Diversion is raining down on the beauty industry like the mother of all storms.
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By Jeryl E. Spear
Putting an end to diversion is about as likely as plugging a leaky dike with your baby finger; it ain’t gonna happen. This gray-market industry has grown from just bits and pieces of product lines appearing on drugstore shelves to a robust, billion-dollar business with whole store aisles now being devoted to complete lines of professional beauty products. Once blamed on sinister salon owners and distributors who delivered pro beauty goods to stores in the cloak of darkness, “some business circles are now quietly referring to diversion simply as ‘multichannel distribution,’” says Stefany Reed, senior vice president of marketing and salon development for Profound Beauty. But whether diversion is given a nefarious spin or referred to by its more respectable moniker, Reed relates, “for many salons, it’s a business disaster that has changed their retail landscapes…probably forever.”
“How bad is diversion hurting the salon business? Nobody knows for sure,” says Eric Fisher, whose Eric Fisher Salons and Academy in the Kansas City area produce a collective $1 million in annual retail sales, with a big emphasis on Aquage, a company that fights diversion tooth and nail. “Our clients go to the grocery store where they can buy many professional brands. Why would they make a special trip to a salon when the products—which have probably already been recommended by their hairstylists—are right there? It’s a much more convenient setup for them: one-stop shopping.”
“We’ve introduced new invisible double-coding and confidential tracking technologies on all of our products. And if diversion occurs, our policy is to immediately terminate the offending distributors or salons.” Ofer Tal, founder of Moroccanoil
“Diversion corrupts our synergy and diminishes our capacity to earn. I, as a stylist, salon owner and manufacturer, am incensed from all perspectives.” Michael O’Rourke, founder and chairman of Sexy Hair