Benefitting from beauty school dropouts (and graduates)

It’s always nice when a discussion from my classes quickly gets tested in the ‘real world’.

Source: http://www.npsetcosmetics.com/

A few weeks ago, as part of a discussion of diversification, I asked my students to identify related industries to various products and services. One of the services I mentioned was hairdressing, and among the suggestions was training schools for hairdressers, stylists etc.  We had a debate about whether this would also constitute vertical integration as it would serve to provide a supply of labour for firms in the industry.

In my old age, I’d forgotten an earlier blog post of mine on the diversification of Aussie make-up magnate Napoleon Perdis.

Well, Perdis popped up again in the news recently with a much more explicit discussion of the benefits to the firm’s salon franchising ambitions of also running ‘beauty schools’:

“The company should have a natural advantage in its franchising push thanks to the beauty training schools it operates. While these schools provide the company with direct source of staff and a strong network of brand advocates, they should also provide a steady stream of potential franchisees well-versed in the company’s processes and products.

“One of the biggest assets of the Academy in that it is a machine that does generate brand advocates. And it feeds itself, because the brand advocates pay to come and do courses, they purchase products and they go out there, advocating and indoctrinating others with the same fervour and passions and beliefs,” [said] Perdis…”

It really is a neat example of utilising corporate strategy to build an advantage beyond direct market-seeking.  The market for potential franchisees is tough.  Having such an effective mechanism to promote the firm (and screen franchisees) is a real boon for Perdis.

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Retail reflections from the Road – part one

Blogging hasn’t been front of mind for me over the past 10 days of so.  Indeed, I have been fixated on consuming burgers, seeing sights, reading roadsigns and booking hotel/motel rooms as I traipse down through California towards San Diego.

Nevertheless, I thought I’d take this opportunity to relate my an early experience in my travels to previous posts on this here Blog.

In San Francisco I had the opportunity to experience Aussie shopping centre giant Westfield‘s US expansion.  They had done a fine job of branding and delivering a suitably slick real estate and retail offering.

There were a couple of Aussie retailers on display (Napoleon Perdis and courier-bagsters Crumpler), as well as the expected mix of US and international chains.  I was disappointed by Zara and H&M‘s offerings (their clothes didn’t seem quite as flashy yet utilitarian as they do in Europe).

I was more impressed by the offerings of Martin+Osa, a fashion house that it turns out is a brand extension from the more ubiquitous and mainstream American Eagle Outfitters.  These two brands serve as a strong reminder of the sheer size and scale of the US market and the limited need for US retailers to internationalise.  American Eagle is yet to spread its wings beyond Canada, while Martin+Osa only has stores in 17 states.  Nevertheless they are able to offer decent quality clothing at their respective (surprisingly low) price points.  Australia-only fashion retailers would simply not be able to compete at that level.

The presence of Perdis and Crumpler remind us that Aussie retailers really do need a neat point of difference to justify tackling the US scene (and beyond).

More on retail in the coming days…

Putting a pretty face on internationalisation

There was a nice piece in yesterday’s paper on the international expansion by Aussie cosmetics wonder Napoleon Perdis.

It is chock full of value chain choices that appear to have made considerable difference to his firm’s success:

1. Building a dedicated distribution facility in Los Angeles (thus cutting out the middle-man and accessing those rents)
2. Tapping into the retail outlets of Target across US (and helping them to go upmarket)
3. Jumping onto parallel value chains in terms of the beauty school, body and bath, skincare and now even health spa and hotel businesses (leveraging strong brand awareness and relatedness)

In an international business sense, the firm doesn’t seem to have been hampered by any particular liability of foreignness. I guess it might be hard for a consumer to work out where the product is from anyway…. Greece? France? Australia? Austria?