Avon Focuses On Overlooked Demographic

Cerberus Capital Management, which took over Avon Products Inc. last year and rebranded it as New Avon LLC, is trying to reverse the brand’s downward spiral with a new focus on lower-income aging women.

Avon lost significant customer growth as the ranks of its door-to-door saleswomen have dwindled, and as the company has failed to leverage growing social media popularity, The Wall Street Journal reports. Cerberus says its new strategy aims to cut costs while targeting an often-overlooked demographic in the beauty industry in less affluent older women. (See also: Avon, Nu Skin Struggle with Revenue.)

Avon is revamping its catalog to focus more on cosmetic sector products. Much to the chagrin of some longtime Avon representatives, it’s axing items like its crockpots, Mickey Mouse bedding and measuring cups.

“Avon is like a boat that’s been in the water for 130 years,” Cerberus executive Steven Mayer, who is driving the changes, told the Wall Street Journal. “You have to take it out and scrape all the barnacles off.”

While Avon has been in business for many decades, the company has lost significant market share to more tech-savvy competitors like Revlon Inc. in recent years. Revlon has been devoted to online shoppers, even marketing itself on shipping boxes. (See also: Revlon Embarks on New Digital Transformation.)

Cerberus said it will try to cut annual costs by $90 million while ramping up its advertising budget by $75 million. Meanwhile, it’s also increasing pay for its some-200,000 North American representatives, who work as independent contractors.

“The plan that Avon and Cerberus put on paper, there’s nothing wrong with that plan,” UBS analyst Stephen Powers told the Wall Street Journal. “But they waited a long time to make these moves, and the question is, ‘Is it enough?’”

Read more: Avon Focuses On Overlooked Demographic (REV) | Investopedia http://www.investopedia.com/news/avon-focuses-overlooked-demographic-rev

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