Monday, April 20, 2009

Buyouts, Bankruptcy, and Counter Closures: How Do They Impact Your Beauty Brand Loyalties?

Today's Wall Street Journal highlighted that Stila Cosmetics was sold once again. It's new owner is Patriarch Partners, Inc. (a NY-based private equity firm). This is really not new news as Stila has been sold multiple times during the last decade. Yet with each sale, I wonder how it has negatively impacted the company's brand. And, how will it influence current (and future) products sales?

If the Stila Web site is any indication, they are halting new online sales in their tracks. This morning when I navigated to the company's Web site, I received a "doing maintenance" message. This translates to: we don't want your business right now. For me, this is a red flag that I need to change my brand allegiance. And I have!

I stopped buying Stila products when the line disappeared from Nordstrom, Bloomingdale's, and Macy's counters several years ago after another company acquired the company. While I knew I could purchase the company's products online or at other retailers (e.g. Ulta, Sephora, even Costco), I wanted the opportunity to get one-on-one product recommendations and demos from makeup artists with specific Stila expertise and knowledge. I was a pretty loyal customer who spent at least $100 year on the company's products, and I'm sure I was not the only one. Long term...what did this sale (and new direction) do for the company's brand and revenue?

But Stila's current situation is not unique to the industry right now. It could be worse. For example, drugstore cosmetics line Jane & Company (commonly known as Jane Cosmetics) filed for Chapter 11 bankruptcy earlier in April.

In fact, I wonder what other beauty brands will be negatively impacted (or even be a fatality) of our current economic times. And most important, which ones do you think will thrive? And why? Keep your eyes open as even the smallest signs are often the most accurate indicators of what is ahead.

Credits: The Wall Street Journal, April 20, 2009

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