Manufacturers speak out against diversion
We heard from so many manufacturers on the subject of combating diversion, we couldn't fit everyone into our annual print report. Here, some prominent executives from your favorite brands weigh in on how their companies are fighting the good fight.
Jim Markham, CEO & Founder
One key advantage of being a new company is we are able to launch with strict policies and procedures preventing diversion from occurring right out the gate. At ColorProof we understand that diversion is a major threat to our Industry and we are committed to stamping it out before it even becomes an issue for our brand. Before shipping any product, ColorProof has taken great care to ensure that all distributors sign an abiding agreement committing to not divert product at risk of a severe financial penalty and termination. We have gone one step further to ensure that all licensed salons also sign a contract committing to not divert as well as to not sell product on the Internet. Any salon caught diverting or selling product online will also face strict consequences. In addition, ColorProof proudly supports our salon partners, and we guarantee our products only when offered through authorized licensed salons. We have also made it extremely easy for consumers and stylists to report diversion by completing a confidential form on our company website. In the past year we have implemented an extensive tracking process to identify the source of the diversion and halt the process immediately. The information received allows us to react immediately to investigate the source of the diversion and take appropriate action. Our comprehensive ‘Where to Buy’ section of ColorProof.com makes it simple for consumers to locate their local ColorProof salon and ensure they are purchasing authentic ColorProof formulas with superior next generation performance. At ColorProof we work closely with our distributor partners to educate our salons on how to help stamp out diversion through their retail practices. Our policy of no Internet sales ensures hairdressers are having conversations with their clients to not only recommend the right ColorProof products for them, but to also to explain why buying from a salon professional is so important. The fact that we only guarantee products sold through licensed salons ensures authenticity of the products as well as allows the stylist to stand behind what they are selling.
JOHN PAUL MITCHELL SYSTEMS
Vikki Bresnahan, Director of Brand Protection
Diversion does more to damage the integrity of our industry than any other issue. It can’t be controlled or prevented solely by the manufacturer. Everyone has to be involved from the distributor and warehouse employees to sales people, distributor store employees, salons and consumers. JPMS works closely with our all of these entities to provide an understanding of diversion and how it happens; its impact on the industry; how to recognize it; and how to report it. Our distributors are our partners in diversion education and investigation. We work together to set purchase limits and identify and stop diverters on a daily basis.
Leighanne Harman, VP of Worldwide Sales and Education
Keratin Complex is committed to fighting product diversion in an effort to protect the beauty industry. We have established a three-part process to ensure that our products remain in the professional salon network.
1. Keratin Complex works solely with like-minded distributors who share the same mutual goals, core values and belief in the integrity of the professional salon industry: Salon products for salon professionals.
2. We have rekindled an anti-diversion campaign with salons via a system of checks and balances to monitor purchase history.
3. Our coding system allows us to track oft-diverted products and maintain control over their final destinations.
As a leading keratin smoothing and color company, it is our responsibility to inspire confidence in those who use and sell our products. We have the ability to drive change in the industry by ensuring that every client receives only authentic, high-quality Keratin Complex products.
Andrew Biazis, Chief Operating Officer
In today’s world of consumers finding beauty products to purchase at the touch of a button on their computers, it is very difficult to stop diversion entirely, but we are very committed to doing just that. Many popular and industry leading professional brands are found at CVS, Walgreen’s, Walmart, Kroger and other familiar mass market outlets, but you won’t find Keune there due to our true professional-only philosophy. One of the easiest ways to stop diversion is not to participate in directly shipping orders to such aforementioned non-professional retailers. Sophisticated retailers go directly to the source due to the large quantities required to fill all their stores across the country, so the majority of diversion comes from manufacturers themselves. Being a family-owned company for over 90 years, we don’t have to be held hostage by quarterly sales reports to stockholders which makes intentional diversion tempting to companies in our industry. That heritage and chosen approach eliminates 90% of our diversion policing, because we police ourselves.
Tracy Liguori, Co-President Marketing/Advertising
Many companies in the professional beauty industry claim to be committed to fighting diversion, stating they’re “professional only” and their products are authorized for sale only in professional beauty salons. However, today we see more and more beauty manufacturers abandoning the needs of independent salons and diverting their products to mass retail outlets for financial gain. Watching this scenario occur with the very brands that that salons have built is not only disheartening, it’s also causing some salon owners and stylists to become numb to the concept of retailing. In the early days of retailing in the beauty industry, salons would remove a brand from their shelves as soon as it began showing up in mass retail. That hard line has become blurred, leaving salons feeling powerless. As a new, young generation of hairdressers emerges, so does their acceptance of situation. After all, they’ve never known a world without diversion. By educating hairdressers and making them aware of what the future of their business could look like if they recommend products that are truly salon-exclusive, we can help improve their business and the industry as a whole. At Scruples, we work diligently to prevent product diversion by ensuring that our products lines are not available on any mass retail store shelve. Therefore, when a salon uses and retails Scruples or INDIE HAIR products, they own it, they build it and they keep it. In other words, they get to keep the business they worked to build. Furthermore, we also do our part in controlling service diversion by teaching hairdressers techniques that can only be achieved in the salon through courses and password-protected online videos. In return, this gives the stylist and salon an opportunity to positively impact their business by improving client retention, increasing retail sales and overall salon revenue. At Scruples, our vision revolves around integrity and we’re always looking out for both the salons’ retail and service business.