Sally Beauty Pivots to Stay Ahead of Its Competitors

With competition stiff in the makeup and hair-care market, Sally Beauty Holdings, Inc. has undertaken a cost-reduction plan and new initiatives to keep the company viable and open new opportunities

Although some might argue that beauty is only skin deep, it’s also big business, and in order to stay competitive in the marketplace, it can take major financial decisions to keep a brand afloat and viable. That’s why Sally Beauty Holdings, Inc., the Denton, Texas-based retailer and distributor of beauty products, is rethinking where its money will go.

In April 2018, the company announced a cost-reduction plan designed to help finance long-term growth initiatives by implementing organizational efficiencies, sourcing product and brands for resale, and rethinking inventory management. Two months later, the company announced the launch of Sally Beauty Cultivate—For Women by Women, a business accelerator program to help female beauty entrepreneurs grow their business.

“We continue to be inspired by all of the terrific women entrepreneurs we have met over the years and believe in supporting women who are developing products to make her best accessory, her hair, even better,” said Carrie McDermott, president of Sally Beauty, in a statement. 

Sally Beauty’s formal restructuring plan is expected to cost about $30 million up front but then generate annual benefits of up to $15 million, which will be reinvested to support strategic initiatives. Benefits will also be reinvested in market-competitive store wages, accelerated technology investments, e-commerce growth, better visibility of store-level inventory, and various initiatives to strengthen the company’s business in both the US and Canadian markets. Sally Beauty president and CEO Chris Brickman says these initiatives will help maintain the company’s profitability and fund investments such as Sally Beauty Cultivate to help transform the business.

As part of that program, Sally Beauty will accept entries from female-owned hair-care brands that want to expand their business. The top brand will receive $25,000 in financial support, product distribution at SallyBeauty.com, and mentorship from the Sally Beauty team as well as some of the brand’s famous business owners. It will also receive the opportunity to have the product put directly into the hands of high-demand beauty influencers at one of Sally Beauty’s monthly influencer events.

“We believe there is so much hair-care innovation happening every day in women’s homes, salons, and communities, and we want to encourage that innovation to thrive and grow,” McDermott said in a statement.

Sally Beauty has a storied history of supporting female-owned hair-care businesses, given that nearly one in three of its sales has supported brands created or owned by women. Sally Beauty was also the first national beauty retailer to provide distribution to popular female-owned hair-care brands including Made Beautiful, Mielle Organics, the Mane Choice, and Arctic Fox. Beyond that, Sally Beauty was the first to launch an exclusive ingredient range with Carol’s Daughter, called the Pracaxi Nectar Collection. In each of these cases, the distribution support provided to these brands helped their businesses grow and achieve the national prominence they enjoy today.

It’s these kinds of efforts that have kept Sally Beauty a constant in the beauty and hair-care market, and they’re an important part of why the corporate restructuring was necessary, to keep the company in a viable position in the marketplace—particularly now that competition in the beauty segment has grown considerably.

“Similar to how our Beauty Systems Group segment is the color and education destination for the professional stylist, Sally’s primary goal is to have every customer feel confident in her ability to color and care for her own hair, and we will tailor our assortment, service, and education to ensure we are her go-to store for that purpose,” Brickman said in a prepared statement.


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