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.
I know, I know, I know! Where did the time go? Between now and my last blog, what has happened that we missed or have wanted to miss? Not much.
But hey, that isn’t why I haven’t blogged since the dinosaurs were roaming 65 million years ago, I have been traveling. In fact, just got back from Vegas and attended a fab wedding (my assistant Lindsay and her now husband Paul) and then drove to the Grand Canyon for a couple days and then drove to Lake Powell, Utah for a few more days. What is amazing is that I must have been to Vegas more than 100 times but never to the Grand Canyon. For some reason I think you too have never been which may explain that the average age of visitors had to be early 70’s. Canes, walkers and wheelchairs were all there and my guess is everyone really wants to see the GC in their lifetime and eventually, we all get there. I have to say, the scenery is awesome and breathtaking.
Lake Powell is located in Utah but for all intent purposes, Page, AZ and is mostly Indian reservation land. Lake Powell features many “fingers” throughout the lake that make it very cool with plenty of natural sand beaches for houseboats to hang out.
Perhaps one of the coolest tours was that of Upper Antelope Canyon, located on the Navajo Indian Reserve and only accessible by a licensed Navajo tour guide. The canyon with the sun coming through is magical and certainly worth a visit.
My favorite pastime is traveling. You get to experience so many different geographical settings, diverse people and of course, local food and wine (and most recently, bourbon). I learned that Utah is not the best place for alcoholics. The place we stayed at told us each drink cannot exceed 1.5 oz. and is measured and controlled by the government. So if you want a double, you have to order two drinks, and have two people at the table. And just to think that alcohol is legal.
Now let’s talk some business. Oh, you want to see a picture of Lindsay in her wedding dress first? Why not, it is not often you are a bride in Vegas and can wear a wedding dress on the Strip, in restaurants and bars and even the pool. What I find is so amazing is that there are so many brides walking around Vegas, tourists don’t even look anymore. Then again, no one looks at anyone because their eyes are glued to their smartphones.
Cosmoprof North America is coming up in July and at one time was the barometer of the pro beauty business (many of us remember when it was called the BBSI before the PBA sold the show to Cosmoprof and the show was actually held twice a year). Now the show is less about pro beauty and more about retail incubators and packaging companies. Can anyone tell me of importance who will be exhibiting and attending? TNG is not even taking a stand this year as we join CND, OPI and so many other companies. No doubt about it, Cosmoprof is an open book of the state of the business.
Tariffs yes, tariffs no? Right now, Trump is putting small and medium businesses at risk including American farmers. With Amazon the biggest online retailer and in control of most pricing, pass through of increases will be difficult at best. That means businesses like TNG will eat much of the tariff increases and eventually pass on some of the costs to consumers or stop selling some products altogether. As many CEO’s can attest, survival of the fittest is at its peak right now.
Steven Tamares, CEO of Bed Bath & Beyond, finally fired. I mention this only because activist shareholders are more and more involved in public companies and demanding their way or the highway. Tamares needed to go years ago and nearly killed Bed Bath’s business. The question now is can they be saved which is the same question being asked about Pier I, Office Depot, Staples and so many others. And one CEO I would not want to be right now is Chris Brinkman, head of Sally Beauty Company.
With summer finally arriving next month, I’m loving the new EMMA Beauty Summer Collection featuring the best neon colors that can’t be beat. After a terrible spring, we really need a fabulous summer and what better way than painting your nails with colors including Slice of Heaven and Sour Apple Passion. Batch 0719 is just as electrifying!
Alas, looks like hip replacement surgery is in my near future. If Nick Saban can do it so can I. I guess putting on more than 15,000 miles running, more than 10,000 miles bicycling, more than 5,000 yoga classes and countless other exercises like aerobics did its trick. But in the end, I would do it all over again.
This is one of my favorite times of the year: Christmas has finally come and gone and the days up to New Year’s are slow, traffic is light and most people are off work and enjoying. It’s the perfect time to think about the upcoming year. As one of my loyal readers you know I have thoughts on most topics so for my last blog of 2018, let me share some thoughts for 2019.
Trump: Trump lost the House and now is in his West Palm Beach self-contained resort pouting and using the federal government as hostage. He wants a border wall or the 800,000 government employees be damned. Oh, let’s not forget about the 200,000 contractors also affected. If this was the only event worth watching that would be enough. But no, we have to contend with China/USA trade tariffs due March 1 (my thoughts with 2020 on Trump’s mind and the stock market down from the start of the year, an agreement will be made, however, not sure the 10% will be rescinded even if the agreement is made). Trump certainly ranks as one of the most dangerous presidents America has ever had, he represents the wild card for 2019.
China: Premier Xi Pinjing has made it known that he wants his country to be the #1 player in the world by 2025. At the age of 65, he has a lifetime commitment to make it happen. This is one reason why Trump is playing China so hard, especially with IT and trade secret theft. America must remain the #1 player on the world stage and do just about everything within legal means to keep Xi’s ambition at bay. 2019 will test both players.
Business: While consumer confidence hit a 5-month low this month, retail sales were at the highest level in more than a decade. Go figure. Housing remains weak, oil is at historical low prices with a glut that won’t go away anytime soon. But the few corporations that are left are doing better than ever and if the tariffs are resolved amicably, we should see the stock market go up 10% and corporate profits continue to rise. Everyone is predicting the start of a recession in 2020 but as we know, everyone is traditionally wrong. With student debt hitting a new record of $1.5T and corporate debt at all-time highs, the next recession could be nasty. Then again, let’s see what the Fed does with interest rate hikes in 2019.
Beauty: Baby boomers, Millennial’s and even the X, Y and Z generation all have one thing in common: They love beauty products. The question will be in 2019, who gets the business? Ulta will continue to drive sales growth opening at least 100 new stores and taking market share from Sephora. With traditional malls in decline the question for Sephora is how are they going to redeploy and become relevant again to shoppers that hate visiting malls.
Pro beauty business continues on its path to being neutralized. Amazon has signed up just about every major player so between them and Ulta, consumers have no need to buy retail products at salons. Booth rental continues to explode and independent contractors who rent space make less money and receive no benefits. When was the last retail hair brand introduced? Both Cosmoprof and Salon Centric will operate more stores with fewer DSC’s and offer less education. Cash & carry trade shows are so yesterday but the two remaining ones make so much money for the organizers, they will continue as long as booths and tickets sell.
Pro magazines will continue to crash and burn, they are already ghosts of their past that no one reads anymore. With both NAILS and NAILPRO under 100 pages and only surviving because Danny Hale has a sweetheart deal to advertise 10 pages monthly. Besides, innovation in the nail business mimics the rest of the industry and no wonder publications such as MODERN and AMERICAN are so thin you wonder why they even publish.
TNG: What can I say, 33 years and still going strong. Our brands are now #1 in most categories and in 2019 alone, we are introducing more than 200 new products. Innovation remains key and my next blog will talk about some of my favorite new products. EMMA continues to delight and is now one of the top brands on Instagram. Thebeautybook Spring 2019 catalog is one of my favorites and an integral part of what makes THE INDUSTRY SOURCE the best-in-class pro beauty distributor year-after-year.
Thank you for hanging around all these years. The beauty of all this is that beauty truly is timeless and I could not be luckier to be involved in this consumer category. Beauty will continue to evolve and so will TNG.
Happy New Year!
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.
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.
If there was a tell-tale hint of how Cosmoprof Vegas was going to be after Cosmoprof Italy back in March, the results speak for themselves:
Down, down and down.
Exhibit space down at least 25%. Attendance down at least 30%. New suppliers down at least 50%.
In the end I didn’t walk away with a single new item that got me excited. Sure, there were a few items that were unique and will sell here and there but nothing that indicated that this industry is on the verge of turning around.
This suits corporate America and private equity just fine. They just assume book a suite at the Four Seasons and meet in private. This way they don’t have to deal with exposing their products to people that couldn’t buy them anyway. Plus the cost savings are terrific and the food is better.
In the end, this show has become nothing more than the ability to meet several existing suppliers in a couple days, shake hands, comment on the show (always the same comments), have breakfast-lunch-dinner meetings and wonder why the show exists.
One thing Cosmoprof Vegas does well is intimidate those that attend. Once you are pre-registered and receive your confirmation, you have to walk a mile to get your badge. You must present a business card and photo I.D. If you forget either, you have to walk a couple miles to fetch. Then you have to walk to the badge holder booth and present more I.D. Then to get into the show, you have to present your badge and hope that their "Navy Seals" security force armed with barcode readers correctly reads your badge or else. At least in Italy you have to just insert your card into a machine and your free. I guess they don’t have enough attendees to afford that here.
Cost savings were evident virtually everywhere. Gone were the espresso machines, bottled water, sandwiches, snacks and other fun things. I did manage to snag a few M&M’s at the OPI booth.
I felt sorry for the suppliers that had to endure three days of torture. Yes, they signed up for it but you have no idea how painful three days can be sitting on a hard chair for 8 hours. When someone finally recognized me, they were so happy to spend a few minutes off their chair they even offered better discounts!
I can’t wait for next year. . .