Amazon Enters Pro Beauty Space

Which FANG company could you not live without?

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It’s official: Today, June 24, 2019, Amazon.com entered the professional beauty space and is now selling to licensed salon professionals through their Amazon Business platform. To get pro pricing, you have to belong to Amazon Business and submit your license. No doubt they will manually verify each and every application and most likely, have already established ties to each state government cosmetology body. No one does business like Amazon.

The good, bad and the ugly.

But before I go there, today’s announcement is years in the making and I predicted this day nearly ten years ago. I recall vividly having my annual vendors charity weekend in 2005 telling everyone they needed to have their goods on Amazon and if not, they would sell  your competitor’s brands. Everyone shook their head like I was on crack cocaine.

Amazon started to enter the pro industry with its Luxury Beauty platform. It signed up plenty of pro beauty companies along with consumer companies. Essie and Zoya were first to sign up for nails. Eventually CND, OPI, Moroccanoil, Redken, Oribe and 100’s of others would join. Interesting enough, Harlan Kirshner was the ring leader for Amazon getting pro beauty companies to sign up or lose out. Ironically, the pro beauty industry’s biggest rep who calls on SBH (Sally Beauty Holdings), Salon Centric and Ulta and makes $$$$ in commissions, played the Amazon side and got many companies to sign up. Harlan is one reason why we don’t see rep groups anymore.

With so many companies part of Luxury Beauty, Professional Beauty was the next step in Amazon’s dominance of all beauty. Today SBH stock is down more than 15% to a new low of $12.47 as I write this. Ulta is down too but that is because Ulta stock sellers don’t understand Ulta’s business strategy. Ulta will continue to best Amazon in beauty for many reasons, none of them part of this blog. But SBH like I have mentioned several times before is vulnerable, especially Cosmoprof because Amazon is focused on their best-selling brands: Redken, Wella and OPI.

OK, here is the GOOD of today’s announcement:

It’s done and now all the players can move on. Salons and spas have been buying on Amazon for years and really the only thing affected are retail and hair color products which will now be available at wholesale costs. Next week we will see what discounts are offered. What is also good is that Amazon is an open book, you can see their strategy right in front of you and you can either ignore it or take advantage of it. One thing is for certain: SBH is the most vulnerable beauty company right now.

The BAD of today’s announcement:

Amazon took the relationships of the pro beauty industry and said good-bye to them. Amazon bet big time the industry doesn’t need sales reps, education, trade shows, stores, sampling and demos. Just think of the savings. And if licensed professionals like it this way, bad news for reps and stores.

The UGLY of today’s announcement:

If you think about it the pro beauty business is only 40 years old and how fitting for Amazon to announce in 2019, nearly 40 years to the day when Matrix and Paul Mitchell started. In retrospect, that is an awfully short time for an industry to come and go and that is ugly. Right now Paul Mitchell is not part of the Amazon story and is arguably the largest pro hair care company left (and still independent). Will it become “us vs. them” mentality? In the end, Amazon wins on convenience and next day shipping (they are testing two hour delivery in Denver and other key cities). Coty went all in and soon we will see what that decision means for the rest of the industry.

Bottom line: Business as usual. Coty and L’Oreal will ship a few more goods to Amazon’s DC’s and fewer goods to SBH’s DC. But in the end, overall usage of pro beauty products doesn’t change and since Amazon Pro Beauty is only good for licensed individuals, Ulta will continue to gain overall market share.

Happy Monday! 

Happy New Year!

What are your thoughts on the economy in 2019?

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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!

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!

Lots Of Luck With Loxabeauty.com

What are your thoughts on the economy in 2014?

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Desperate times call for desperate measures. It doesn’t take a rocket scientist to understand the professional hair product business is dead in the water. Even L’Oreal masters of the universe with their Kerastase brand among others just reported negative growth in the USA. Regis the largest operator of salons in the USA continues to report declining retail sales numbers. TIGI resorted to selling an off-label to Sally. It’s no secret either that Ulta continues to enjoy healthy growth in its business (albeit they sell a whole bunch more than hair care products). Ulta’s arch enemy, Sally Beauty Holdings (SBH), thinks it has the answer to Ulta: Loxabeauty.com.

According to SBH’s CEO Gary Winterhalter, loxabeauty will be BSG’s (they own more than 1000 Cosmoprof stores and employ nearly as many DSC’s) solution to helping salons compete against Ulta and retailers. The premise which has yet to be unveiled goes something like this: BSG gets sign-off from its major vendors to sell goods to consumers. Winterhalter already has Paul Mitchell, Kenra and a host of others lined up. The BSG DSC goes into a salon and most likely has the salon owner complete an application for the website including stylists names, name of salon and other vital facts.

The client goes into a salon, gets the service wanted and then the front desk manager gives the client a business card or such and the pitch, “We can offer you more than 3000 salon products and have them shipped directly to your front door. Just go to loxabeauty.com and enter this code on the card (the code is the salon code). All products will be shipped to you from our supplier and we endorse everything.” If the client goes home and makes a purchase, both the salon and stylist will receive commission.

For the salon owner, no more inventory to stock and a full assortment of products for their clients. Win-win, right? At least that is what Winterhalter thinks.

In the real world, Amazon has more than 10,000 salon products available at discount prices with free 2-day shipping to its Prime customers. And customers can buy any brand including brands BSG doesn’t sell such as Kerastase, Oribe, Bumble and Bumble and virtually every brand under the sun. And there are hundreds of other sites to buy beauty products. But alas, BSG is more concerned with Ulta than anyone else and Ulta cannot sell pro hair care products online (yet).

The other thing wrong here is that virtually every mass retailer has a full selection of pro beauty products. CVS, Walgreens and Rite Aid alone have more than 20,000 stores crammed with pro beauty. And they have virtually every brand BSG sells.

Bottom line is that this concept is as old as Ivory Soap. Some vendors today have their own consumer websites and give commissions back to salons. None of them work.

You at least have to give Winterhalter credit for thinking about the problem. But when it comes to hair care products for retail, it’s only a problem for BSG because that is their business. For every other business it is just one of hundreds of product categories.

I have a better idea and the timing is right. In fact, it’s perfect for the next generation of salons. I’ll talk more about it in my next blog.

In the meantime, there is one line that loxabeauty.com won’t have on its website and it’s the same brand not available at Ulta: Moroccanoil. Thank God for small miracles.

Happy President’s Day!

Out Of My Mind On A Monday Mornin’

Out Of My Mind On A Monday Mornin’

When are you buying the iPhone 5?

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Week 2: MSU 41, CMU 7. Spartans now ranked #9 according to AP. Next up: Notre Dame. Big game Saturday night at Spartan Stadium. Can the Spartan’s make it 16 in a row at home? One note of interest was that this was MSU’s first appearance at Central. The game had a record attendance of more than 35,000 and both marching bands joined in at the end of halftime. Very cool.

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Both the LIons and Wolverines were lucky to pull out victories. Let’s see what happens when they play quality teams. And yes, it has been a while since Spartan’s had bragging rights.

My yoga teacher today repeated a well know proverb, “How you do anything is how you do everything.” One of the best.

Beauty Buzz is less than a month away, hard to believe. It’s going to be a fabulous program and a huge fundraiser for the American Cancer Society. It is October 7, 4-6PM at the Motor City Casino Hotel Sound Board. Visit for more info.

Over Labor Day, Carter came in to visit. Now 7 months old and already eating real foods and standing up. It is very cool watching the growing up process all over again. All of a sudden, 18 years from birth to college doesn’t sound like a long time.

IMG_1367

Mitch Albom has yet another book out, this one about time, The Time Keeper. I have not read the book but it starts out about the person who actually decided to come up with a way of keeping track of time. This lead to a day, week, month and year concept. Albom discusses what it would be like if we had no calendars, no watches and no time to pay attention to. What I have always found fascinating about time is that everyone complains they never have enough of it. But when it comes to finding time to do things they really want to do like go on vacation, people always find the time for that. One subject that Albom recently wrote about in the Sunday Free Press is how time eludes us quickly and there is a reason why we don’t live forever. One comment he made that resonates is why do we want more time? So many people are in a routine and they don’t want to step outside that routine even for important events. Time marches on, it’s what we do with it that counts.

Moroccanoil Body hits salons and spas this month. Premium retail line, premium pricing and premium packaging. Retail prices range from $10 to $52. It will be interesting to see which, if any, argon oil hair care companies follow suit.

ULTA announces record earnings and store revenue once again driving the stock to over $100 a share.

Joico is updating its entire line with new packaging for 2013. The current packaging never took off and word is that the new packaging will feature brighter and bolder colors. Hmm, wonder if ULTA buyers had a say in this?

Jan Arnold is the mastermind behind Shellac and the co-founder of CND. Jan is hosting perhaps her last really big Shellac class in Detroit October 8. The event has sold out but we have added another 50 tickets due to demand. If you are into gel color, then this class is a must. You will be amazed at what you can do with Shellac and a few nail art items to create amazing nails.

Wednesday Apple will unveil the iPhone 5. This will be the most incredible smart phone of all, at least for the next few months. Larger screen, 4LTE technology, perhaps NFC technology (to scan credit cards without taking them out of your purse or wallet), navigation that talks while you drive, online music streaming (good-bye Pandora) and a whole bunch of more stuff that we didn’t know we needed. The iPad Mini will be even more fun.

Happy Monday!

Out Of My Mind On A Monday Mornin’

Out Of My Mind On A Monday Mornin’

When are you buying the iPhone 5?

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Week 2: MSU 41, CMU 7. Spartans now ranked #9 according to AP. Next up: Notre Dame. Big game Saturday night at Spartan Stadium. Can the Spartan’s make it 16 in a row at home? One note of interest was that this was MSU’s first appearance at Central. The game had a record attendance of more than 35,000 and both marching bands joined in at the end of halftime. Very cool.

IMG_1380

Both the LIons and Wolverines were lucky to pull out victories. Let’s see what happens when they play quality teams. And yes, it has been a while since Spartan’s had bragging rights.

My yoga teacher today repeated a well know proverb, “How you do anything is how you do everything.” One of the best.

Beauty Buzz is less than a month away, hard to believe. It’s going to be a fabulous program and a huge fundraiser for the American Cancer Society. It is October 7, 4-6PM at the Motor City Casino Hotel Sound Board. Visit for more info.

Over Labor Day, Carter came in to visit. Now 7 months old and already eating real foods and standing up. It is very cool watching the growing up process all over again. All of a sudden, 18 years from birth to college doesn’t sound like a long time.

IMG_1367

Mitch Albom has yet another book out, this one about time, The Time Keeper. I have not read the book but it starts out about the person who actually decided to come up with a way of keeping track of time. This lead to a day, week, month and year concept. Albom discusses what it would be like if we had no calendars, no watches and no time to pay attention to. What I have always found fascinating about time is that everyone complains they never have enough of it. But when it comes to finding time to do things they really want to do like go on vacation, people always find the time for that. One subject that Albom recently wrote about in the Sunday Free Press is how time eludes us quickly and there is a reason why we don’t live forever. One comment he made that resonates is why do we want more time? So many people are in a routine and they don’t want to step outside that routine even for important events. Time marches on, it’s what we do with it that counts.

Moroccanoil Body hits salons and spas this month. Premium retail line, premium pricing and premium packaging. Retail prices range from $10 to $52. It will be interesting to see which, if any, argon oil hair care companies follow suit.

ULTA announces record earnings and store revenue once again driving the stock to over $100 a share.

Joico is updating its entire line with new packaging for 2013. The current packaging never took off and word is that the new packaging will feature brighter and bolder colors. Hmm, wonder if ULTA buyers had a say in this?

Jan Arnold is the mastermind behind Shellac and the co-founder of CND. Jan is hosting perhaps her last really big Shellac class in Detroit October 8. The event has sold out but we have added another 50 tickets due to demand. If you are into gel color, then this class is a must. You will be amazed at what you can do with Shellac and a few nail art items to create amazing nails.

Wednesday Apple will unveil the iPhone 5. This will be the most incredible smart phone of all, at least for the next few months. Larger screen, 4LTE technology, perhaps NFC technology (to scan credit cards without taking them out of your purse or wallet), navigation that talks while you drive, online music streaming (good-bye Pandora) and a whole bunch of more stuff that we didn’t know we needed. The iPad Mini will be even more fun.

Happy Monday!