Last January, Shiseido announced that it had acquired the American natural cosmetic brand, Bare Escentuals, for 1.7 billion dollars - roughly 3 times its annual turnover ($ 556 million in 2008). The success of the brand is based on a number of factors -
some of which are analysed in the NBSE Report 2009:
- The identification of the brand with its current CEO, Leslie Blodgett.
- The brand's positioning - that of a pioneer in natural makeup - with the launch of bareMinerals in 1995
- Close attention paid to consumers - the brand engages its clients in a real dialogue using various points of contact.
- The choice of a distribution strategy that breaks away from all the codes of the profession:
- When she took over the brand (which at that time had a range of bath and body products) in 1994, its turnover was significant only during the holiday season. The first break away was to use television as a means of distribution. By appearing on QVC in person, Leslie Blodgett made a twofold impact: She carved a niche for herself on a fast-growing channel (the second time she appeared, her turnover attained $180,000 in 10 minutes, the third time, she sold $400,000 in 20 minutes, and the "one hour" appearances helped her to sell $1.4 million) AND she personalized the brand around her own image. This strategy took shape when QVC offered Bare Escentuals the opportunity for live broadcasts - and thereby made possible a direct contact between the brand, its CEO and its clients.
- That was the origin of the second break away: The choice of a "community based" distribution. Leslie Blodgett set up direct distribution channels (such as itinerant stalls in shopping malls / cruise ships / buses ...) allowing direct contact between consumers, the brand ... and its charismatic CEO.
- Bare Escentuals was one of the first beauty brands to use the Internet to market refills... and its products - and thereby expand its network of consumers. Other than its own website, the brand is one of the bestsellers on Amazon.com.
- In 2001 she developed an Infomercial strategy - with a frequency of 250 per week (which now accounts for 1 / 3 of turnover)
- After having bypassed the usual distribution channels in this way, and once success was guaranteed, Bare Escentuals started selling at Sephora, Ulta, Macy's, Nordstrom ... and also opened boutiques in its own name (121) where it offers the complete collection.
Today Bare Escentuals realizes its turnover from retail (shops + spas + Sephora, Ulta, Macy's etc. ... 60%), through infomercials, internet and television (28%) and the rest from overseas sales (12%). It generates an operating margin of 31.5% - which is from 2 to 3 times more than its competitors. I cannot help but admire this business model:
you have to know how to break the codes in order to create, from scratch, the 46th most important cosmetic company in the world (source WWD). As Michael Porter says: "
The only way to [achieve] a sustainable competitive advantage [is] by operating at lower cost, by commanding a premium price, or by doing both. Cost and price advantages can be achieved in two ways. One is operational effectiveness – doing the same things your competitors do but doing them better. ….. The other way to achieve advantage is strategic positioning – doing things differently from competitors, in a way that delivers a unique type of value to customers."
