My marketing/product development consulting firm reviews hundreds of potential consumer products from every category imaginable each year. Sporting goods, specialty foods, automotive accessories, children’s products, toys, games, footwear, jewelry, ready-to-wear and health and wellness products are only a short list of the types of items we review for funding and market launch potential. I am often asked what is the most easily penetrated space by contractors?
This question comes up invariably almost every time I teach at a university or am interviewed by the media. Before, I was a bit arbitrary, almost opaque in my answers. However, over the years, the answer has become clearer. The beauty industry should be at the top of the list of entrepreneurial strengths for successfully launching and growing a startup business.
Since biblical times, perfumery has been a highly sought-after cottage industry. Local flora and fauna have been blended into perfumes and potions that add beauty to the human body, atmosphere and religious worship. Cleopatra was famous for her perfumed baths, the Bible is replete with references to sacred perfume oils, and in modern times the perfume industry has grown into a multi-billion dollar international business.
And yet, every year, inspired entrepreneurs bring new scents to market. Aromatherapy has exploded as science and awareness of the mental and wellness benefits of specific aromas have been researched. The process of creating an all-new scent, packaging, branding, and delivering a product to the consumer that offers a different scent perspective has never been easier.
Giorgio’s story is one of the great entrepreneurial business successes in the history of the perfume industry. The eponymous fragrance originated in a single Rodeo Drive boutique, Giorgio’s, in Beverly Hills in the 1980s. The scent, a stark departure from popular scents of the time, was overwhelmingly powerful. The distinctive top note made the shop a destination for shoppers as word of mouth quickly spread about the unique warmth of Giorgio’s dried fragrance notes.
The Company did not have the funds to go nationwide with department stores. The owners decided to do a bit of guerrilla marketing. They began placing scent strips infused with the Giorgio scent in local magazines targeting high-end consumers. The power of fragrance escaping from magazines and newsstands has become a cocoon of perfume for the company. Mail-order sales exploded, the campaign was quickly extended to national women’s fashion magazines, and a direct mail business was formed solely to meet consumer demand.
Soon, department stores are scrambling to stock and promote the Giorgio line. The company was able to negotiate from a position of real strength and requested, and was granted, prime space and location in every store that carried the brand. Sales soared, the product became an international sensation, a key item in duty-free shops and was eventually purchased by consumer products kingpin Procter & Gamble.
Giorgio is an extreme example of business success. Nevertheless, if one were to examine the most popular fragrance, skincare, color cosmetics, bath and body lines and cosmetic accessory lines sold in various classes of commerce (department store, mass retail , pharmacy, etc.) from 1950, 1970, Between 1990 and 2009, the researcher would be surprised by the churning of marks going up and down.
Hazel Bishop was one of the most popular cosmetic brands of the 1950s. Rose Milk was a hugely popular body care product in the 1970s. Indian Earth was the flavor of the day in makeup products in the 1980s. Chen Yu was the original post-WWII classic nail care line. Francis Denny, Germaine Monteil, Imperial Formula and Alexandra de Markoff were popular skin care brands in specialty stores. All were founded by entrepreneurs, enjoyed wide distribution, commercial success, fell out of favor and were replaced by a new generation of entrepreneurial products.
The beauty industry has relatively low barriers to entry. Private label labs exist in every region of the country and are eager to satisfy the creative demands of new entrepreneurs with fresh product concepts. The opportunity to start a product or line exists in the cosmetics industry like in virtually no other. Limited amounts of capital can be raised and go a long way.
The competition is, of course, very tough. But the competition is brutal in all mature industries. However, in the cosmetics industry, 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.
Walk into a Sephora or Ulta store. Virtually every product stocked in these magnificent retail locations was made and branded by an entrepreneur in the recent or distant past. Estée Lauder is one of the world’s great brands. However, Mrs. Lauder began in the early 1950s to make a single cream in her apartment. The successful professional beauty salon brands Redken and Matrix were created and maintained by Jherri Redding and Arnie Mitchell respectively. They’re mighty today, but they were like tiny mustard seeds at birth before they became 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 cosmetics entrepreneur has more opportunities to break into the market than ever before. The beauty of the beauty industry is that truly inventive people can enter this market and grow their opportunities at their own pace, with limited capital, and enjoy a real shot at success. This cannot be said about many business opportunities.
