Euromonitor International is pleased to present an interview with Nicola Kilner, Co-Ceo at DECIEM, a relatively recent entrant in the beauty industry, boasting a portfolio of no less than ten niche brands with an alternative positioning. While the niche segment is proliferating in the industry, several brands still face challenges associated with making their voice heard, gaining scale and adapting the right distribution strategy. Nicola tells us more about DECIEM’s key differentiating strategy in the marketplace as a successful niche company, and its future growth prospects.
What are the specific elements that differentiate product development of a niche brand, from that of a mainstream one? How do DECIEM brands fit into this definition and what do you see as the most unique differentiator among the competition?
Speed is one of our biggest differentiators. It allows us to be the rabbits that jump into the holes the elephants can't.The likes of Zara completely changed consumers’ demands by getting current season trends to the end consumer in record times. Before this, the fashion industry had always run on a roughly two year lead time from seasonal cycles before the trend would come out. Two years would be a record time in the traditional beauty world, where typically it takes most larger beauty companies around six years to get product from conception to market. DECIEM does everything in house - our scientists, designers and product creators are all under one roof. We have no layers and loops to jump through to move forward, meaning the speed of our delivery model is second to none. We constantly meet with the CEOs of every pharmaceutical active company to make sure we are the first to know about the latest technologies. Once we are sure it is a technology with substance and proven results we brainstorm as a team the best way to bring to the consumer. Once we have the concept our lab will work on the formulation at the same time as our design team work on the packaging and marketing materials so we can quickly move into production and distributing to our channels. We move at a pace where we can get the latest technologies to market extremely quickly. If we really want to push this we can get a new technology to market in three months but our comfortable timeline is six months. If you think about your mobile phone from seven years ago it was very old technology, and that is actually how 'old' a lot of the 'new' launches are in the beauty market today.
Is the smaller scale of operations a challenge in finding the desired retailers to sell start-up brands?
E-commerce and social media have really removed a lot of barriers previously felt by start-up brands. Online retailers are able to move at a much quicker speed than traditional bricks and mortar and take chances on brands more easily so these tend to be the first partners for most of our brands. Social media allows consumers to really be in the driving seat of which brands break-through into retail. If you sell direct, you can build a fan base on social media first without any retailers signed. Once the consumer demand arises, opening your desired retailers becomes a lot easier. With The Ordinary we had shipped over 3 million units before we had any bricks and mortar retailers opened. The landscape of “desired retailers” has also changed a lot. A few years ago ASOS had very little in a beauty offering, but are now one of our fasting growing accounts and doing a phenomenal business both commercially and as an aligned brand partner.
DECIEM brands such as HIF and AB Crew, are very specialised and targeted. How does this fit into DECIEM’s retail strategy?
Each DECIEM brand has aimed to find a gap in the market that we can add value to - through product, design and direction. HIF and Ab Crew will follow similar retail footprints as our other brands, but with added focus on hair salons for HIF and gyms for Ab Crew. We are all aware the opportunity for men's is great, but the retail strategy will play a huge part in the success of men's brands. It is important to go where men are—in gyms and in fashion stores— rather than expecting them to go to beauty halls.
What challenges do you see for the company and opportunities for building further scale moving forward? M&A? What areas are you looking to explore in terms of innovation and new market segments?
Our biggest challenge currently is capacity. We are in our third location in three years and have already outgrown it. We are upscaling in a large way. The new facility is 72,000 sq ft and is planned to be operating at the end of this year. We have new brands coming this year in the lip category (ESHO), the bath and body category (Loopha) and the baby and natural categories (names tbc!). The US remains one of the largest economies in the world, and one we have done very little in. Our plan is to open offices and start recruiting in NY and LA this year to grow the brands in the US.
Do you see the demise of legacy brands in the future? Which disruptive models do you think have the best longevity prospects?
Demand for beauty products is large enough for many brands to co-exist together in a very happy sphere. Legacy brands won't go away, but I do think they will put more focus on innovation, speed to market and honesty to keep up with disruptor brands. Disruptive brands that have a soul and integrity will stand the test of time.