The way in reach brands are able to sell products have dramatically changed over the last 5-10 years with brands moving from a single channel to a multi-channel / omni-channel model. Diane Miles, CEO of TSG Beauty shares her insights on why implementing the right business model can ultimately drive the top and bottom line of a company, in the latest edition of my In Conversation Series.
SDF: You have had a successful career in building premier skincare, makeup, and fragrance brands including L’Oreal, LVMH, Benefit Cosmetics, and most recently Perricone MD. Why did you pursue a career in the beauty industry?
DM: I was qualified as a pharmacist and initially joined L’Oreal as their pharmacist for Vichy Skincare after 7 years in retail pharmacy. I quickly loved the beauty space and became involved in all aspects from product development, to marketing, to sales to PR and eventually general management.
SDF: As the CEO of TSG Beauty, can you describe your role?
DM: I work with all portfolio beauty brands to help them develop their business. This involves everything from sales to marketing to recruitment to supply chain . I also help TSG source new companies to invest in and attend all potential acquisition meetings in the beauty space.
SDF: The way in reach brands are able to sell products have dramatically changed over the last 5-10 years. Why is moving from a single channel to have a multi-channel important?
DM: The multichannel customer spends a lot more on a single brand than the single channel customer. A customer expects to be able to purchase her favorite brand easily and readily, this may be on line, in the mall, TV shopping, where ever she prefers to spend time and shop. Multi-channel shopping is here to stay, there is no going back. E-commerce will continue to erode bricks and mortar share, however, the customer needs a complete shopping experience, she may want to shop on line, pick up in store, do her returns in store. She is in the driving seat and demands that her preferred retailer offers this omni-channel experience. She is also highly influenced by reviews and social media, hence she may well do her research on line and then shop in store. Many brands in beauty also have a big story to tell. This story is told so much better and more effectively on TV or on line than in open sell or department store retailing. Hence certain channels (the virtual ones) can act as strong marketing vehicles for brands and allows small brands to thrive without a huge marketing advertising budget.
SDF: In the past you have spoken on the topic of why brands should be organizing by channel rather than discipline. Why is that? What is the benefit?
DM: The multi-channel approach is much harder to manage than just retail selling. A company needs to have experts in TV shopping, e commerce, digital marketing, vertical retailing, open sell, department store selling off a dedicated counter. No one person can possibly know all these channels and grow them fast. Hence, by structuring by channel rather than by discipline a company can have a channel head that knows everything about a particular channel. For example a channel head would be responsible for marketing, sales, merchandising, assortment, SKU planning and P+L for their particular sales channel. This is instead of having a sales person who looks after all channels, a marketing person overseeing all channels etc.
SDF: What advice do you have for both established brands and emerging brands in formulating a multi-channel program?
DM: Let the channel owner for each channel really own it and take responsibility, being in friendly competition with their colleagues who manage other channels. This sense of being the general manager of a particular channel can drive great application, enthusiasm and ultimately drive top and bottom line of the company. It also takes a lot of weight off the CEO if he or she has excellent channel leaders in their multi-channel business model.