Daily Management Review

WSJ: Cosmetics manufacturers are trying to weaken ties with retailers


In the face of the pandemic, cosmetics manufacturers are trying to reduce dependence on retailers, who were forced to close stores, and look for new ways to sell their products, writes The Wall Street Journal.

In the United States, some large networks experienced difficulties even before the pandemic, when they suffered from lockdowns. Department store chain J.C. Penney, luxury retailer Neiman Marcus Group and several other retail brands have filed for bankruptcy.

The American cosmetics manufacturer Estee Lauder has additionally agreed with retailers, for example, to provide its employees with access to products that have already entered the network and, for example, are stuck in closed stores. If the retailer chooses to close, Estee Lauder may demand their products back or negotiate a new price to avoid a deep sale, said CEO Tracey Travis.

Estee Lauder has negotiated new financial terms with some retailers. According to Travis, the company does not anticipate the high debt risk of J.C. Penney or Neiman Marcus.

Estee Lauder tried to increase online sales during the pandemic and expects their share in its revenue to grow in the next few years. For the quarter ended March 31, 46% of the company's revenue came from department stores, the newspaper said. The company posted a net loss of $ 6 million for the quarter versus a profit of $ 555 million a year earlier.

In recent months, South Korean Amorepacific, which owns the Sulwhasoo and Mamonde brands, has also taken steps to reduce reliance on retailers. The company spent most of its marketing budget on building online sales. Amorepacific also plans to expand its partnerships with online retailers in Asia and North America.

source: wsj.com