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Direct-to-consumer (DTC) brands were heralded as beauty sector disruptors, ripping up the retail playbook. But, as the bubble begins to burst and many of the indie darlings enter wholesale, another left-field approach is gaining momentum — professional distribution.
At clean cosmetics company Jane Iredale, its longstanding pro division accounts for 54 per cent of new customer acquisition, up from 21 per cent in 2022. Actor Tracee Ellis Ross’s haircare line Pattern Beauty added a pro channel in July, around the same time as indie curl care line Briogeo.
Well-known names such as Dermalogica and Skinceuticals have long traded on their professional network and spa and medi-spa distribution, but now younger brands are joining the fold. “Supporting an expansion into salons is a huge endeavour, and requires so much in terms of resourcing, education and support and development for stylists,” says Nancy Twine, Briogeo’s founder and CEO. That was out of Briogeo’s reach as a small company, which, in part, prompted Twine to sell her business to Wella Company in 2022. “We knew they could help us take this on,” she says.
Marko Horvat, managing director of beauty and personal care at investment bank Financo Raymond James, views pro distribution as a strong marker of credibility, but says that “there needs to be a clear strategy”. Tracey Woodward, a board advisor whose career has included stints at Aveda, Aromatherapy Associates and Urban Retreat, agrees. “The product has to perform in the hands of the professional,” she says. “The story has to be right to engage a high level of engagement, and then it has to perform when the consumer takes that product home.”
As Briogeo’s Twine points out, professional distribution brings its own challenges, and success is not guaranteed. At haircare brand Olaplex, for example, professional sales have historically made up around half of its business, but were down 61 per cent in Q2 2023 compared to the same period last year, which the company attributes to vendors right-sizing their inventory positions.
New forms of expansion
For hair tools and products brand Nicky Clarke, professional distribution provides an opportunity to rebrand. Managing director Robin Young explains how the company previously licensed its name to a third party that manufactured, distributed and sold hair tools to consumers at a mass price point. “Now, we’ve taken the licence in-house again, we finally have the chance to do it our way,” he says. Nicky Clarke is still 100 per cent founder-owned, by Clarke and his business partner Lesley Clarke, who also own and operate an ultra high-end salon in London frequented by royals and celebrities.
Young says it never made sense to have a super-luxe salon alongside hair tools sold in drugstores. Relaunching as a purely pro brand allows a reset of image. The company is looking to the US through a partnership with professional distributors Salon Centric and hopes to recruit stylists to use its first new tool, a $300 super-light blow dryer designed for professionals, at New York Fashion Week.
Aurelian Lis, global chief executive officer of professional skincare line Dermalogica, says the addition of a pro channel offers another means for brands to expand without developing high-risk new categories. “You do see successful examples of brands expanding from say, skincare to haircare, but quite often, these expansions don’t really work and it’s a very big undertaking for the company,” he says.
He notes that the support of a loyal professional base can help companies weather the trend and mood shifts of consumers. “There’s a plethora of brands and products out there, consumers are really spoilt for choice. But, by being trusted by professionals, and being the brand they use in treatments or recommendations, it means you’ll always have that halo effect of real expertise.”
Professional distribution also opens the way to more ambassadors, argues Horvat of Financo Raymond James. “A huge segment of consumers want recommendations from trusted experts, and they’ll go with what the expert recommends.” Tory Mountford, professional sales director at skincare brand Murad, says many aestheticians in the Murad network share client results over a period of months, not just immediate before-and-afters. “For skincare, it’s so powerful if people can see how the products have improved a client’s skin in the long term,” she says. That turns the flywheel for more clients for the aesthetician as well as more sales for the brand. The professional division is about 25 per cent of its overall business.
Selling products in salons and spas is also compelling for the proprietors — McKinsey estimates that the margins on a beauty product are between 55 to 80 per cent, compared to 5 to 20 per cent on a service.
Engaging with professionals
Winning over professionals takes a lot more than a backbar sized shampoo and some branded aprons. Professionals want more education to further their development, products that consumers genuinely want to purchase, and results they can rely on — their livelihoods are potentially at stake with any treatment that goes awry. “The products have to be genuinely differentiated or have a real value proposition,” cautions Horvat of Financo Raymond James, saying professionals are not easy to fool. To that end, brands like Murad and Dermalogica offer pro-strength products alongside larger sizes of regular ones.
Dermalogica’s Lis estimates that Unilever-owned Dermalogica trains around 100,000 aestheticians a year through its education pathway for post-graduates, teaching them further facial care and how to advise clients on skincare routines. The company has 80 full-time educators on staff in the US alone, while around 40 of its 100 SKUs are professional-grade only. There are further benefits for aestheticians in Dermalogica’s network, says Lis: they can sell consumer products to clients, creating another revenue stream, important for freelance or small-business practitioners. Around half to a third of Dermalogica’s business is led by the professional side, says Lis.
A professionally targeted range can help solve pain points for the practitioner, argues Jane Iredale CEO Chris Payne. Jane Iredale cosmetics are designed to be especially gentle on the skin, making them suitable for use after intensive procedures like laser or chemical peels. “If a client has a treatment and then has to go out in public with a really sore, red face, she’s likely going to have a negative connotation with that experience and may not repeat it, resulting in a loss for the aesthetician,” he says. “But, if the aesthetician can do a little cosmetic application at the end with safe-to-use products so she feels really good leaving, that’s a different story. It’s almost like insurance for the practitioner’s reputation.”
“You have to enrich [the professional’s] life somehow,” says board advisor Woodward of creating a value proposition. Stylists, estheticians and practitioners have to feel like they’re part of a community. “There’s a lot of isolation and long, physical labour involved in the beauty services industry,” she observes, noting that practitioners often end up as conduits for their client’s moods, and that their satisfaction has a material impact on practitioners’ wellbeing and reputation.
Resourcing challenges
The challenge of building and maintaining a professional channel is significant. “Suddenly, you’re dealing with a large and disparate network of quasi-retailer partners. It’s very different to traditional retail,” says Horvat, of Financo Raymond James. “It’s more like hand-to-hand combat, because you’ll have hundreds or thousands of small accounts, individually ordering products on an irregular basis. You have to deal with managing churn, appropriate incentive structures and a sales infrastructure.”
“We have to ensure all the providers in our network truly understand our brand, our story and our values to be able to pass that on to clients,” says Murad’s Mountford, adding that education is a large part of the focus. Agile thinking helps — on noticing that dentists were becoming more popular aesthetic providers due to their ability to perform injectables and facials in their clinics in the UK, Murad is moving to launch a new chemical peel at a strength that dental professionals can also use.
Briogeo’s Twine believes the brand’s pro business can be as large as its business via DTC stores Sephora and Ulta. “But, to get there, we’re going to have to really start thinking about salons from a global perspective,” she says.
It’s high risk, high reward. “If you’re able to engage with stylists and get them to be giving that professional recommendation, there’s almost nothing more powerful than that,” says Marko Horvat. “But, for the professional, the risk profile is asymmetric. If something goes badly, they’re on the line. The quality has to be there.”
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