many others will ever exhibit again.

Cosmoprof North America is being held next month in Vegas. The question you have to ask is, why? COVID didn’t go away and with the Delta variant, it is getting worse. In fact, Vegas is already asking everyone to wear masks. International travel still isn’t happening so forget international visitors which made up so much of the show. Who is going to exhibit that is newsworthy for an attendee? And bottom line, what information can’t an attendee get these days? All trade shows advertise the list of exhibitors so do you really need to attend? It’s no wonder why the Cosmoprof show floor is less than half filled and most likely, will be their last show.

Premier and ABS are in the same predicament. Who is going to exhibit and those companies that do, the question is again, why? The main attendees are booth renters looking to snatch up bargains but with inflation roaring and the supply chain gutted, attendees will be sorely disappointed when they don’t find bargains. There just isn’t any reason for these shows anymore.

The only show that matters today is amazon.com. We went to a mattress store and asked the sales person if they had the best price. “Yes of course” was the standard answer. “You can check online and we guarantee the best prices for at least 30 days after your purchase.” Jokingly I mentioned Amazon and he said they don’t offer the same services as we do. Just for shits and giggles I went to amazon.com and sure enough, they sold every bed Mattress Firm had on their floor at the same price with all the same services. Today, it doesn’t matter what the category is. Amazon is the show that matters.

Truthfully I am not going to miss any of the beauty trade shows. At one time when the real entrepreneurs of the business were exhibiting, threw parties and real innovation took place, they were a blast. But that excitement left more than ten years ago and beauty trade shows have been ghosts of their past ever since. COVID will finally put them to rest, R.I.P.

Out Of My Mind On A Wednesday Mornin’

Women: How much time do you spend each morning getting ready?

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Bob Woodward has now penned his eighth presidential book, FEAR: Trump In The White House. Working for the Washington Post (now owned by Jeff Bezos)since 1971, Woodward was among the first to investigate Watergate (along with Carl Bernstein) and has written 18 books, 12 of which are best-sellers. No doubt FEAR will be among the top of the list which debuts September 11 of all days. Trump has already tweeted that most of the book is made up of lies, fabrications and other Trump phrases. Bottom line: Woodward is a true investigator reporter who is now the associate editor for the Washington Post. At the age of 75, who is kidding whom?

And speaking of Trump, will he or won’t he impose an additional $200B in tariffs on Chinese goods? Today the U.S. announced a record trade deficit with China and of course that is due to the economy on track for its longest expansion ever. Like I have said previously, tariffs will do nothing but harm virtually every company that produces a product and will cause prices to go up.

Then again we are living in the age of “no one cares a shit about anything.” Respect is out the window. Communication between people is at the lowest levels ever. Phones on desks are slated for the Smithsonian. People don’t get back to you or even respond when you ask them something. Service at restaurants and hotels is terrible and no one cares. We now trust Amazon more than we trust anyone else, hence Amazon’s trillion dollar valuation. I can see it now: New apartment and condo buildings will have Amazon access for drivers who make non-stop deliveries day and night.

Is it any wonder that suicides are at an all-time high, up 30% since 1999? Marijuana use on college campuses is at a 30 year high. Opioid addiction and deaths are at an all-time high. And should I mention alcohol sales? 

OK enough of this! What is wrong with just being happy? Who cares what Trump tweets? Who cares who Nike hires? But of course there is a company that rates happiness and guess what, America is 108 out of 140 according to the Happy Planet Index.  In fact, we rank pretty dismal in all categories. That is why I proclaim the new TGIF, TGFB! Thank Goodness For Beauty provokes happy thoughts. After all, we spend quite a bit of our life doing the following: Showering (wash and condition hair, wash body, shave, daydream), apply makeup, apply deodorant, brush and whiten teeth, spray fragrance, style hair, file nails, get hair cut & colored, get mani’s & pedi’s, brows, bikini wax, visit dermatologist, visit dentist, visit spa. Oh should I mention the going to bed routine? TGFB is all about being happy! Most of the time you are by yourself and can listen to music and daydream. And it’s all for looking good!

I never did blog about the Cosmoprof Vegas show that came and went last July. Perhaps because there wasn’t much to write about. Once again, they claim record booths but c’mon, what really has this show become? It is now 1/3 pro beauty (shrinking quickly), 1/3 retail and 1/3 packaging. There is not enough of anything for a serious buyer to attend, hence, attendance keeps dropping. Next year will be even more interesting as NAHA finally moves out and heads to Long Beach. Finally there will no longer be hairdressers walking the floor so the show floor will be that much less busy. Next up for us: Natural Expo in Baltimore and ISPA in Phoenix.

Most-wanted APP’s that have yet to be developed that have the greatest potential: Self-directed garbage cans that move to the curb and back to the garage; self-emptying dishwashers; self-folding laundry; and self-washing cars.

I passed level 2800 of Candy Crush and not proud of it. They say video games will be even more addictive in the next five years as consoles go away (bye-bye Gamestop) and all games are downloaded. Next fad: Live game rooms for gamers. One opened at Luxor.

I read about 10 books this summer and stayed away from the all-additive TV as much as possible. Only watched The Affair, Allison is dead but the series still has one more season to go. Also watched Sharp Objects starring Amy Adams who plays a terribly dark character. Only 8 episodes, but with so many flashbacks, each episode was slow and agonizing. Great ending and as of right now, no chance of a second season especially since Adams won’t come back.

Happy Wednesday!

Out Of My Mind On A Wednesday Mornin’

When chomping down pizza, which crust is your fav?

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We head out to Vegas Saturday for the annual Cosmoprof show. Reviewing the newly updated floor plan (it gets updated each year due to exhibitor mix), the show is now divided equally between “pro” beauty and consumer/packaging. Pro beauty is now in the area that packaging used to be in, planned that way since that is the section that will continue to shrink while the other two sections will continue to expand. It will be an interesting show for sure. If you are around, come visit us at stand 39087.

My latest revelation and wonderment is the attention given to reviews and “THE BEST OF.” Let’s take review sites such as Trip Advisor and Yelp. You would think that everyone is an expert that posts a review. And does anyone Google-search the worst hotel or the worst restaurant? We all want the BEST and we want to pay the cheapest price to get it. Interesting enough, many reviews are bullshit and you have to become an expert to know which reviews to ponder and which reviews to skip. When it comes to finding recipes, I was looking for curry cauliflower. I typed in BEST curry cauliflower and up came pages of recipes. Then I typed in WORST curry cauliflower and just about the same recipes appeared.

Amazon is the most bizarre when it comes to reviews. I wanted to buy a vent mounted iPhone holder. I found one for $6.99 and it had 25,000 reviews. Really? No kidding. No one has time for nothing anymore, but they certainly have time to post reviews.

Sergio Marchionne, what a terrible end of life story. What he did for Chrysler is Harvard case study material. I mean look at Ford whose stock is about to go below $10. And even GM whose stock can’t get past $45. Fiat stock more than doubled in less than one years and Sergio spun off Ferrari which as tripled. 66 years old is way too young but cancer knows no age. The auto world will certainly miss him.

Is there any hotter color than green? Green is great: Go instead of stop. Fully charged or charging instead of drained or about to drain. Stocks up instead of stocks down. Green is organic, natural. Green is MSU (sorry I had to toss that in).

Here’s one for you. I was speaking to a Vietnamese nail spa owner who has 7 locations. His biggest concern? Finding qualified nail techs. With Vietnam booming (7% GNP growth vs. 2.2% USA), young people are working in factories and making more money than ever before. No longer do they need to come to the USA to find work in a nail salon. They now come with a skillset where they can get quality jobs without working 6 days a week, 10 hours a day.

I visited the new MGM National Harbor property last month and was totally impressed. As nice as any Vegas property and very comparable to ARIA but with only 300 rooms. Casino is smoke-free and features more than 60 poker tables. Location is perfect and if you are thinking about a great weekend getaway, check this place out.

The fitness craze is nutsy-cookoo. It seems like every new strip center has some kind of workout place that offers pop-in classes. Truly appealing to Millennial’s, I can’t even list all the names but places like Orangetheory already have 1000 locations. My take is that personal trainers are opening their own joints and willing to work 7 days a week to have their own business. This is one business that burnout will certainly take place down the road.

Here is a question for you: If the fitness craze is nutsy-cookoo, why is the obesity rate in the USA at it highest level ever?

Are you moving to Denver to take advantage of legal weed? Fastest growing city in the USA and weed bed and breakfasts are one of the hottest trends around since smoking it in public or in hotels is still illegal. Now on the breakfast buffet besides O.J., donuts and cereal, your choice of Sour Tangle, Ghost Train Haze and Gorilla Glue #4. The only caveat is that prices per night are higher due to the amount of food inhaled at breakfast!

Sorry Macy’s, Nordstrom’s, Neiman and Saks. Ulta wins, you lose. Estee Lauder, master of premium cosmetics and skin care (MAC is still hot, hot, hot) is opening stand alone boutiques in Ulta stores as fast as they can build them. Department stores will yet again need to reinvent themselves. Perhaps first floor makeup counters will move upstairs but what will take its place?

Is there anything better than good pizza?

Happy Wednesday!

Out Of My Mind On A Wednesday Mornin’

Clinton vs. Trump. Who will win?

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I want to be Marc Lore. He understands the marketplace, private equity and marketing perhaps better than anyone else. How can anyone explain the phenomenon of selling diapers online below cost to get volume, losing money and finding yourself competing directly with Amazon for the same customer. We all know the outcome: Amazon bought diapers.com for $540 million in 2010 (oh, that also included soap.com). But hey, how can one live with only $400 million after taxes? So Marc goes to Amazon to work with Jeff. Jeff makes sure Marc has an iron-clad non-compete. I know I certainly would do the same. Marc works at Amazon and then comes 2014 and the end of his non-compete, what does he do? Leaves and starts Jet.com. Everyone wants to do business with Marc and in no time he raises $80 million in private equity funds. That would eventually grow to $500 million but what’s a few million here or there? Jet.com goes live last year, does some business while losing millions. But again, who cares? Then last week Walmart decides it needs Jet.com to be competitive with Amazon and buys it for $3 BILLION cash plus another $300 million for the executives to stay on. Now I have no idea what iron-clad non-compete Walmart negotiated with Marc but it best be 20 years or longer!

As an entrepreneur, you read about these stories and just scratch your head. There a few of us that can successfully start one company let along two or three. But selling regardless of price is tough. Just ask those that have.  BTW, happy 60th birthday to Max!

Now that two major shows are behind us, Cosmoprof and NACDS, what can be said about the business of beauty?

Cosmoprof now reminds me of the Olympics. 50% larger this year due to the new space created at Mandalay Bay (thank you MGM for making everyone walk more), there were more than 1000 booths and they claim more than 30,000 attendees. What is really interesting is that beauty is now dominated by public and private equity companies. Independents like us make up just a tiny bit of the business. To attract more retailers to the show, Cosmoprof created prime space for beauty entrepreneurs to show off their latest creation much like Olympic athletes. These products are truly entertaining and more than 90% of the companies won’t survive but it gives retailers ideas to come up with products of their own. My interpretation is that this is not what Cosmoprof should be but they prefer the Mark Cuban’s of the world over professional beauty companies.

NACDS on the other hand is strictly business. No theatrics here in Boston. No rep groups taking large booths on the show floor, in fact, they aren’t allowed. Large phama companies have even larger booths which make up more than half the show. The “front of the store” makes up the rest of the show. Unfortunately the front of the store is getting stale because innovation and new players are not in this space. There are many reasons for this but let’s just say I have a feeling mass retailers are not going to take over beauty anytime soon.

Yes it has been hot but this is the summer of a lifetime. It doesn’t get much better than this. I did read that June and July were the hottest months in history.

Sports Illustrated picked U-M to win the BIG10 and go all the way to the national championship only to lose to Alabama. I think SI has drank too much Harbough Kool-aid. I spoke with my guy at MSU and he thinks the Spartans will go 10-1 losing only to Notre Dame. One thing is for certain, the U-M/MSU rivalry is finally back.

And please tell me football season is not 3 weeks away.

Trump vs. Clinton. Never before in USA history has there been such an election. Can this election even be close? My thoughts are that the polls have no idea. Clinton will win in a landslide OR Trump will win in shocking style and confound all the experts.

Happy Wednesday! And happy birthday BUB!