Cosmetic Firms try change of face

Tuesday, September 19th 2000, 12:00 am
By: News On 6

Avon Products Inc. is heading to the mall, while competitor Mary Kay Inc. is focusing on getting its independent consultants on the Web with new products, including gifts and nutritional supplements.

Avon said Monday that it is negotiating with Plano-based J.C. Penney Co. and Sears Roebuck & Co. to launch a new line of cosmetics in their stores a year from now.

Last week, another direct seller was in the news. Tupperware Corp. said it is buying Carrollton-based BeautiControl Inc. for $60 million to broaden its product offerings. Twenty-year-old BeautiControl, with 50,000 sales consultants, had retail sales of $130 million last year.

All three cosmetics companies said the changes won't affect their existing sales structures. Mary Kay says its Web site will be used to enhance the sales of existing representatives, and Avon stressed that it will be selling a new product line, not the products its direct-sales reps sell. Tupperware said it planned to keep BeautiControl's sales staff in a separate division.

In the last year, Dallas-based Mary Kay has set up individual Web sites for about 75,000 of its 650,000 beauty consultants. The company plans to have 25,000 more selling online by the end of this year, said Russell Mack, executive vice president of Dallas-based Mary Kay.

"Some companies use the Web to go around their sales force. We use it as a tool to give our sales force more business," he said.

The privately held company doesn't report sales and profits, but Mr. Mack said that Mary Kay is profitable and that sales have increased from about $1 billion to $1.2 billion, or $2.4 billion at the retail level, over the last couple of years.

Mary Kay, which celebrated its 37th anniversary last week, isn't exploring a retail strategy, the company said Monday.

"We're not taking that approach at all. Our company has been built on the independent beauty consultant," Mr. Mack said. "We would never do anything to circumvent our sales force."

Having a Web site has increased her business, said Alison Williams, a Mary Kay consultant in Dallas.

"My customers tell me they think of me twice a day, in the morning when they're washing their faces and at night when they're doing the same thing, but they don't want to call at those times," Ms. Williams said. "But they can get online and order anytime."

Avon stressed Monday that the makeup and lotions sold in Sears and J.C. Penney stores will be "a completely different product line" from the one sold by its 500,000 representatives in the United States.

"While direct selling will always be our principal sales channel, expanding access to new customers will help accelerate top-line growth," said Andrea Jung, Avon's president and chief executive officer.

Avon, Penney and Sears officials declined to say how many Penney and Sears stores would sell the new product line. And Avon wouldn't say whether it had approached other chains, such as Wal-Mart Stores Inc. or Target Inc.

Unlike other mall department stores, cosmetics aren't a big revenue generator for Sears or Penney, largely because both retailers have been shut out by major cosmetics manufacturers.

Estee Lauder, Lancome and other upscale brands dominate cosmetics counters at Foley's and Macy's, for example, but they don't sell to Penney and Sears, who appeal to a more moderate-income shopper.

Avon has been selling directly through its network of independent representatives for 115 years. Two years ago, it started opening company-operated kiosks, which now operated in about 50 malls nationwide, including Valley View Center in Dallas.

"We've learned that at retail, we attract new customers, not the same people that our representatives are serving directly," said Debora Coffey, a spokeswoman for Avon in New York. A few of those kiosks are being operated by licensed Avon representatives, and the company is considering expanding that test with more of its independent representatives.

Avon is trying to defuse any problems its independent reps might have with its Penney and Sears agreements.

"We're having an early dialogue with our sales representatives so they understand that we're reaching new and different customers with a new and different product line," Ms. Coffey said.

Beth Kim, a former Avon representative who now runs for other Avon sales reps, said the kiosks are a bigger threat to Avon representatives than a new line of Avon-branded products showing up in Penney and Sears stores. The kiosks sell the same products that Avon reps have in their catalogs.

"A new line in the stores won't interfere," Ms. Kim said from her New York home office.