In its Biggest Market Worldwide, a Bold Move for Avon in the Philippines

In a bold move to increase brand visibility, Avon has cemented a partnership with Watsons Philippines and SM Beauty to make its products available in the latter’s retail outlets. Kristof Neirynck, Global CEO of Avon, flew into the country recently for the ribbon-cutting ceremony held at a Watsons outlet in SM MOA. 

It’s a strong signal of support from the Avon boss for its business in the Philippines, which happens to be Avon’s biggest market to date, followed by South Africa, Poland, Romania, Turkey, Italy, and the UK. Stepping up from CMO to CEO only in January this year, Kristof was also in the country to be “close to the market” as he puts it.

The strategic partnership is unexpected for Avon, a company traditionally known for its direct-selling business model, as it expands into the beauty and wellness retail space by making some of its products available at the popular retail hubs. 

It is part of a three-pronged business strategy Kristof is implementing globally now that he is CEO, and which he disclosed during an interview with Esquire Philippines.  

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Avon’s new direction

The first part of the business strategy involves modernizing the “relationship selling” or direct selling business and transitioning to a flat commercial model. Avon is helping representatives sell through modern channels like TikTok and online marketplaces. The company also trains representatives on using digital platforms such as Shopee and Lazada. 

The second involves expanding brand visibility through strategic partnerships with retail outlets like Watsons, and Superdrug in the UK. While it may be daunting for a direct-selling company like Avon to make its products available in retail stores, it has proven beneficial in the case of the UK market. The company says brand visibility in Superdrug outlets in the UK helped increase the sales of direct sellers in the area. 

“We saw that the ones close to a store were selling more because of the halo effect of the brand visibility,” Kristof confirmed. 

Kristof Neirynck, Global CEO of Avon

Only about 100 Avon products are available in retail outlets vs. the thousands of SKUs available through direct sellers, who in turn can offer the non-retail items exclusively. Kristof expects a similar ‘halo effect’ for the brand in the Philippines and hopes that the presence of Avon in retail hubs will reignite demand for its products. Avon products under the makeup, skincare, and fragrances categories are now available in Watsons and SM Beauty.

The decision to explore additional sales channels follows a survey, with results suggesting that the decline in Avon’s revenue from direct sales is caused by the changes in shopping behavior. Six out of 10 survey respondents admit they have not been purchasing Avon products because they’d rather shop in a brick-and-mortar store or online than through a direct seller. Relationship selling is facing challenges globally and is under a lot of pressure, hence Kristof’s decision to modernize the business model. 

Retail customers are of a different demographic. “The different consumers that we reach are slightly younger and also have a slightly higher socio-economic background. And so that's why we see that as a really big driver for the strategy,” said Kristof.  

The third pillar of the new business strategy is revamping and restructuring the global brand portfolio, which entails reducing it to focus on core categories (beauty) while divesting non-performing categories (such as household items). 

No job loss

The chief executive also took the time to clarify issues surrounding Avon Products Inc. filing for Chapter 11 bankruptcy.

“There's actually no impact because the US holding company (Avon Products Inc.) is a non-operational holding company,” Kristof explained. “It's basically a legacy from the past because Avon used to be a US company and back in 2016. We sold our us operations to Cerberus Private Equity, who then sold it on to LG Home and Health, and basically, we haven't sold a product in the US since 2016, basically.  We don't have people working there except for some lawyers who deal with the litigation. 

“Operations like in the Philippines or the UK or anywhere else don't depend on any funding from that holding company, as it's a non-operational,” Kristof added. “Natura & Co takes us directly in ownership, without the US holding company in between, so that's what we're trying to do, and that's why the operations are in Philippines, or any markets are actually not impacted.”

Kristof also clarified that there have not been job cuts, as mistakenly as some publications have reported. 

Kristof remains optimistic about Avon, a brand that offers high-quality products at affordable prices, and whose sense of purpose—as a brand that empowers women and champions women’s causes—stands out from the competition. 

With their new three-pillar approach to growing the business through innovation and strategy, Kristof is all set to steer Avon toward market expansion. The brand is poised to open 2,300 stores globally, including retail hubs and direct-selling exclusive boutiques similar to those in the Philippines.