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How Successful Beauty Founders Are Managing the Crisis

BoF spoke to five experienced entrepreneurs about how they steered their businesses through times of adversity — and how they are managing now in the face of Covid-19.
Source: Shutterstock
By
  • Rachel Deeley

LONDON, United Kingdom — For beauty entrepreneurs, the pandemic leaves little room for error. Without the support of well-capitalised conglomerates, most independent brands have a limited cash runway to work with while they navigate changing consumer sentiments, tricky marketing pivots and the widespread closure of crucial distributors like beauty salons and wholesale partners.

The beauty industry has a complicated relationship with economic crises. On the one hand, recessions famously create a “lipstick effect,” where hard-up consumers still crave small luxuries. On the other hand, spa treatments and flashy launches of prestige cosmetics products rarely thrive during tough times.

BoF spoke with seasoned entrepreneurs in the beauty space — from Marcia Kilgore to Bobbi Brown — about how they have navigated past crises, and how to approach the current one.

Name: Marcia Kilgore
Known For: Bliss Spa, FitFlop, Soap and Glory, Soaper Duper and Beauty Pie
What They Learned: Put yourself in the customer's shoes

Marcia Kilgore always aligns her business decisions with what she as a customer is feeling in times of crisis.

“If you’re [experiencing] an emotion or fear,… most people and most of your customers will be feeling the same way you are,” she said. “The best decisions that you can make are always the ones that increase customer trust long-term.”

In the immediate aftermath of 9/11, Kilgore repurposed her Bliss Spa in downtown Manhattan to offer food and free massages for emergency service workers.

“I remember getting letters from people saying... how much they appreciated that, and that they would never go to [any] other spa… in their entire lives because they had seen that we had been trying to do something to help,” she said.

People don't care what a brand might do for three months to stay alive.

During the pandemic, Kilgore recommends sending personalised emails to existing clients to check in on them and ask if they need any products or guidance for at-home treatments. Similarly, when Bliss was fielding a backlog of appointments in the wake of 9/11, her team would call each waitlisted client on a daily basis.

Aligning with the customer also means leaving your ego at the door and questioning your assumptions about what is valuable about your business — whether that means lowering price points, offering subscription fee holidays, or just being frank with marketing copy.

“Which brand do you remember doing something really damaging in [September] 2001? None, because it didn't matter at the time and it doesn't matter right now. People don't care what a brand might do for three months to stay alive. They're not going to remember, right? What they're remembering is their financial stresses… No one is as focused on your brand as you are.”

Name: Jane Wurwand
Known For: Salon skincare favourite Dermalogica, which she sold to Unilever in 2015
What They Learned: Lead with clear communication and education

Jane Wurwand and her husband launched Dermalogica in 1986, just as the HIV/AIDS crisis was taking hold in the United States.

“No one really knew [what HIV was], so you can imagine there were, as there are now, a lot of mistruths, exaggeration [and] misinformation,” she said.

Wurwand was also navigating the crisis as a skin-care teacher for cosmetology students at the International Dermal Institute, which she founded in 1983.

“In the classroom, I was getting questions [like] ‘Can we catch this from our clients? Can clients catch it from us? Should we stop waxing [clients]?’” As it became more widely known that HIV was transmitted through bodily fluids, there was an even bigger question mark over safety of extraction procedures and blemish treatments — “a very core piece of our market,” said Wurwand.

Only discuss facts. Don't get involved with fear-mongering.

She promptly enlisted the head of UCLA’s nursing school to host a series of meetings for anyone in the industry who wanted to understand the key facts about HIV and went on to develop an accessible protocol for salons to follow sanitation and health measures appropriate to the AIDS crisis, which she has done again for the age of coronavirus with the Clean Touch Certification.

“What I learned at that time [of the AIDS epidemic] — and we've applied it in every single situation since [are] the same rules: the first thing is [to] only discuss facts. Don't get involved with fear-mongering,” she said. “Second thing: communicate clearly and often from the top.”

The importance of communication also extends to the vast network of spas that use Dermalogica’s products — mostly small independent businesses facing a particularly precarious situation due to Covid-19.

Currently, the company offers a 30 percent affiliate commission to salons whose customers have purchased products through the Dermalogica website, as well as advice on rent negotiations and how to explain Clean Touch Certification protocol to local news outlets and clients.

Name: Janet Gurwitch
Known For: Founding Laura Mercier and sitting on the boards of brands like Urban Decay, Drybar, Tatcha and Olaplex
What They Learned: Focus on your point of difference

As the founder of Laura Mercier, Janet Gurwitch is well acquainted with the challenges of being a self-funded entrepreneur, even before the beauty industry was saturated with independent brands.

“There was no private equity money or venture money,” she said. “You tell people in Houston, Texas you wanted money for a beauty brand, they’d say ‘unless you have an oil well, we’re not interested.’”

Now, in her current career as an investor, Gurwitch has wisdom to impart from the other side of the table.

Make sure you have hero SKUs, because you want a repeat customer.

“I'm looking for the same things I was looking for before Covid,” she said. “Brands that have a point of difference, they fill a white space [and have] clear branding identity... If you were showing promise as a young brand before Covid and you've just run out of capital because you're just a young brand and you weren't well-capitalised, which most aren't, then I think a lot of people are going to be very interested.”

For entrepreneurs who maybe weren’t ready to go to market for fundraising rounds, she advises “if it’s going to be [for] the survival of your brand, do it,” but look for a partner with a track record of working closely with young brands.

It's also important to focus and ensure that your brand is not over-assorted with SKUs [stock keeping units, or product types] or retailers — one of her biggest business mistakes was excessive "flag-planting" when she first started Laura Mercier. The current crisis, said Gurwitch, provides an opportunity to whittle down your product offering and "make sure you have hero SKUs, because you want a repeat customer."

This period is also a chance for a brand relaunch, as hair salon Drybar has done with the gradual reopening of its salons complete with protective masks in its signature yellow.

“You've got to really focus. If ever you focus, this is the time.”

Name: Bobbi Brown
Known For: Her namesake makeup brand, which she sold to Estée Lauder in 1995 and exited in 2016. Now, she runs wellness brand Evolution_18
What They Learned: Keep your business lean, agile and above all, human

For Bobbi Brown, “there are definite similarities between weathering the crisis of 9/11 and now… [in] that all of a sudden everything changed, instantly… and what that means for an entrepreneur is that this is your opportunity to shift, to adjust and be more flexible.”

The main difference, in her case, is that in 2001 she was part of a large corporation, having sold her brand to Estée Lauder six years prior, and now she is at the helm of independent wellness brand Evolution_18. But at any stage, she has always favoured a lean business model.

I was not about to talk about how important collagen is for your body when people are dying.

“I think what really gets a business ahead is being scrappy and creative and very, very flexible. And that’s how I’ve always operated,” said Brown, citing the example of her executive assistant now putting her copywriting skills to use on the brand’s social media. “Only someone at a small brand could allow that to happen.”

Agility applies to public-facing decisions, too. In the post-2008 recession, Bobbi Brown’s marketing showcased products with multiple uses, “so it was very sensitive to how much money people had to spend.” Similarly, with her current business Evolution_18, promoting wellness products in the midst of a global health crisis is a contentious issue.

“There were definitely conversations [among the team] about what is the right thing to do,” she said. “And certainly, in the beginning, I was not about to talk about how important collagen is for your body when people are dying.”

“Any leader of a business, any founder needs to understand what's happening and be emotionally intelligent to what people are going through,” she said. “That’s probably the most important thing: to humanise your business.”

For fledgeling beauty entrepreneurs, Brown said “this is the perfect opportunity to press the reset button. Just look at what you're doing and see what's working, what's not. Don't waste money, don't think getting an investment will change things.”

Name: Jo Malone CBE
Known For: Her namesake candle and fragrance company, which she exited in 2006, and her new unaffiliated line Jo Loves
What They Learned: Embrace survival mode

Jo Malone CBE set up both of her businesses in the wake of deep recessions in the UK, launching her namesake fragrance and candle line in 1983 and Jo Loves in 2011.

Think of entrepreneurs as young artists.

“When I think back on my last two businesses, [they] were built on survival, having to survive, and a desire to build a business and do something proactive,” she said.

More recently, the British beauty industry has once again been grappling with ongoing economic uncertainty.

“Brexit probably was the nearest thing we were heading towards… that had life-changing situations for people in business,” said Malone, citing the UK beauty industry’s heavy reliance on European supply chains. “One of the big strategy moves we made was to really concentrate a huge part of our expansion and distribution into the Far East,” she said. “If I can’t [build this business] in an arena that I feel is right for us, I’m going to go somewhere else for a period of time.”

Still, she added, Brexit is “nothing [like] we’re facing now.”

Normally, Malone would advise budding entrepreneurs to gain some experience at an established beauty company. Now, she recommends using this time to do the “groundwork” for a business plan: “think about the product, how it would look, what it would cost, where you would sell it” she said.

Collaborations also open up an unlikely pathway for precarious small brands. Jo Loves' partnership with fast-fashion retailer Zara "has opened up my world," said Malone, allowing her to keep one foot in the European market and source candle production in the UK, while she focuses on expanding into Asia as Brexit looms. For big brands looking to partner with independent founders, she says, "think of entrepreneurs as young artists… [their] minds think in a different dimension, [chasing] solution after solution."

THIS WEEK IN BEAUTY

Ulta Beauty posts a 33 percent sales decline for Q1. The retailer's gross margin also dropped to 26 percent, down from 37 percent the same period last year.

Isamaya Ffrench is Burberry's new global beauty director. The quirky British makeup artist will debut her first collection for Burberry Beauty this autumn.

SponCon beauty products, debunked. Experts weigh in on the weird gadgets that have been cropping up on our social feeds, from jaw-defining chewable balls to skin tag removal patches.

Beauty companies are betting big on virtual consultations. Even as retailers gradually reopen, brands like Huda Beauty, Glow Recipe and Dermalogica are adopting the service in a bid to boost online sales.

The pandemic is hitting cosmetic manufacturers hard. According to data from Independent Cosmetic Manufacturers and Distributors, 30 percent of its member businesses expect to fold in the next 90 days if the state of the beauty industry doesn't improve.

UK hair salons are pushing to reopen June 15, well ahead of schedule. The government, however, is still drafting guidance for businesses that will struggle to maintain social distancing.

Hailey Bieber threatens legal action against a TikTok plastic surgeon. Dr Daniel Barrett posted a video speculating that the model had undergone several treatments to alter her appearance.

Bootleg hair appointments are on the rise. According to hairdressers, most requests are coming from short-haired older women.

A reopened hair salon in Missouri exposed 140 people to Covid-19. Two stylists at Great Clips in Springfield, Mo. tested positive for the virus after working for several days despite showing symptoms.

How the CBD craze happened. It all started in 2011 with a meeting between marijuana farmers, scientists, writers and activists in Northern California.

Editor's Note: This article was revised on May 29, 2020. An earlier version of this article misstated that Dermalogica is offering 13 percent affiliate commision to salons whose customers have purchased products through the Dermalogica website. This is incorrect; the rate is actually 30 percent. 

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