Doors began opening for Pound Cake when it joined beauty brand Glossier Inc.’s inaugural grant programme in 2020. Photo: Instagram/Pound Cake
For startup beauty brands with founders of colour, landing shelf space at a major retailer can be both a cause for celebration and the beginning of a new set of challenges.
First, there’s fulfilling orders – often the biggest-ever for a new brand and a test for labs and suppliers. Then, there’s launching in hundreds of stores on the same day. And once you’re on shelves, new customers need to be sold on the product among a sea of options.
Those hurdles can be particularly high for minority-owned businesses, which often operate with less funding and access to professional networks than their White-led counterparts.
It’s a curve that some founders are learning in real time as retailers work to uphold racial-equity promises made in the wake of 2020’s Black Lives Matter protests.
That year, Sephora USA Inc and BlueMercury Inc took the Fifteen Percent Pledge, an initiative led by designer Aurora James to encourage retailers to stock Black-owned brands.
Ulta Beauty Inc followed in 2021 and Credo Beauty, a smaller retailer focused on so-called clean beauty products, informally said it would meet the goal.
The Danessa Myricks brand namesake owner says the challenges have been worth it. Since it launched in Sephora, she says sales has double and triple year-over-year in 2021 and 2022 respectively. Photo: Instagram/Danessa Myricks BeautyThe Pledge, which called on retailers to dedicate 15% of their shelf space to Black-owned brands, said that such brands represented just 1% to 3% of inventory for the average company when it signed up. Sephora and Ulta each said that about 8% of their brands are now Black-owned, while Credo said it’s at 10%.
Beauty industry veteran Nyakio Grieco runs retailer Thirteen Lune, where 90% of brands are BIPOC-owned (black, indigenous, and other people of colour).
She said identifying the brands she wants to support isn’t the difficult thing – it’s finding the ones with funding and resources to grow.
“It’s very, very expensive to perform and scale your business at national retail, no matter who you are,” said Grieco. “Because of the lack of access to capital for Black and brown-owned brands, that is really at the heart of why we’re seeing brands really struggle to either get to shelf or survive at shelf once they get there.”
Read more: Modern and colourful, fashion in Malaysia reflects the diversity of its people
A new strategy
Danessa Myricks, a professional makeup artist who developed her own line, which she first promoted at beauty conventions, began talking to Sephora about stocking products in 2019.
To ramp up from 50 wholesale partners to the high-street retailer, Myricks and her team worked with Sephora to first launch 30% of the brand’s products online in February 2021. That was followed by in-store sales in 311 stores in April and an additional 66 that September.
Myricks soon found that the typical Sephora customer is different from the one shopping directly from the brand. That meant some shades sold out faster than the brand’s usual high performers, leading to replenishment delays and empty shelves after selling through a 12-week supply more quickly than anticipated.
“You can be on the shelf, but then what?” Myricks said. “You’re definitely coming across a brand-new customer.”
For Myricks, the challenges have been worth it: Since launching in Sephora, she said she’s seen sales double and triple year-over-year in 2021 and 2022 respectively.
While big companies have committed US$340bil (RM156bil) to promoting racial equity since 2020, how that money trickles down to individual businesses can be difficult to track, and doesn’t necessarily translate to long-term success.
Just 4% of Black-owned startups are still operating three-and-a-half years after being founded, compared to more than half of businesses overall, a 2020 report from consulting group McKinsey & Co found.
Meanwhile, venture-capital funding to Black founders plunged in the third quarter of 2023 compared to a year earlier, according to TechCrunch data, totalling just US$39.7mil (RM182.42mil) or 0.13% of all capital allocated.
Read more: New York's Metropolitan Museum takes a feminist look at global fashion
Shelf space
For beauty brands especially, getting into physical stores is critical given the way customers discover new products. Prior to the pandemic, 85% of beauty purchases were made in-store, a 2020 McKinsey report found.
Technology that helps shoppers find the right shade via questionnaires and selfies has since shifted some of those purchases online, but nothing beats the ability to test in person: Monica Arnaudo, Ulta’s chief merchandising officer, said 80% of its customers still shop in store.
Pound Cake co-founders Camille Bell and Johnny Velazquez first began working on their own products in 2016. But it wasn’t until they joined beauty brand Glossier Inc’s inaugural grant programme in 2020 that doors began opening for them.
In 2020, Sephora USA Inc and BlueMercury Inc took the Fifteen Percent Pledge to encourage retailers to stock Black-owned brands. Photo: Bloomberg
The programme, which invests in Black beauty entrepreneurs, offered mentorship, introductions to suppliers and US$10,000 (RM45,000) in pre-launch funding (Glossier has since upped funding to US$50,000/RM230,000 per grantee.)
“When you have people whose needs aren’t being met, you also have an entrepreneurial cohort of people who say, I have this problem, I know other people have it too, I’m going to make a change and I’m going to fix it,” said Roya Shariat, the director of social impact and communications at Glossier, who leads the brand’s grant programme.
Shariat cautioned against grouping Black-owned and other minority owned brands together in one section of a store.
Highlighting these brands on their own merits, both in-store with dedicated tables and signage as well as online, can help consumers direct their dollars according to their values.
Once they were in the programme, said Bell, the brand’s chief executive officer, investors suddenly found time to meet with them, and it was easier to source a good packaging vendor. Pound Cake launched direct-to-consumer sales in September 2021; now, the brand is in store at Credo Beauty, and has launched in more than 850 Ulta locations since October.
While Bell and Velazquez are primarily a two-person team learning as they go, they hired an operations consultant to help with the rollout, and scheduled biweekly meetings with Ulta to stay on track.
“It’s one thing to sit there in class and learn about something, and another to have to actually put what you’re learning to the test,” said Bell. – Bloomberg
