PUREBEAUTY USES LOOPHOLE TO SELL HIGH-END SUPPLIES
PureBeauty’s unusual approach to selling beauty products is attracting manufacturers, customers and capital in a hurry.
There are a host of manufacturers of high-end beauty supplies that won’t allow conventional retail outlets to sell their products, insisting they be sold only through beauty salons. PureBeauty has found a loophole in this rule. Though the chain is more a store than a salon, it does have a handful of stylists at each outlet meaning the likes of John Paul Mitchell Systems and Sebastian International have no problem selling merchandise to the chain.
A promising market
Begun last year by beauty-industry veteran Larry Freeman, the Westwood-based chain has grown to 36 stores (four in L.A. County, though 12 more local outlets will open within the next 60 days). By 2001, the company plans to add another 140 stores, including some outside of California in Arizona and Utah.
The growth spurt is funded in part by Boston-based Heritage Partners, which invested an undisclosed amount in the company in January, giving Heritage a 50 percent equity stake.
“We saw this as an opportunity to serve a very under-served market and a terrific opportunity to transform the traditional beauty supply salon into a more customer-friendly environment,” said Mark Jrolf, a Heritage partner.
PureBeauty is an example of the changing face of the beauty industry, as it looks for ways to sell merchandise differently. A few other merchandise-focused salons have opened in the past few years, including Beauty First, in Witchita, Kan., and Minneapolis-based Trade Secrets.
French retailer Sephora has made a splashy debut in the United States with its “open sell” approach, displaying products outside of cases to foster sampling. In addition, Chicago-based Ulta, a specialty beauty retailer, is rolling out 10,000-square-foot mega-stores offering everything from toothpaste to mobile mammograms. Meanwhile, the Internet has spawned a number of sites hawking lipsticks and perfumes.
PureBeauty, however, prefers to remain focused on high-end, upscale beauty items of the sort you can’t find in Rite Aid, a strategy some experts endorse.
“It’s an approach that’s pretty darn exciting, creating the Starbucks of the beauty-supply industry,” said Larry H. Oskin, president of Fairfax, Va.-based Marketing Solutions, a beauty consulting firm.
Vision realized
The chain was the vision of Freeman, who sold his 22-year-old cosmetics firm to Dial Corp. in 1998.
Typically found in strip malls and upscale neighborhoods such as Brentwood, Larchmont Boulevard or Beverly Drive, PureBeauty stores range from 1,800 to 2,000 square feet and dedicate about 80 percent of the space to merchandise. The aisles are stocked with about 1,000 items from roughly 400 manufacturers, such as Paul Mitchell, Sebastian International, Formulas by Ecoly and Nexxus.
The rest of the interior is given to three stylists and one aesthetician, who are independent contractors and set their own service prices. By housing stylists in the store, PureBeauty is allowed by manufacturers to sell professional products.
While these products do occasionally show up on the shelves at supermarkets and drug stores, such retailers are, for the most part, forbidden by the manufacturer from carrying them. When a regular retail outlet does carry professional beauty products, it’s usually because a third party has illegally obtained a shipment and sold it to the retailer a practice called “diversion” in the industry.
Co-founder and co-owner Jill Freeman believes the highly fragmented $3.2 billion beauty-supply retailing industry is ripe for consolidation.
“There’s been this proliferation of mom-and-pop stores, but nobody has really branded the environment,” said Freeman, daughter of Larry Freeman. “We have a look and feel that will be consistent throughout our stores.”
Sea-foam green
The carpet at each store matches the walls, all painted in sea-foam green, and the round PureBeauty logo is posted at the end of the aisles. Inside, one can find reams of hand creams, shampoos and conditioners, though the stores are light on cosmetics. The back-store tester display highlights only a handful of brands including Italian maker Brava and Sebastian’s Trecco line.
Although Jill Freeman won’t release sales figures, she says year-over-year sales are up 10 percent to 35 percent per store.
“The stores are doing quite well. Because we carry so many lines, we can offer value to the consumer by offering different promotions, such as buy one product, get one free,” Freeman said.
Freeman added that the sales representatives receive weekly classes on product training. One supplier thinks that’s information that can be invaluable to a customer.
“We sell very well there and we like the fact that they stress education among their employees, because that’s what we’re about,” said R.W. Miller, Sebastian’s vice president of North American sales. “And, by dedicating so much space to (the line), it gives us a chance to show off all our different product categories.”
