As we’ve noted before, the Avon Lady is one of the most iconic and well-recognised retail ‘brands’ in the world. But while the original business model for the cosmetics firm 131 years ago was retail genius with its army of female sales reps calling on customers at home, it’s one that has been in need of a digital makeover for a different age.
As well as keeping up to speed with retail trends, such as e-commerce and m-commerce, the changing demographic of the Avon Lady herself is demanding change, as CEO Jan Zijderveld observes:
We are attracting a new generation of consultants, with 45% of our new recruits being millennials or under 30. They are attracted by an improved and increasingly strong digital presence, our new tools, trendier innovation and faster, more flexible delivery options.
When we last checked in on the progress of the digital transformation of the company that Zijderveld has triggered since his appointment last year, it was a case that the foundation had been applied, but there was still a lot more to do. That remains the case, although Zijderveld is still clear about the mission statement, the so-called ‘Avon formula’ as he puts it:
We are building repeatable models to re-boot direct selling, to make it easier for her to earn money and do business with us. We're creating demand by strengthening the value of our brands, making it more on trend with scaled innovation and attracting the next generations. We are unlocking e-commerce so that Avon is available anytime and anywhere. And we are digitizing our representatives' experience with digital tools and digital training.
We continue to be very proud of our purpose to improve people's lives and promote projects and initiatives that are important to her and that empower women…To do this, we will invest in her and step change our training and tools to improve her productivity and equip her with technology to do her job better…we will attract a new generation to Avon by becoming more on-trend, digital and trainer to become a real Avon digital influencer and then build her digital and e-commerce business.
That’s the mile-high pitch. Drilling down, there are some specific objectives - and not all of these are going entirely to plan to date. For example, there’s a commitment to “double our consumer base through doubling e-commerce sales” in 2019. To that end, dedicated e-commerce business units have been set up in all Avon’s key markets, says Zijderveld:
These dedicated teams will ensure we have the right focus and build the right capabilities to unlock the e-commerce opportunity for Avon. Our My Avon e-commerce store is now in 25 markets and is, as a platform, updated every 2 weeks. The digital Avon brochure is now available in all our markets and has reached 6 million page views.
Ninety percent of our representatives think it's easy to use and save them time. We're also seeing great productivity improvements, with increased conversion rates from 2.5% to 4%. And we have doubled the average order size from our e-commerce sales versus our normal brochure sales. We are training her to use our e-commerce tools to help her build her e-commerce business and become a micro-influencer.
All of which sounds positive enough as a bigger picture. But there are problems at a regional level, most notably in Russia, one of Avon’s biggest markets. Global President Miguel Fernandez says that there have been issues and that the Russian market is now in what he calls “full reset mode”. But what’s interesting- and possibly alarming - is the issues identified aren’t ones that could be regarded as specific to Russia. Fernandez admits:
Our strategy in Russia is not different from the one we have in other markets. We need to reboot direct selling by focusing on increasing training to drive productivity and thereby increase our earnings. Some of the tactics being used in the market include segment and sales leader incentives to recruit, train and retain. Segmented training programs such as the blogger school, which is a micro-influencer training program…Launching more and better digital tools for the market is also part of improving our image and relevancy.
As we try to track younger trendier representatives, we have to give them the products, tools and experience that they expect. In Russia, nearly 40% of our representatives are millennials with a very different need. In order to retain this younger group, we're deploying direct delivery to consumer, adding more relevant innovation for consumers and becoming more digital.
For example, we [have] announced to the sales force that we were launching direct delivery throughout Moscow, which we will continue to expand throughout the market. The younger generation of representatives expect to get their product in a much faster timetable. Russia, like Brazil, will take some time to stabilize and return to growth.
That pursuit of the younger Avon Lady is one that’s repeated in every major geography as a corporate priority, so getting the digital tools to this next generation is clearly a matter of considerable urgency if Avon is to deliver what Zijderveld calls “a more digital company”.
Zijderveld talks about 2019 as being “the year of execution”. He also emphasizes that a digital makeover is going to take time and talks in terms of stemming decline as a short term priority rather than promising growth.
That’s pragmatic. When you’re transforming an iconic and globally recognized retail brand, rushing into change overnight is a recipe for disaster - look no further than WW, the company formally known as WeightWatchers as a case in point.
But the issues in Russia are, I suspect, ones that will be replicated elsewhere. They’re also a timely reminder that digital transformation isn’t just about the tech; it’s about people who’ll be using that tech as well. And the harsh reality is that the number of active Avon Lady representatives has fallen for ten consecutive quarters. That's a decline that needs to be reversed most urgently.
This is one transformation program to keep a close eye on in 2019.