My marketing consulting/product development firm reviews hundreds of prospective consumer products from every category imaginable, each and every year. Sporting goods, specialty foodstuffs, auto accessories, juvenile products, toys, games, shoes, jewelry, ready to wear and health and wellness products are only a short list of types of items we review for funding and market launch potential. I am often asked what is the space most easily penetrated by entrepreneurs?
This question invariable pops up almost every time I lecture at a university or am interviewed by media. I used to be a bit arbitrary, almost opaque in answering. However, over the years the answer has come into sharp focus. The beauty product industry must be at the top of any list of entrepreneurial sweet spots for successfully launching and growing a start-up business.
Since Biblical times perfumery has been a highly desired artisan industry. Local flora and fauna have been compounded into scents and potions that add beauty to the human body, the atmosphere and religious worship. Cleopatra was famous for her fragrant baths, the Bible is full of references to sacred fragrant oils and in modern times the fragrance industry has matured into an international, multi-billion dollar business.
And yet, every year, inspired entrepreneurs bring new scents to market. Aromatherapy has boomed as the science and awareness of the mental and wellness benefits of specific aromas has been researched. The process of creating a completely new scent, packaging, branding and delivering the consumer a product that offers a different fragrance perspective has never been easier.
One of the great entrepreneurial commercial success stories in the history of the perfume industry was the story of Giorgio. The eponymous fragrance was born in a single Rodeo Drive boutique, Giorgio’s, in Beverly Hills in the 1980’s. The scent, a clear break with popular fragrances of the time, was overwhelmingly powerful. The distinctive top note made the boutique a destination for shoppers as word of mouth travelled quickly about the unique warmth of the dried down fragrance notes of Giorgio.
The Company did not have the necessary funds to launch nationally with major department stores. The owners decided to do a bit of guerrilla marketing. They started to place scent strips impregnated with the Giorgio scent inside of local magazines targeting high end consumers. The power of the scent leached from the magazines and newsstands became fragrance cocoons for the Company. Mail order sales exploded, the campaign was quickly expanded to national women’s fashion magazines and a direct mail business was set up solely to fulfill consumer demand.
Soon the major department stores were falling all over themselves to stock and promote the Giorgio line. The Company was able to negotiate from a position of real strength and demanded, and received, prime space and location in every store that carried the brand. Sales exploded, the product became an international sensation, a key item in duty free shops and eventually was bought by consumer product kingpin Procter & Gamble.
Giorgio is an extreme example of commercial success. Nevertheless, if one were to examine the most popular fragrance, skin care, color cosmetic, bath and body lines and cosmetic accessories lines sold in various classes of trade (department store, mass merchant, drug store, etc.) from 1950, 1970, 1990 and 2009, the researcher would be surprised by the churning of brands that rose and fell.
Hazel Bishop was one of the most popular cosmetic brands of the 1950’s. Rose Milk was a wildly popular body care product of the 1970’s. Indian Earth was the flavor du jour of makeup products in the 1980’s. Chen Yu was the original classic nail care line after World War II. Francis Denny, Germaine Monteil, Imperial Formula and Alexandra de Markoff were popular specialty store skin treatment brands. All were founded by entrepreneurs, enjoyed widespread distribution, commercial success, fell from grace, and were replaced by a newer generation of entrepreneurial products.
The beauty industry has relatively low barriers to entry. Private label laboratories exist in every area of the country and are eager to satisfy creative demands of new entrepreneurs with fresh product concepts. The ability to bootstrap a product or line exists in the cosmetic industry as in virtually no other. Limited amounts of capital can be leveraged and made to go a long way.
Competition is, of course, very stiff. But competition is brutal in every mature industry. However, in the cosmetic business, there is an insatiable demand for new, exciting, and different products. The industry is huge, but the opportunity to identify and fill tiny niches is virtually limitless for entrepreneurs willing to commit to their concepts.
Take a stroll through a Sephora or Ulta store. Virtually every product stocked in these beautiful retail venues was crafted and branded by an entrepreneur in the recent or distant past. Estee Lauder is one of the world’s great brands. However, Mrs. Lauder started in the early 1950’s making a single cream in her apartment. The hugely successful professional beauty salon brands Redken and Matrix were created and nurtured by Jherri Redding and Arnie Mitchell respectively. They are mighty today, but they were like tiny mustard seeds at birth before evolving into industry icons.
The rise of the internet, direct response, electronic retail, specialty retailers and mall kiosks has changed the landscape for selling all types of consumer products. Today’s cosmetic entrepreneur has more opportunity to penetrate the marketplace than ever before. The beauty of the beauty business is that the truly inventive can enter this marketplace and grow their opportunity at their pace, with limited capital and enjoy a real chance for a successful outcome. This cannot be said about many business opportunities.