Out Of My Mind On A Tuesday Mornin’

If and only if, Clinton vs. Trump, who you voting for?

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What’s going on in the nail color category? Once the hottest category at both professional and retail with the introduction of gels, extend wear nail polish and gel nail polish that needed no light, it’s now saturated. The next innovation is around the corner but until then, the retail market is cleaning up. Just announced is Wet n Wild 1 Step Wonder Gel. They claim up to 2 weeks of color and shine in just 1 step and removes easily with polish remover. All this for $4.99 before discounts. Sinful just announced it’s two-step extended wear polish, Sinful Shine. 28 colors plus the top coat, each just $2.99 before discounts.

The question is “How can this be?” The answer is simple. The costs of innovation for the products have already been incurred. Now the only costs are the packaging, advertising and placement. How will this affect the salon market? Not too much. After all we are willing to pay $5 for a beer at a bar that we can buy at Costco for less than a buck. It’s all about the service.

Speaking of innovation in beauty, who does it better than L’Oreal? More importantly, who does marketing and product launches better than L’Oreal? Last year for every dollar of sales, L’Oreal spent about $.29 in product costs. Guess how much they spent in marketing costs? About $.31 per sales dollar. Yep, they spent more money on marketing than product costs. And their sales keep going up. Bottom line: Much better to innovate and charge accordingly than bottom fish.

THE INDUSTRY SOURCE is getting ready to launch a new polish line, 5-Free, and at a pretty good price from a pretty good brand. Details to come in March. Looks to be around 80 colors plus a top and base coat. We’re going to have some fun with this.

Amazon just raised it’s free shipping minimum to $40 from $35. But really, who isn’t a Prime member?

I’m hooked on Billions, the new series from Showtime. Damian Lewis is superb as he was in Homeland. I also checked out the new series on HBO, Vinyl. Premier episode was very good and if you are into rock and roll, check it out. It takes place in 1973. The only downside: The amount of smoking that takes place. I just started at MSU at the time and don’t recall it ever being that bad.

Trump vs. Clinton. Is this what we have to look forward to in November?

Michigan is debating increase the speed limit to 80. Hmmm, most travel at 79 already. I think it is a great idea especially since we are the car state of America. But first we need to fix our roads. Can you believe they are going to spend more than $1B to fix I-75 Auburn Hills to Detroit and take 14 years to do it? I am very happy I don’t drive that stretch.

I hope you like the look of my new blog page. Thanks to Heather, it’s only been 10 years in the making!

How can MSU be ranked 6th nationally and be in fifth place in the BIG10? I’m loving their chances for making yet another Final 4. But this time, Izzo needs to deliver like he did in 2000.

What’s hot in pedicures? ForPro Toesie Flops. Super comfortable flip-flops with built-in BLING toe spacers. With the pedi season coming soon, now is a good time to check them out.

Happy Tuesday!

The Independent Hair Care Business Going Down The Drain

Where do you get your hair cut?

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“Welcome to Gina Franklin, Larry! So nice to see you. Matt will be with you shortly. Can I get you some coffee, soda or perhaps a glass of wine?”

As I walk past the receptionist I head over to the coffee station where there are fresh pastries, bagels, assorted beverages, comfy chairs and current magazines. The salon is buzzing with women getting hair cuts, hair color, makeup applications and it’s like everyone knows each other.

Matt comes and gets me, wonders if I need a manicure and hands me a copy of the WSJ. After a long haircut and hot towel face treatment, I’m back to the receptionist to book my next appointment and be sold on the latest hair care items. Of course she knows I’m in the business and most likely we sold her those products but that’s her job. $60 later I head out.

The rise and fall of the independent hair salon business has been remarkably quick spanning only 30 years. Oh there are plenty of other industries that have come and gone much quicker, i.e. the video rental business (Blockbuster was an amazing story). The tanning salon business is 25 years old and struggling to stay alive. In the past five years alone, tanning salons have declined by a third  to less than 13,000.

I’ve mentioned the historical part of the rise of the independent hair salon business in the past and only Paul DeJoria is left to relish those memories. Everything else has gone down the drain. There are many reasons for the decline and one only wonders what the next 10-20 years is going to bring. After all, everyone still needs to get their hair cut. From what I can see, the usual suspects are at work over the decline of the industry:

  • Entrepreneurs came, sold, and were never replaced. The likes of Arnie Miller and Jheri Redding weren’t just about products, they were about inspiration for a new generation of guys who never envisioned themselves being hairdressers. Suddenly in the 80’s and 90’s it was cool to be a hairdresser. Then the entrepreneurs sold out to the likes of L’Oreal, P&G, and Henkel and that began the first transitional wave down. Guys no longer see this as a cool industry and beauty schools have been turning out 99.5% female hairdressers for the last decade.
  • Competition ceased and public companies took advantage. L’Oreal not only was the first hair color company in the world, they were astute enough to buy the best companies such as Matrix, Redken, Pureology, and ARTec (OK, that one they screwed up). In the meantime they had the retail consumer to support their expansion with brands such as Maybelline, Kiehl’s and L’Oreal. P&G got into the game too late with their acquisition of Wella, Sebastian, Nioxin, Clairol and Graham Webb (oops, that was a nightmare and too bad). Now P&G is unloading all these brands (Fekkai they paid $450 million is now worth $50 million) and even L’Oreal stated they are not interested in any of them. OK Henkel will come to the rescue but too little and too late. Unilever who bought TIGI, also has no interest in a larger footprint in this industry.
  • Competition among distributors went public too. Sally bought BSG and BSG bought the best of the best of the independent distributors. Today BSG operates more than 1200 stores and has nearly 1000 DSC’s. Salon Centric owned by L’Oreal bought the rest and this year will most likely buy the remaining Redken distributors. They have about half the presence of BSG. Combined however, they own the market and leaves companies such as TNG to focus on innovative products that they can’t match or get involved with.
  • The death of the independent salon. My story to start this blog is true. It was all about the salon experience. Booth rental was an infant industry that took root in California and Texas and then Florida. The Midwest and East coast were anti-booth rental. But hairdressers are an interesting group. History has always dictated that the salon owner made out like bandits offering only 40% to 50% commission. The rise of male hairdressers moved the needle to 60% and even 70% commission to retain the best. And even that didn’t work. Salon walk-outs became as common as salons closed on Monday. Eventually salon owners had enough and booth rental gained traction. Chain accounts with their franchisees saw a new opportunity at the same time with the proliferation of beauty schools churning out hairdressers with no where to go. It’s no wonder that the life expectancy of a new graduate that stays in the industry is at the lowest point in history.
  • Retailers such as Sephora and Ulta enter and offer a superior experience for consumers to buy hair care products. Today Ulta is marching toward 1000 locations and its salon business has never been stronger. And factor in Amazon that has virtually every hair care brand on earth priced well below retail.

While all this is going on, what are our industry leaders (such as PBA) doing about it? You guessed correctly. They still flock to the trade shows and trumpet the virtues of education while the only ones attending are rushing to the flea markets in the back of the show with their empty roller bags. They still honor someone at the City of Hope dinner at Cosmoprof just like those diners on the Titanic who were raising their champagne glasses before the tragic accident.

The true winners in all this are L’Oreal, Sally/BSG and Ulta. I always applaud winners (unless they wear maize and blue). And I see them keeping on winning with no one to stop them.

For us, life is good. When you have $50 billion in sales between the winners, it only takes a few crumbs to make me happy. Over the past few years those crumbs turned into cookies, then cakes and suddenly we have a bakery. Our assortment has never been better and our customers love us for what we do for them. But when it comes to the hair care business, we need to keep the independent salon owner alive. One hint for them: Support independent distributors and manufacturers.

Happy Friday!

Out Of My Mind On A Friday Mornin’

What is your favorite Mexican food/beverage?

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WOW, where did the week go? OK, I will admit I finally took a few days off in sunny Mexico. I don’t have a laptop and my iPhone doesn’t have international access so when I’m gone, I’m gone. We stayed south of Cancun in the hot tourist area called the Maya Riviera nearby the new hot town Playa Del Carmen. Although Mexico is rife with drug, government and police issues, this part of Mexico is calm and collected. The weather is always good and the Mexican people are ultra friendly and love to take care of their guests.

What’s better than fresh guacamole and tortilla chips? Mexico is famous for their hot sauces and we had a variety to choose from. They have no such thing as “Pace” (the American version of salsa) as everything they make is fresh and homemade. I especially love the pablano pepper sauce, red sauce and Mexican salsa. But after a few days of eating it for breakfast, lunch and dinner (you can’t help it), you can’t wait to get home so you can stop eating it.

The Hospitality industry in Mexico is quite diverse and all of the major players are now situated in this part of Mexico (Four Seasons is working on taking over a failed Viceroy development). While most of the larger properties are all-inclusive, there are many properties that have opened in the past few years that are not. I will admit my days of standing in the swimming pool with a beer in my hand and a cooler of them poolside are long gone (actually they never happened although a good Peña Colada was my weakness). Add that, blaring music, non-stop activities and food that never stops either, all-inclusive resorts are quite hectic. The newer resorts are quiet and while they allow kids, you can relax if that is your goal.

With all the TSA precautions going on at USA airports, how is it the Cancun airport which is among the most ultra-modern in North America, not only allows you to keep your shoes on going through the x-ray, you don’t have to worry about being searched or going through one of those new scanning machines either. They are truly tourist-friendly.

I tried tasting Tequila one night with the BUB. We got the grand idea during the day since the resort put a small bottle in our room with limes and salt. We opened the bottle, poured a large shot and got the limes ready. But since it was a good quality Tequila (like Patron), we decided sipping was better than doing shots. We each took a sip and immediately had the look of disgust on our face like “who can drink this?” Of course we tried another sip but after that, the Tequila was tossed out. I decided you either do Tequila shots with lime and salt or mix it. But you really don’t want to taste the stuff.

Hopefully by now you have received both thebeautybook Spring 2011 edition and The Industry Source magazine Jan/Fed edition. So far the response has been great to both.

An interesting article came out today that L’Oreal is vulnerable to a take-over and that management is deciding what it can do to prevent it from happening. I know I mentioned this fact in 2010, but the more the rumors float, the more they come true. It is still hard to believe anyone could buy L’Oreal.

I’m ready to start my video blog next week and as promised will be focusing on new products. The video blog will feature Amy B. who will be my spokesperson showing off the products.

The Detroit North American Auto Show starts tonight with the charity preview. Compared to the past few years, this show will be splashier, more extravagant and a lot of players are back such as Porsche. Optimism in the auto industry is very high right now with all 3 American companies riding strong. The question is will they learn from their previous mistakes. Union contracts are due later this Fall and one thing is for certain, no company can afford any mistakes at this point. And for Michigan, let’s be happy the auto industry is improving but let’s still move forward with the grand plan to remake this state without auto industry boom and bust cycles.

Happy Friday!

Out Of My Mind On A Friday Mornin’

What is your favorite Mexican food/beverage?

View Results

WOW, where did the week go? OK, I will admit I finally took a few days off in sunny Mexico. I don’t have a laptop and my iPhone doesn’t have international access so when I’m gone, I’m gone. We stayed south of Cancun in the hot tourist area called the Maya Riviera nearby the new hot town Playa Del Carmen. Although Mexico is rife with drug, government and police issues, this part of Mexico is calm and collected. The weather is always good and the Mexican people are ultra friendly and love to take care of their guests.

What’s better than fresh guacamole and tortilla chips? Mexico is famous for their hot sauces and we had a variety to choose from. They have no such thing as “Pace” (the American version of salsa) as everything they make is fresh and homemade. I especially love the pablano pepper sauce, red sauce and Mexican salsa. But after a few days of eating it for breakfast, lunch and dinner (you can’t help it), you can’t wait to get home so you can stop eating it.

The Hospitality industry in Mexico is quite diverse and all of the major players are now situated in this part of Mexico (Four Seasons is working on taking over a failed Viceroy development). While most of the larger properties are all-inclusive, there are many properties that have opened in the past few years that are not. I will admit my days of standing in the swimming pool with a beer in my hand and a cooler of them poolside are long gone (actually they never happened although a good Peña Colada was my weakness). Add that, blaring music, non-stop activities and food that never stops either, all-inclusive resorts are quite hectic. The newer resorts are quiet and while they allow kids, you can relax if that is your goal.

With all the TSA precautions going on at USA airports, how is it the Cancun airport which is among the most ultra-modern in North America, not only allows you to keep your shoes on going through the x-ray, you don’t have to worry about being searched or going through one of those new scanning machines either. They are truly tourist-friendly.

I tried tasting Tequila one night with the BUB. We got the grand idea during the day since the resort put a small bottle in our room with limes and salt. We opened the bottle, poured a large shot and got the limes ready. But since it was a good quality Tequila (like Patron), we decided sipping was better than doing shots. We each took a sip and immediately had the look of disgust on our face like “who can drink this?” Of course we tried another sip but after that, the Tequila was tossed out. I decided you either do Tequila shots with lime and salt or mix it. But you really don’t want to taste the stuff.

Hopefully by now you have received both thebeautybook Spring 2011 edition and The Industry Source magazine Jan/Fed edition. So far the response has been great to both.

An interesting article came out today that L’Oreal is vulnerable to a take-over and that management is deciding what it can do to prevent it from happening. I know I mentioned this fact in 2010, but the more the rumors float, the more they come true. It is still hard to believe anyone could buy L’Oreal.

I’m ready to start my video blog next week and as promised will be focusing on new products. The video blog will feature Amy B. who will be my spokesperson showing off the products.

The Detroit North American Auto Show starts tonight with the charity preview. Compared to the past few years, this show will be splashier, more extravagant and a lot of players are back such as Porsche. Optimism in the auto industry is very high right now with all 3 American companies riding strong. The question is will they learn from their previous mistakes. Union contracts are due later this Fall and one thing is for certain, no company can afford any mistakes at this point. And for Michigan, let’s be happy the auto industry is improving but let’s still move forward with the grand plan to remake this state without auto industry boom and bust cycles.

Happy Friday!

Peel’s Beauty Supply Sells Due to Estate Taxes

Are you done shopping for Christmas?

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One would have to go back to Cleopatra days to find a beauty distributor that started before Peel’s. Without consulting a history book, I think if they hung around another 4 years, they would have celebrated their 100th anniversary.

Peel’s joins the chorus of other family-owned distributors that have decided enough is enough. In this instance, Peel’s claimed that the estate taxes going up after the first of the year was the culprit: The family could not justify paying 55% estate taxes and handing off the business to their kids to pay the taxes.

I’m not going to expel on the whole notion of estate taxes but it is worthy to understand that is the reason for the sale. Both Essie and OPI sold this year along with Aerial and Schoneman, perhaps their reasons were the same.

L’Oreal picked up Peel’s and it’s now #1 L’Oreal doing battle with #2 Sally Beauty Holdings for the business. Boutique distributors and brands will continue to be around until they too get to a size that makes it worthwhile for an acquisition.

While the Peel’s family is staying on, their culture will change. We have seen the transformation in virtually every instance.

My question is “Is this the end of legacy independent businesses?” Sure there are still thousands of such businesses around but the likes of public companies such as P&G, Unilever, L’Oreal and Henkel make it very difficult to be independent. After all, these are legacy businesses that will be around a very long time.

What’s ironic is at this very moment powerhouse L’Oreal, a $26 Billion company, is fighting for it’s life. That’s right. Nestle owns 30% of the company and wants the rest. Can you imagine? But it could be a tasty acquisition: Buy a bottle of Biolage and get a Nestle Crunch bar free (King Size please).

One thing for certain with the stock market heading higher is that acquisitions in 2011 will intensify. There isn’t much left in the pro beauty business field to pluck (we aren’t selling) so the likes of ULTA become attractive.

While I never had any dealings with the Peel’s family, they will be missed. It’s sort of the end of a bygone era with a whole new era being ushered in. I got my FLIP camera, Facebook-Twitter-YouTube infantry, and other new media resources for this era. Steve Jobs has made the life of people simpler and with the introduction of his new iPad2 in 2011, we are going to see things we have never dreamed about.

New era, new media, new iStuff, new year. Hey, it’s still fun to be independent, damn the estate taxes.

Happy Tuesday!

Peel’s Beauty Supply Sells Due to Estate Taxes

Are you done shopping for Christmas?

View Results

One would have to go back to Cleopatra days to find a beauty distributor that started before Peel’s. Without consulting a history book, I think if they hung around another 4 years, they would have celebrated their 100th anniversary.

Peel’s joins the chorus of other family-owned distributors that have decided enough is enough. In this instance, Peel’s claimed that the estate taxes going up after the first of the year was the culprit: The family could not justify paying 55% estate taxes and handing off the business to their kids to pay the taxes.

I’m not going to expel on the whole notion of estate taxes but it is worthy to understand that is the reason for the sale. Both Essie and OPI sold this year along with Aerial and Schoneman, perhaps their reasons were the same.

L’Oreal picked up Peel’s and it’s now #1 L’Oreal doing battle with #2 Sally Beauty Holdings for the business. Boutique distributors and brands will continue to be around until they too get to a size that makes it worthwhile for an acquisition.

While the Peel’s family is staying on, their culture will change. We have seen the transformation in virtually every instance.

My question is “Is this the end of legacy independent businesses?” Sure there are still thousands of such businesses around but the likes of public companies such as P&G, Unilever, L’Oreal and Henkel make it very difficult to be independent. After all, these are legacy businesses that will be around a very long time.

What’s ironic is at this very moment powerhouse L’Oreal, a $26 Billion company, is fighting for it’s life. That’s right. Nestle owns 30% of the company and wants the rest. Can you imagine? But it could be a tasty acquisition: Buy a bottle of Biolage and get a Nestle Crunch bar free (King Size please).

One thing for certain with the stock market heading higher is that acquisitions in 2011 will intensify. There isn’t much left in the pro beauty business field to pluck (we aren’t selling) so the likes of ULTA become attractive.

While I never had any dealings with the Peel’s family, they will be missed. It’s sort of the end of a bygone era with a whole new era being ushered in. I got my FLIP camera, Facebook-Twitter-YouTube infantry, and other new media resources for this era. Steve Jobs has made the life of people simpler and with the introduction of his new iPad2 in 2011, we are going to see things we have never dreamed about.

New era, new media, new iStuff, new year. Hey, it’s still fun to be independent, damn the estate taxes.

Happy Tuesday!