Iman's Mass-Market Distribution Model
The Entrepreneur: Somali-born former supermodel Iman, 53
Background: Fashion photographer Peter Beard discovered Iman in 1975, when she was a 19-year-old student at the University of Nairobi. A year later, the seed for Iman Cosmetics was planted during her first photo shoot for Vogue. (It came when the makeup artist asked Iman if she had her own foundation because he didn't have a formula for black skin.) Over the next two decades, even as she was gracing countless magazine covers and serving as the muse for fashion designers Yves St. Laurent and Versace, Iman always mixed and tested her own foundation. Women frequently came up to her and asked which brand of foundation she was wearing, thinking that the famous model had access to some fancy new formula.
The Company: Despite frequent discussion about multiculturalism and "the browning of America," Iman, who had retired from modeling in 1992, realized that there was a dearth of quality beauty products for women of color. After finding a business partner and researching Census data that showed rises in the population and median incomes of African-American and Latinos, Iman decided the time was right to create a line of products targeted at this market. In 1994, Iman Cosmetics and its accompanying skincare line were unveiled at 400 J.C. Penney (JCP) stores across the country, as well as at department stores in England, France, and Canada. In 2007, Iman leveraged her success to launch a line of handbags and accessories, Iman Global Chic, on the HSN.
Revenues: $25 million (in the U.S.)
Her Story: When I started my cosmetics company, I wanted to be the black Estée Lauder (EL). I wanted to be big. I knew that there was a potentially huge niche market in cosmetics and skincare for women of color.
Initially I launched my brand with J.C. Penney. At the time, they were building their own cosmetics department. The decision made sense; they had the customer base and they were willing to support the brand.
And I was right. I had 10 full-time employees and we were very successful immediately. By 1996 we had sales of over $5 million. Celebrities and beauty editors got it right away, but I knew that I had made it when women stopped me on the street and showed me my products in their purses. There was a real appetite for this kind of cosmetics. Women were buying the product in bulk, afraid we might go out of business because a lot of companies in the past had lines for women of color but after a time would discontinue products or just stop producing entire lines altogether.
However, in 2003 Penney decided to move in another direction and opted to phase out cosmetics. It forced me to quickly consider my next move. Yes, we were a huge success at the beginning, but I learned it is staying in business that is the difficult part. You have to keep your eye on the ball. With the end of my relationship with Penney, I had to determine what kind of sales distribution I needed going forward.
KNOWING THE CUSTOMER
I could have continued selling in another department store, but mass chains are more profitable and have a bigger reach. In 2004, we began selling Iman Cosmetics at Wal-Mart (WMT), Target (TGT), Walgreens (WAG), Duane Reade, and the Chicago-based beauty retailer Ulta.
I had learned a great deal from our experience at J.C. Penney. But I think one of the things that really contributed to my success was that I knew who my customer was because I was my customer. When we decided to go mass market, we were very strategic about it. We specifically chose partners located in areas where we already had a customer base that understood our product.
Located within many of our successful J.C. Penney's regions, these particular retailers were already familiar with the brand's success. They also realized that their multicultural customers were shopping in their hair-products aisle but not the cosmetics aisle. There was a great opportunity.
PROCEEDING WITH CARE
However, we didn't jump in; we treaded carefully. Instead of selling the brand in every store of each chain, we sold our products in 50 doors for each retailer because we didn't want to get lost in the shuffle. Don't get me wrong, the distribution that mass chains can provide is great, but we wanted to do it carefully, so we didn't lose our customers' trust that we had worked so hard to develop. To do so, we mapped out where our clients were within the larger map of the chains. Once we knew where our customers were, we talked to the retailers about placing us in those stores.
We even told them where we wanted to be in the store. We told them to put us in the front with the other major brands. It gave the store credibility and told customers that the store valued them. Usually, they put our kind of product in the back with the "ethnic brands." It was such an outdated concept. We also told the stores that we needed 3 feet of wall space. We wanted to keep the entire line together and not separate the skin and beauty lines. It made sense for customers who didn't want to hunt it down all over the store. We explained that it would also be more profitable for the stores if the line was sold like this. It was also a lesson for the retailers—many said they never had people of color representing people of color.
There were other things to think about as well. We had to make some adjustments repositioning the line from a department store, such as changing the packaging to make it more visible on store shelves—before, when we sold it at the counters at J.C. Penney, a sales clerk helped promote it. We also lowered the price points about 25%, but we ended up making up for the cut through volume. What we didn't change was the quality of the formulations themselves.
Even after doing all of that, we knew that there was a psychological shift in the perception of a brand going from a department store to mass market. On our Web site we spent a lot of time explaining to our customers that the brand wasn't going to change. For instance, we made sure not to change the names of each product. And when we launched, we did something nobody else did in the self-service chain stores—we hired makeup artists to do in-store product demos.
Once we established ourselves in the mass market, it became apparent that this was a totally different ball game. I needed a bigger giant to help run the show for us. I needed a partner, but I wanted someone who understood us and wasn't going to remake us. It was my name out there, and I wasn't going to give it up and sell it off. But I knew that demand for the product was now greater than I could manage.
After approaching a number of big companies, in 2004 I met with Procter & Gamble (PG) and we signed a licensing deal. P&G invests a certain amount on an annual basis and provides strategic financial and sales advice. The deal gives P&G the right to distribute Iman Cosmetics globally while my company Impala Inc. runs the marketing and day-to-day operations. It also gives P&G the right to purchase the brand over the next several years. The deal allows us to grow the brand at a faster pace, as well as help us to develop a more efficient supply chain. It also gives me time to concentrate on keeping the brand relevant by introducing new products and expanding into new markets.
It was a good strategic move for me personally, but what has made it work for my business is that I did my research. I knew our customer base, but above all I realized that it is a better to be a master of one than a jack of all trades.
—As told to Stacy Perman
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