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P&G Wants Another 3%

Yesterday I wrote about the 1-2 competitive landscape for most industry's. One I didn't mention was P&G and L'Oreal. P&G is twice the size of L'Oreal and owns brands such as Pantene, Tide, Crest, Olay, Clairol, Wella, Sebastian, Bounty and Charmin (remember Mr. Whiffle?).

L'Oreal owns brands such as Garnier, Matrix, Redken, Pureology, L'Oreal Paris, Plentitude, Lancome, Preference, Excellence, Kiehl's,  and Studio Line.

Together, they own the majority of the professional beauty retail and color products sold. However, their numbers dwarf those they do in retail.

It's no wonder that most pro products are available in most retail and Internet outlets. Question is, is there really a distinction between pro and retail products? Do salon owners care that P&G and L'Oreal are crushing the industry?

Apparently many care more about ULTA. ULTA has more than 300 stores including their newest flagship in downtown Chicago on 3 levels. ULTA passed the $1 billion mark (Pantene does more than $2 billion alone). ULTA figured out how to put retail AND pro products into one store and glamorize the whole thing. ULTA carries virtually every brand of pro products plus thousands more in the retail sector.

So the battle cry is that if ULTA sells it, we don't want it. Never mind that the same owners continue to use P&G and L'Oreal brands at the back bar which are among ULTA's biggest vendors. And you know what's even funnier? Most salon's biggest selling retail line is Kerastase, another L'Oreal brand. And the other biggest selling brand? Bumble & Bumble, owned by Estee Lauder who also own Aveda, MAC, Clinique, and Origins.

Just recently P&G announced their newest CEO. His focus: Beauty. P&G wants to eat L'Oreal's lunch. P&G claims that over $1 billion a year is lost in salon retail sales each year due to consumers buying salon products at retail. This is a strange statement coming from a company that makes its money in retail. Further, they want to increase their salon market share by 3 points equivalent to the $1 billion lost (they figure they will come in and clean up).

They have the money, resources, strategy, R&D, and people to do whatever they set to accomplish. The question becomes: What is the future of the salon industry? Will salon owners wake up, stand up and yell as loud as they can: THIS IS OUR BUSINESS AND STAY FAR AWAY FROM IT OR ELSE!

Or else what? Doing business with P&G and L'Oreal is tricky. They lure owners with massive education, trips to NY and LA, online seminars from the likes of Michael Cole, offer free back bar, free capes, free this, free that, and loyalty points. They spend money advertising so people will buy the products. It's like a drug addict needing cocaine but knows the perils. How to wean the addict; how to wean the salon owner?

P&G's 3% will become 6% and do you think L'Oreal is going to sit around doing nothing? The game changer moment is here and the future of our industry is at stake.

Where are we going to go from here? I have an idea for tomorrow.

Happy Tuesday!

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