Peek behind the curtain of one of the beauty industry's most successful companies. Vitaly Simonian, the Vice President of Finance at Dr Dennis Gross Skincare, takes us on a journey through a business that's quadrupled in size and expanded into 16 markets.
We talk about :
- Navigating shifting consumer trends
- The role education plays in marketing
- How to effectively venture into fresh business verticals in an uncertain economic climate
We get down to the nuts and bolts of successful retail partnerships, tackling the company's collaboration with the beauty giant, Sephora. Vitaly opens up about the trials and tribulations of breaking into the device market, shedding light on the supply chain challenges they faced, and triumphantly overcame. The episode offers a treasure trove of insights and strategies that have propelled Dr Dennis Gross Skincare to the top of their industry.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
The consumer has never been more educated in our
lifetime than they are today.
Right Again, there's just somany tools out there whether it
be social media, whether it beword of mouth, the internet and
it's just.
The consumer already comes inwith a certain level of
education.
It's just that we're there nowto guide them and answer any
additional questions.
There's just so much data outthere, and I think the biggest
(00:21):
concern for us right now ismisinformation, and that's what
we're kind of battling right nowwith our education, the way
that we market things.
Speaker 2 (00:31):
From Alloy AI.
This is Shelfling.
Speaker 3 (00:49):
How can you stay ahead of consumer trends in a
fast-changing industry?
Speaker 2 (00:53):
How do you educate your consumers in order to drive
more demand?
Speaker 3 (00:56):
How do you push into new verticals successfully?
Speaker 2 (00:58):
What does the uncertain economic climate mean
for consumer brands?
On every episode of Shelf Life,we answer questions like these
and more, with the help ofleaders across the consumer
goods industry.
Speaker 3 (01:09):
Today we welcome Vitaly Simonian, vice president
of finance at Dr Dennis GrossSkincare.
Speaker 2 (01:14):
Vitaly has been with Dr Dennis Gross for 11 years,
where he's helped the businessquadruple in size and grow into
16 markets.
During his time at Dr DennisGross, he's helped drive
strategic growth by partneringcross-functionally in all
aspects of the business, frommarketing and sales to
operations and new businessdevelopment.
Speaker 3 (01:32):
I'm your co-host, joel Beal, ceo of Alloy AI, and
I'm your co-host Logan Ensign,chief customer officer at Alloy
AI.
We'll be back with VitalySimonian right after this.
Speaker 4 (01:44):
Selling consumer goods is a tough job.
Between rising costs, supplydisruptions, price-sensitive
consumers and retail partnerswho have their own set of
priorities, it's becoming harderthan ever to execute today,
much less planned for tomorrow.
There's plenty of data to help,but pulling and analyzing
reports from retailer portals isso tedious and time-consuming
that you can't respond toproblems at the shelf until the
(02:06):
bullwhip hits you in the face.
That's cow, actually.
Now there's Alloyai to help.
Alloy automatically aggregatesand harmonizes data from your
retailers, supply chain partnersand ERP.
Then we make it easy to findinsights using pre-built
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, predict and respond instantly.
(02:27):
Check it out today and get ademo at Alloyai.
Speaker 2 (02:35):
Vitaly, welcome to shelf life.
Really excited to have youtoday.
Thank you.
Speaker 1 (02:39):
I'm excited to be here.
Speaker 2 (02:41):
How about you get us started with telling us about
your background and what yourcareer journey has looked like
to get you where you are now?
Speaker 1 (02:48):
I can't say it's gone too far, past the DG world or
Dr Dennis Gross skincare world.
I actually joined the brandright out of college.
I did finance in my undergrad.
After undergrad I went andfinished my master's.
I got my MBA Right out ofschool.
I joined the company.
I've now been there for almost11 years.
Actually it was 11 years twodays ago, so I hit my
(03:12):
anniversary point just recently.
It's kind of funny becauseyou're studying finance in
college, You're thinking, oh,I'm going to come out of college
and school and go into banking,I'll be on Wall Street making
these big bucks.
And now I'm in beauty.
Of course I started out doingfinance and accounting for the
beauty industry, but I'm inbeauty and I've been here for 11
(03:32):
years.
So I started out with accountsreceivable, accounts payable,
worked my way up to salesanalysis.
I started getting the hang ofunderstanding and analyzing the
retail business, understandingmarket trends, then kind of
progressed more into theforecasting and demand planning,
Eventually budgeting, internalbudgeting, operations, logistics
.
At some point there was somesales background or experience
(03:54):
there, some marketing.
So, over the years I'vedefinitely worn many hats.
Speaker 2 (03:59):
Interesting, and was there something kind of thinking
back to when you joined DDGthat was compelling about the
company to dive into beauty?
Speaker 1 (04:08):
No, honestly, I was just excited to test something
new.
It's funny.
I got the call I did not reallyhave any background on the
beauty industry, so right away Iactually called the front of
mind, who worked in the beautyindustry.
She was editor, I believe, atAllure magazine at the time and
so as soon as I got off the callwith the interview call, I
called her up and I said hey,have you ever heard of this
(04:29):
skincare brand?
And she said yeah, I actually.
That's my dermatologist.
Dr Gross was her doctor, so shewas a frequent patient of his.
So she told me quite a bitabout the brand and she had
nothing but positive things tosay about it.
And so I said you know what,let me give this a shot.
Speaker 3 (04:46):
And so I went on for another one or two follow up
interviews and things justworked out and what was the
scale of the company at the timeyou joined?
Based on the number of rolesyou've had, I imagine it was
still a pretty small team, whichis exciting because you get a
chance to obviously see probablya lot more things than you
would have if you went to, forexample, a big bank.
Speaker 1 (05:05):
So I want to say the finance department was maybe
three people and that's, youknow, four people.
If you had operations anddevelopment Right now our team
is probably closer to about adozen.
I think total company and staffwise it was maybe around 30 to
40 employees.
Now we're just past the hundredmark.
So we've definitely grown overthe years and we're continuing
(05:27):
to grow.
Speaker 2 (05:27):
Well, and one of the reasons we're really excited to
have you here, vitaly, isbecause you touched so many
parts of the business and, Ithink, get to kind of have a
unique perspective on howdifferent parts of the business
think about problem solving andwhat matters to them.
I think one of the questions wehave for you.
A lot of folks we talked to arequite interested in trying to
(05:48):
better understand trends.
You know we're in a post COVIDworld.
Covid taught us that things canmove quickly, and so I'm
curious, as you think about youknow all your roles, but maybe
especially today, how you allare thinking about responding to
trends.
Speaker 1 (06:05):
That's an interesting question, because I don't think
we've ever been really known asthe trendy brand, right?
If you look at our packaging,we're not the flashy kind.
It's not like we sparkle offthe shelf when you walk in.
Of course, some of ourpackaging is quite beautiful and
a lot of our imagery is donevery well.
We have a very, veryexperienced and highly capable
(06:25):
creative team, but in terms oftrend, we never really thought
ourselves as the trendy brand.
We don't really follow markettrends.
We prefer to say that we followconsumer trends.
You have a lot of people thathave now just kind of begun
talking about fruolic andretinol, lactic acid, hyaluronic
acid, alpha, beta, and to themthese are like the new hot
topics, right, but these aren'tanything new to dermatologists.
(06:47):
Dermatologists have been tryingto advocate for the benefits of
these things for decades now.
So I think it's kind of funnybecause instead of more stuff
seeing the trend and going, oh,let's kind of jump on the trend.
I think Dr Gross is kind ofsitting in his office and is
like ah, finally people arestarting to really understand
what the benefits of these are.
(07:08):
And so what do I mean byconsumer trend?
Dr Gross has his practice andhe's been practicing.
He's been a practicingdermatologist for the last
almost I mean probably more than20 years at this point, and we
kind of like to call hispractice the living lab.
He sees real world concernsfrom his patients and he works
to create solutions to thoseconcerns right.
So it's not the trend thatwe're seeing online or in social
(07:32):
media, it's more so the trendthat he's seeing from his
clients at the practice.
So I call ourselves theconsumer trending brand as
opposed to marketing trending.
Speaker 2 (07:42):
I like that, and when I think of health and beauty, I
think that may be exceptional.
I mean, you guys are probablyfairly unique in how you think
about this.
Speaker 1 (07:50):
Yes, we're in the beauty industry, right, but
we're more so skincare asopposed to makeup, and skincare
that's kind of you know, that'syour health, right.
So, yeah, I do considerourselves as part of the health
industry, as opposed to more sothe front facing beauty or
instant gratification type ofindustry.
Speaker 3 (08:07):
This is fascinating, I think, this comment you've got
this living lab with Dr Gross,which I think is awesome.
You think about productdevelopment and how you test
ideas and you have a veryobvious one, I guess, there,
which I think is quite unique.
Clearly, a lot of theseconcepts, a lot of these
products have been known for awhile, as you mentioned earlier.
So now it's about how youeducate consumers, about how
(08:29):
they can help them and reallytake them to market.
How do you approach that?
As Logan was mentioning, Ithink of and you're right, this
is probably more the beauty sideof health and beauty.
You think these days a lotabout influencer marketing and,
you know, celebrities, all thatkind of thing.
This seems very different.
This is rooted, it sounds like,a little more in science,
medicine.
I'm curious how you bridge thatdivide.
(08:50):
Obviously, you're trying todrive consumer demand, you're
trying to sell more, and what'sthe approach that you take there
?
Speaker 1 (08:56):
From the get-go.
When I just started with thebrand, it was obvious that
education was our number andpriority, right.
I want to say education is howwe market.
We know we don't have theseshowy marketing campaigns to
just drive the consumer in tobuy our product.
Our job is really to amplifywhat Dr Gross teaches in his
practice, and so we useeducation as kind of a means of
(09:18):
marketing his message and whathe's trying to teach it.
Obviously, a million to 10million people can visit Dr
Gross on a weekly basis, right,to really learn about the
benefits of a lot of theseingredients and formulaic
approaches to product.
But social media is a tool thatyou know has been able has
really been helping us amplifythat message.
So what we're doing is we'retrying to compact these
(09:43):
educational sessions that DrGross has in his practice into
these 30-second clips.
So, in other words, we'retrying to pass this educational
message this consumer viaInstagram, via TikTok, through
Twitter, through our own website, through YouTube, right?
So it's great to see that wenow have this tool and that's
what we're using for education.
(10:04):
We're not using it to kind ofjust grab your attention and say
, hey, buy this product.
No, it's really for us to passon Dr Gross's message, and
that's what we're doing.
That's how we market.
Speaker 2 (10:14):
You know you do sell through some traditional beauty
channels, and so, as you workwith retail, do you find that
there's education you're doingat that point as well?
Speaker 1 (10:24):
Yeah, of course.
I mean we have a very largesales team that's on the ground
and they're across the country,it's somewhere international.
They've been taught by Dr Grossdirectly.
You know we have trainingsessions.
We don't just bring onsalespeople and kind of just
send them into the field as justboots on the ground.
They go through pretty rigoroustrainings with Dr Gross himself
.
We have a very talentededucation department that really
(10:45):
trains not only our owninternal staff but also, you
know, we travel to Sephoraevents where we train their cast
members, and cast members arepretty much the team that they
have on the ground.
So we do definitely havetraining within the actual
retail stores.
We have a means of training andultimately, I mean right now
that the consumer has never beenmore educated in our lifetime
(11:07):
than they are today.
Right Again, there's just somany tools out there, whether it
be social media, whether it beword of mouth, the internet, and
it's just, the consumer alreadycomes in with a certain level
of education.
It's just that we're there nowto guide them and answer any
additional questions.
There's just so much data outthere and I think the biggest
concern for us right now ismisinformation, and I think
that's what we're kind ofbattling right now with our
(11:29):
education, the way that wemarket things.
Speaker 3 (11:31):
How do you combat that misinformation, especially
in the health space?
There's so many different ideas, fads, et cetera.
Again, you're a brand that'sreally rooted more in science.
You're founded by a doctor here.
Do you find that that's besthandled by having your
salespeople go into stores anddoing that one-on-one training
(11:52):
and making sure that it's thatpersonal touch?
Is that through marketing andbuilding up a brand that's
really based more in the science?
Speaker 1 (12:00):
The ultimate way to really battle misinformation is
to address it directly, and Ithink DG, or Dr Gross, does that
quite a bit.
He addresses a lot of themisconceptions that are in the
street.
You'll see quite a bit ofvideos that he posts up online
saying this is what I'm seeingpeople do and unfortunately,
this is the incorrect way ofdoing it.
When it comes to dosages ofclinical ingredients, there's
(12:22):
quite a bit of misinformation asto how to really apply them and
how often to apply them.
There's a basic message that DrGross likes to pass on is red
skin, red flag.
So I think the best way ofreally battling a lot of
misinformation is to just attackit head-on.
Speaker 3 (12:36):
I'm also curious to understand.
You said you have a prettyextensive sales team.
They're out visiting I know yousell through Sephora.
What's the goal for that team?
Clearly education is a part ofit.
Maybe that's primarily whatthey do.
My understanding in the beautyspace is that's a more common
approach.
It's you're going into thesestores.
There's a lot of education, alot of really getting closer to
(12:57):
the customer, more so than wemight see with some other
consumer brands where they shipit in and do their marketing but
they're not going into thestore and partnering with that
retailer.
So I'm curious what that retailexecution side of the business
looks like for you.
Speaker 1 (13:11):
So it actually is a partnership with the retailers.
The sales team is constantlygoing into store working with
the team that's in storesSephora's team yes, they are a
sales team, but they aretechnically educators For the
most part.
I think you hear that a lot ofthe sales really rely on
commission as opposed tosalaries.
It could be anywhere between40% salary, 60% commission.
A lot of sales teams work on.
(13:32):
For us it's quite the opposite.
We're not incentivizing theteams to just sell, sell, sell
and push and push and push.
No, we're incentivizing toeducate the consumer.
So we don't want that one sale,we want that consumer that's
coming back and reallyunderstanding how to use these
products and to benefitthemselves With the importance
of that education.
Speaker 3 (13:49):
Does that make you be that much more careful about
which retailers you work with?
You mentioned Sephora.
You obviously have a greatrelationship there.
But when you look at sellingthrough more retailers, some are
probably going to be moreinclined to allow you to come in
and educate.
That's more of their ethos.
Others they just want you toship in the product and sell it.
Curious how that makes youthink about distribution.
Speaker 1 (14:08):
We're hearing pitches from retailers left and right,
other retailers and there'squite a bit of other retailers
that are fairly big and namedcompetitors to Sephora and
they've been reaching out to usfor years now.
We are very cognizant of who wework with.
We're very cognizant of thepartners and what their
relationship is with consumer.
We find that our partnershipwith Sephora is the best
(14:29):
approach for really meeting theconsumer's needs and for getting
Dr Gross's message out.
We're not just trying to shippipeline into every single
retailer that's out there.
Like I said, it's not about thesale, it's about the consumer.
Speaker 3 (14:41):
It's such an interesting concept because we
see across a lot of brands thattension.
Obviously, everyone is lookingto sell more, they want to get
into more channels, they want tosell across more retailers or
regions, et cetera.
Yet it's so easy to getoverextended.
You start putting your productsin places where, yes, you're
going to sell a little bit more,but you can damage your brand.
(15:03):
It's very interesting hearingfrom you great products, You've
got a great partnership insaying, hey, let's keep working
on this one.
I'm sure you look for otheropportunities as well, but not
just taking everyone who'sinterested.
That requires a lot ofdiscipline.
Again, it's something that wesee.
We see brands expand out andthen start to pull back as they
realize okay, that's a lot ofwork.
(15:24):
We're damaging our brand.
We need to optimize.
Speaker 1 (15:27):
Yeah, we're not perfect either.
We've dipped our feet in otherwaters.
We've tried out some retailerswhich we were maybe a little bit
hesitant on.
It just didn't work out.
We agreed to mutually.
Part ways we didn't hurt ourbrand.
We try new things every once ina while, but we know the heart
of the message that we want toreally share.
It's through very, veryparticular partnerships and with
(15:47):
partners that really believe inthe same exact mantra as we did
.
Speaker 3 (15:50):
Something that we know about your business is that
you have started sellingdevices.
It's a bit of a new category.
You start talking aboutdifferent supply chain,
different, I imagine, salesmotion.
Maybe there's more similaritiesthan I would normally expect.
I'm curious to betterunderstand what led to the
decision to expand.
What's the process of entering,kind of a new vertical?
Speaker 1 (16:10):
Yeah, we actually entered the device market, I
want to say maybe 10 years ago,maybe a little bit more.
We entered initially with thesteamer device that we had,
which did very well for us, andthe most recent I think one of
the hottest items on the marketand doing a phenomenal job, is
the LED faceware device that wehave.
I think it's a little funnythat it's a shocker for some,
(16:30):
you know, for I guess the waythat you made it sound is, if
you're surprised, the devicemarket.
But I don't think it'ssurprising at all.
I mean, we're a skincare brand,right, we're not a moisturizer
and serum brand.
You know, once again, our goalis to bring the practice home to
the consumer, right, we want tobring Dr Gross's message and
what he's doing in his practiceto the consumer so that they're
able to kind of replicate thatat home in a safe environment
(16:50):
and safe way.
So we're constantly developingnew technologies, and by
technology I don't mean a device, I don't mean the actual
steamer or the actual LED deviceitself.
I mean the technology is.
It's a means of delivering aningredient or a for me, leg
benefit to a certain target air.
A moisturizer's technology,right, that's a means of
delivering a benefit to acertain area.
(17:12):
A serum is a technology, and sois a device right.
So a device is a means ofdelivering the benefit of light
therapy to the skin.
Speaker 2 (17:22):
What about more on the the execution side?
Did it present new challengesin terms of production and
transportation and forecastingand planning, or did you even
find through this that itoperates fairly similarly or you
were well equipped to handlefrom a supply chain perspective?
Speaker 1 (17:39):
Supply chain wise.
Surprisingly, it isn't thatmuch different.
Of course, now you know youhave the batteries that you have
to worry about and, as I'm suremany people have heard already,
there are certain regulatoryrequirements that we have to buy
by when it comes to devices andlike batteries and light
therapy in general.
There was quite a bit of alearning curve, but not as much
as some would think.
(17:59):
What really helped us succeedin this market was I can't say
we were the first market movers,for sure, but we definitely one
of them and we definitely didit best, which is why our name
is really attached to a high endLED device product.
So right now, I want to saythat we probably have the number
one selling LED face mask andthere's quite a bit of imitators
(18:21):
out there.
So you know, imitation is aform of flattery, but I do want
to consider us as a first marketmover and it's really tough to
knock out a first market mover.
It's tough to knock out a kingand that face or device is a
king.
Speaker 2 (18:34):
We find new product launches, from the conception
all the way through to execution, are really key to people's
overall strategy.
So I think you've mentioned twokey concepts right First mover
or near first mover, great brandbut do you have other
perspectives on why your newproduct launches go well, or how
do you think about that sort ofin the whole life cycle of new
(18:57):
product launches?
Speaker 1 (18:58):
This was an unorthodox life cycle of a
launch, because we launched theface or device five or six years
ago and it hasn't been tilllike the last year and a half
where it's really resonated withconsumers and in the market.
It's really interesting becauseit's not as if we're constantly
pushing out marketing.
Behind it there's quite a bitof organic growth.
(19:18):
You know we're seeing thedevice in Netflix shows, we're
seeing the device in Hulu shows,we're seeing influencers and
celebrities posting about thedevice and these aren't seated
placements.
A lot of these things weresurprised and shocked to see
like, oh, look at that, thisperson posted about us.
Holy crap, did you see that?
So I think that actually speaksfor the product itself.
You know there's two life,there's two life cycles to
(19:39):
launch.
There's the marketing andthere's kind of the regular run
rate, right.
So a product coming out the gate, the success of the product net
gate is based on the marketingitself.
If it doesn't come out well,chances are because it wasn't
didn't have a strong enoughmarketing campaign behind it.
The consumer wasn't educated tothe point why they need to.
They understood why they neededto try this product, why it
would help them.
How is it beneficial?
(19:59):
So at the very beginning it isvery much the product.
After maybe a six week, andsometimes it could be as long as
a six month period, that'swhere you really start to
understand whether the productresonates with the consumer
themselves.
Did the consumer come backbecause they understood the
benefits, because it works forthem, it's beneficial to them?
So now they're replenishing onit, they're purchasing it on it
again, right?
(20:19):
So now we really have anunderstanding of the run rate
and the success of the productitself versus the success of the
actual marketing campaign.
Speaker 3 (20:26):
I'm visualizing the sales curve for this product
right now, which sounds a littlebit unconventional yeah, it is
Versus your typical launch andwhat that looks like.
Was that something that you sawcoming as it really started to
take off?
Was that something that caughtyou completely by surprise?
Were you able to forecast that?
Okay, I mean, if it happened inthe last couple of years, when
there were all the supply chainissues, did you find that that
(20:47):
impacted things?
Speaker 1 (20:48):
I can't say that I am too surprised because even over
the past five or six years wehave had an issue of really
producing to demand.
Not to the extent that we'rehaving, you know, over the past
six to 12 months that we've seenrecently, definitely not to
that extent.
But you know, the demand wasthere and it was gradually
growing at a very healthy rate.
(21:09):
And then it's just this, youknow, all of a sudden this spike
or this foraging that we'veseen, and now it's just like are
we need to get ahead of this?
So now we're planning, like twoyears down the line as opposed
to, you know, the next sixmonths of inventory or 12 months
past that we actually we don'teven think we've hit the run
right yet.
We still don't understandexactly what the average, you
know sales volume is, becauseevery once in a while you know,
(21:32):
every other month or so therewill be a retail that's out of
stock and we just can't fillthem completely to their full
demand.
So we're still learning.
But at no point did I questionthe possible success of this
product.
Our CEO, kerry Gross, drGross's wife, who has been, you
know, the key person to reallybring the brand to where it is
today.
She had no doubts about it, andI mean, she's the one that
(21:53):
lives with Dr Gross on a dailybasis, right?
So she knows where his mind isand she knows exactly what he
believes the true benefits ofany of his products to be.
Speaker 3 (22:04):
Do you find a lot of cross-selling across?
You know people that buy yourLED device.
Are they also gonna be buyingmore traditional products?
At least in the way that I lookat it, is that something that
you look at or do you find thatit's kind of a different
consumer?
Speaker 1 (22:16):
Funny, you're actually hitting on a lot of key
points.
We actually have reached thepoint of the life cycle of this
product where it is a newcustomer acquisition.
It's really hard to believebecause the product is a high
price point product.
Right, when we look at customeracquisition skews or products,
we typically look at lower costproducts because you know the
consumer.
When they're hesitant toactually dip their feet into the
(22:38):
water and really test out a newproduct or formula, they're you
know the price point can be adeterrent.
So a lot of the new customeracquisition skews or products
that we like to test out aremuch lower price points.
We're seeing this across our ownwebsite, which where we have
the most data sets, you know toreally understand the consumer
behavior and all that.
(22:59):
And we're seeing that.
You know customers are buyingor trying our brand for the
first time through the Face Worddevice and then they're coming
back and trying the AlphabetAppeal, which is our flagship
skew.
That's what the brand was builton.
They're trying the newmoisturizer, they're trying the
new serum.
It's a very unusual customeracquisition product, for sure.
But, like I said, when theproduct resonates with the
(23:22):
consumer and the consumerunderstands the need and the
benefits and the results, thenyou've not only want to sell,
but you've won the consumer'sheart.
Speaker 3 (23:32):
I think there's going to be a lot of jealous people
listening, thinking of wow, ourcustomer acquisition strategy is
selling our highest priceproduct.
Just thinking of this wholestory and you know, I guess in
my mind this was a more recentlaunch you're like, no, this is
seven to eight years in themaking to get to this success.
And it was an instant.
You know, it was solid and it'sgotten better and better.
(23:54):
That's an amazing story.
Speaker 2 (23:56):
Yeah, I just hear discipline, discipline in making
sure there are results,discipline in maintaining the
brand, sticking with somethingthat people believed in it's so
it doesn't happen overnight,exactly.
Last question we have for you,vitali, because you've worn a
lot of hats, I think you'reuniquely positioned around
finance and sales and planningand understanding consumers, and
a lot of people are asking thequestion right now what do we
(24:19):
make of this market?
Right, we've got thesecompeting forces around what
we've got?
Inflation and pretty healthyconsumer demand, but also you
know other signals thatcompanies are being more
conservative.
And so, from your vantage, whatdo you make of the market today
?
Speaker 1 (24:35):
If I had the answer to that, you know, I probably
would be working in Wall Street.
I'd be the head fund, exactly.
You know, let's start kind ofwithin our own industry.
You know the beauty industry.
I think there's a lot ofoutside or external entities
that are really understandingand starting to really realize
how beauty is important and howsuccessful a beauty brand can be
(24:57):
or a skincare brand can be,because there is a need.
Where there's a need, there'sdemand.
It's a very tough market.
Competition's very fierce andthe only tool we have is to
really fight the misinformationthat's out there from brands.
You know there's a lot ofpeople getting into the skincare
world that don't really have abackground in, you know,
skincare or dermatology.
There's a lot of celebritiesthat are jumping into skincare
(25:20):
right here.
Hearing a lot of thesecelebrities that are starting
their own brands, I don't know.
Would you buy a car engineeredby a celebrity?
Personally, I probably wouldthink twice about that.
The market itself you know,economically I do think it's a
very skeptical market.
There's a lot of new trendsthat we've never seen in the
past.
Especially when we're dealingwith inflation.
You would expect certain thingsto happen, certain key
(25:44):
indicators to flash, which we'renot seeing in the market.
I mean, inflation was at over10% not too long ago and yet the
markets are still some of thehottest markets.
Some would still say we're inthe bull market at this point,
right now.
Right, it's definitely one ofthose areas where you're trying
to really understand what'shappening.
The way that we're approachingright now is we're prepared for
(26:05):
anything to happen.
Right, we're building two tothree different scenarios.
Financially, you have to beprepared for the worst If there
is a recession, if we are in arecession or a recession does
come, we're not invincible.
We likely will feel the impact.
So we're prepared for ourdecline in sales and you know,
we have certain strategies thatwe will implement.
We want to make sure they'reflexible.
(26:25):
If revenue drops by a certainpercentage, you have to be ready
to make certain cuts.
So we have scenario A, we havescenario B, there's a doomsday
scenario and, yes, you knowwe're part of what's the saying.
There's two recession proofindustries.
There's the alcohol and there'sthe beauty industry.
You drink when you're happy,you drink when you're sad.
Well, beauty, like I said,beauty is not just cosmetics.
(26:50):
It's I think it's, I considerit personally a health industry.
And, of course, what do you do?
You put your health above all.
So we just happen to be verylucky to be in this particular
industry.
But we start to be verycognizant of the consumers.
Right, we have to be cognizantof the average everyday consumer
, the blue color workers, and sowe have to be very cognizant of
our price points.
(27:10):
We actually haven't done aprice increase for the past five
years.
This was the first time we everdone one.
So over the past five years, asour own costs have been
increasing year over year overyear, we've been really
absorbing a lot of that.
We haven't been passing thatdown to the consumer and
fortunately it got to the pointwhere, you know, we couldn't any
longer.
So we did have to look at aprice increase, but once in five
(27:31):
years is I'm sure.
If you ask anyone in anyindustry to only increase the
prices by, you know, once infive years, that's unheard of.
And we understand.
You know we're not the averagepharmacy moisturizer that you
find for six or seven dollars,but the ingredients and the raw
materials are efficacious for areason.
You know the raw materials thatwe use and they're expensive
(27:53):
and that's what leads us to haveto really set these high price
points.
Speaker 2 (27:57):
That really is amazing, vitaly, for five years
in today's environment, not tohave gone through a price
increase.
I mean, we work with a lot ofbrands and that is genuinely the
first I've heard that.
Yeah, as we're talking, it justkeeps coming back to me
discipline and sort of reallypreserving the brand.
It's really cool to hear aboutthat.
Well, fantastic, vitaly.
(28:18):
Really appreciate you joiningus today.
So many interesting insights.
Thanks for joining us here.
On Shellfly oh, thank you forhaving me.
This is, this is great.
This is fun.
You've been listening to VitalySimonian, vice president of
finance at Dr Dennis GrossSkincare.
That's all for this week.
See you next time on Shellfly.
The consumer has never been more educated in our
lifetime than they are today.
Right Again, there's just somany tools out there whether it
be social media, whether it beword of mouth, the internet and
it's just.
The consumer already comes inwith a certain level of
education.
It's just that we're there nowto guide them and answer any
additional questions.
There's just so much data outthere, and I think the biggest
(00:21):
concern for us right now ismisinformation, and that's what
we're kind of battling right nowwith our education, the way
that we market things.
Speaker 2 (00:31):
From Alloy AI.
This is Shelfling.
Speaker 3 (00:49):
How can you stay ahead of consumer trends in a
fast-changing industry?
Speaker 2 (00:53):
How do you educate your consumers in order to drive
more demand?
Speaker 3 (00:56):
How do you push into new verticals successfully?
Speaker 2 (00:58):
What does the uncertain economic climate mean
for consumer brands?
On every episode of Shelf Life,we answer questions like these
and more, with the help ofleaders across the consumer
goods industry.
Speaker 3 (01:09):
Today we welcome Vitaly Simonian, vice president
of finance at Dr Dennis GrossSkincare.
Speaker 2 (01:14):
Vitaly has been with Dr Dennis Gross for 11 years,
where he's helped the businessquadruple in size and grow into
16 markets.
During his time at Dr DennisGross, he's helped drive
strategic growth by partneringcross-functionally in all
aspects of the business, frommarketing and sales to
operations and new businessdevelopment.
Speaker 3 (01:32):
I'm your co-host, joel Beal, ceo of Alloy AI, and
I'm your co-host Logan Ensign,chief customer officer at Alloy
AI.
We'll be back with VitalySimonian right after this.
Speaker 4 (01:44):
Selling consumer goods is a tough job.
Between rising costs, supplydisruptions, price-sensitive
consumers and retail partnerswho have their own set of
priorities, it's becoming harderthan ever to execute today,
much less planned for tomorrow.
There's plenty of data to help,but pulling and analyzing
reports from retailer portals isso tedious and time-consuming
that you can't respond toproblems at the shelf until the
(02:06):
bullwhip hits you in the face.
That's cow, actually.
Now there's Alloyai to help.
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Then we make it easy to findinsights using pre-built
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, predict and respond instantly.
(02:27):
Check it out today and get ademo at Alloyai.
Speaker 2 (02:35):
Vitaly, welcome to shelf life.
Really excited to have youtoday.
Thank you.
Speaker 1 (02:39):
I'm excited to be here.
Speaker 2 (02:41):
How about you get us started with telling us about
your background and what yourcareer journey has looked like
to get you where you are now?
Speaker 1 (02:48):
I can't say it's gone too far, past the DG world or
Dr Dennis Gross skincare world.
I actually joined the brandright out of college.
I did finance in my undergrad.
After undergrad I went andfinished my master's.
I got my MBA Right out ofschool.
I joined the company.
I've now been there for almost11 years.
Actually it was 11 years twodays ago, so I hit my
(03:12):
anniversary point just recently.
It's kind of funny becauseyou're studying finance in
college, You're thinking, oh,I'm going to come out of college
and school and go into banking,I'll be on Wall Street making
these big bucks.
And now I'm in beauty.
Of course I started out doingfinance and accounting for the
beauty industry, but I'm inbeauty and I've been here for 11
(03:32):
years.
So I started out with accountsreceivable, accounts payable,
worked my way up to salesanalysis.
I started getting the hang ofunderstanding and analyzing the
retail business, understandingmarket trends, then kind of
progressed more into theforecasting and demand planning,
Eventually budgeting, internalbudgeting, operations, logistics
.
At some point there was somesales background or experience
(03:54):
there, some marketing.
So, over the years I'vedefinitely worn many hats.
Speaker 2 (03:59):
Interesting, and was there something kind of thinking
back to when you joined DDGthat was compelling about the
company to dive into beauty?
Speaker 1 (04:08):
No, honestly, I was just excited to test something
new.
It's funny.
I got the call I did not reallyhave any background on the
beauty industry, so right away Iactually called the front of
mind, who worked in the beautyindustry.
She was editor, I believe, atAllure magazine at the time and
so as soon as I got off the callwith the interview call, I
called her up and I said hey,have you ever heard of this
(04:29):
skincare brand?
And she said yeah, I actually.
That's my dermatologist.
Dr Gross was her doctor, so shewas a frequent patient of his.
So she told me quite a bitabout the brand and she had
nothing but positive things tosay about it.
And so I said you know what,let me give this a shot.
Speaker 3 (04:46):
And so I went on for another one or two follow up
interviews and things justworked out and what was the
scale of the company at the timeyou joined?
Based on the number of rolesyou've had, I imagine it was
still a pretty small team, whichis exciting because you get a
chance to obviously see probablya lot more things than you
would have if you went to, forexample, a big bank.
Speaker 1 (05:05):
So I want to say the finance department was maybe
three people and that's, youknow, four people.
If you had operations anddevelopment Right now our team
is probably closer to about adozen.
I think total company and staffwise it was maybe around 30 to
40 employees.
Now we're just past the hundredmark.
So we've definitely grown overthe years and we're continuing
(05:27):
to grow.
Speaker 2 (05:27):
Well, and one of the reasons we're really excited to
have you here, vitaly, isbecause you touched so many
parts of the business and, Ithink, get to kind of have a
unique perspective on howdifferent parts of the business
think about problem solving andwhat matters to them.
I think one of the questions wehave for you.
A lot of folks we talked to arequite interested in trying to
(05:48):
better understand trends.
You know we're in a post COVIDworld.
Covid taught us that things canmove quickly, and so I'm
curious, as you think about youknow all your roles, but maybe
especially today, how you allare thinking about responding to
trends.
Speaker 1 (06:05):
That's an interesting question, because I don't think
we've ever been really known asthe trendy brand, right?
If you look at our packaging,we're not the flashy kind.
It's not like we sparkle offthe shelf when you walk in.
Of course, some of ourpackaging is quite beautiful and
a lot of our imagery is donevery well.
We have a very, veryexperienced and highly capable
(06:25):
creative team, but in terms oftrend, we never really thought
ourselves as the trendy brand.
We don't really follow markettrends.
We prefer to say that we followconsumer trends.
You have a lot of people thathave now just kind of begun
talking about fruolic andretinol, lactic acid, hyaluronic
acid, alpha, beta, and to themthese are like the new hot
topics, right, but these aren'tanything new to dermatologists.
(06:47):
Dermatologists have been tryingto advocate for the benefits of
these things for decades now.
So I think it's kind of funnybecause instead of more stuff
seeing the trend and going, oh,let's kind of jump on the trend.
I think Dr Gross is kind ofsitting in his office and is
like ah, finally people arestarting to really understand
what the benefits of these are.
(07:08):
And so what do I mean byconsumer trend?
Dr Gross has his practice andhe's been practicing.
He's been a practicingdermatologist for the last
almost I mean probably more than20 years at this point, and we
kind of like to call hispractice the living lab.
He sees real world concernsfrom his patients and he works
to create solutions to thoseconcerns right.
So it's not the trend thatwe're seeing online or in social
(07:32):
media, it's more so the trendthat he's seeing from his
clients at the practice.
So I call ourselves theconsumer trending brand as
opposed to marketing trending.
Speaker 2 (07:42):
I like that, and when I think of health and beauty, I
think that may be exceptional.
I mean, you guys are probablyfairly unique in how you think
about this.
Speaker 1 (07:50):
Yes, we're in the beauty industry, right, but
we're more so skincare asopposed to makeup, and skincare
that's kind of you know, that'syour health, right.
So, yeah, I do considerourselves as part of the health
industry, as opposed to more sothe front facing beauty or
instant gratification type ofindustry.
Speaker 3 (08:07):
This is fascinating, I think, this comment you've got
this living lab with Dr Gross,which I think is awesome.
You think about productdevelopment and how you test
ideas and you have a veryobvious one, I guess, there,
which I think is quite unique.
Clearly, a lot of theseconcepts, a lot of these
products have been known for awhile, as you mentioned earlier.
So now it's about how youeducate consumers, about how
(08:29):
they can help them and reallytake them to market.
How do you approach that?
As Logan was mentioning, Ithink of and you're right, this
is probably more the beauty sideof health and beauty.
You think these days a lotabout influencer marketing and,
you know, celebrities, all thatkind of thing.
This seems very different.
This is rooted, it sounds like,a little more in science,
medicine.
I'm curious how you bridge thatdivide.
(08:50):
Obviously, you're trying todrive consumer demand, you're
trying to sell more, and what'sthe approach that you take there
?
Speaker 1 (08:56):
From the get-go.
When I just started with thebrand, it was obvious that
education was our number andpriority, right.
I want to say education is howwe market.
We know we don't have theseshowy marketing campaigns to
just drive the consumer in tobuy our product.
Our job is really to amplifywhat Dr Gross teaches in his
practice, and so we useeducation as kind of a means of
(09:18):
marketing his message and whathe's trying to teach it.
Obviously, a million to 10million people can visit Dr
Gross on a weekly basis, right,to really learn about the
benefits of a lot of theseingredients and formulaic
approaches to product.
But social media is a tool thatyou know has been able has
really been helping us amplifythat message.
So what we're doing is we'retrying to compact these
(09:43):
educational sessions that DrGross has in his practice into
these 30-second clips.
So, in other words, we'retrying to pass this educational
message this consumer viaInstagram, via TikTok, through
Twitter, through our own website, through YouTube, right?
So it's great to see that wenow have this tool and that's
what we're using for education.
(10:04):
We're not using it to kind ofjust grab your attention and say
, hey, buy this product.
No, it's really for us to passon Dr Gross's message, and
that's what we're doing.
That's how we market.
Speaker 2 (10:14):
You know you do sell through some traditional beauty
channels, and so, as you workwith retail, do you find that
there's education you're doingat that point as well?
Speaker 1 (10:24):
Yeah, of course.
I mean we have a very largesales team that's on the ground
and they're across the country,it's somewhere international.
They've been taught by Dr Grossdirectly.
You know we have trainingsessions.
We don't just bring onsalespeople and kind of just
send them into the field as justboots on the ground.
They go through pretty rigoroustrainings with Dr Gross himself
.
We have a very talentededucation department that really
(10:45):
trains not only our owninternal staff but also, you
know, we travel to Sephoraevents where we train their cast
members, and cast members arepretty much the team that they
have on the ground.
So we do definitely havetraining within the actual
retail stores.
We have a means of training andultimately, I mean right now
that the consumer has never beenmore educated in our lifetime
(11:07):
than they are today.
Right Again, there's just somany tools out there, whether it
be social media, whether it beword of mouth, the internet, and
it's just, the consumer alreadycomes in with a certain level
of education.
It's just that we're there nowto guide them and answer any
additional questions.
There's just so much data outthere and I think the biggest
concern for us right now ismisinformation, and I think
that's what we're kind ofbattling right now with our
(11:29):
education, the way that wemarket things.
Speaker 3 (11:31):
How do you combat that misinformation, especially
in the health space?
There's so many different ideas, fads, et cetera.
Again, you're a brand that'sreally rooted more in science.
You're founded by a doctor here.
Do you find that that's besthandled by having your
salespeople go into stores anddoing that one-on-one training
(11:52):
and making sure that it's thatpersonal touch?
Is that through marketing andbuilding up a brand that's
really based more in the science?
Speaker 1 (12:00):
The ultimate way to really battle misinformation is
to address it directly, and Ithink DG, or Dr Gross, does that
quite a bit.
He addresses a lot of themisconceptions that are in the
street.
You'll see quite a bit ofvideos that he posts up online
saying this is what I'm seeingpeople do and unfortunately,
this is the incorrect way ofdoing it.
When it comes to dosages ofclinical ingredients, there's
(12:22):
quite a bit of misinformation asto how to really apply them and
how often to apply them.
There's a basic message that DrGross likes to pass on is red
skin, red flag.
So I think the best way ofreally battling a lot of
misinformation is to just attackit head-on.
Speaker 3 (12:36):
I'm also curious to understand.
You said you have a prettyextensive sales team.
They're out visiting I know yousell through Sephora.
What's the goal for that team?
Clearly education is a part ofit.
Maybe that's primarily whatthey do.
My understanding in the beautyspace is that's a more common
approach.
It's you're going into thesestores.
There's a lot of education, alot of really getting closer to
(12:57):
the customer, more so than wemight see with some other
consumer brands where they shipit in and do their marketing but
they're not going into thestore and partnering with that
retailer.
So I'm curious what that retailexecution side of the business
looks like for you.
Speaker 1 (13:11):
So it actually is a partnership with the retailers.
The sales team is constantlygoing into store working with
the team that's in storesSephora's team yes, they are a
sales team, but they aretechnically educators For the
most part.
I think you hear that a lot ofthe sales really rely on
commission as opposed tosalaries.
It could be anywhere between40% salary, 60% commission.
A lot of sales teams work on.
(13:32):
For us it's quite the opposite.
We're not incentivizing theteams to just sell, sell, sell
and push and push and push.
No, we're incentivizing toeducate the consumer.
So we don't want that one sale,we want that consumer that's
coming back and reallyunderstanding how to use these
products and to benefitthemselves With the importance
of that education.
Speaker 3 (13:49):
Does that make you be that much more careful about
which retailers you work with?
You mentioned Sephora.
You obviously have a greatrelationship there.
But when you look at sellingthrough more retailers, some are
probably going to be moreinclined to allow you to come in
and educate.
That's more of their ethos.
Others they just want you toship in the product and sell it.
Curious how that makes youthink about distribution.
Speaker 1 (14:08):
We're hearing pitches from retailers left and right,
other retailers and there'squite a bit of other retailers
that are fairly big and namedcompetitors to Sephora and
they've been reaching out to usfor years now.
We are very cognizant of who wework with.
We're very cognizant of thepartners and what their
relationship is with consumer.
We find that our partnershipwith Sephora is the best
(14:29):
approach for really meeting theconsumer's needs and for getting
Dr Gross's message out.
We're not just trying to shippipeline into every single
retailer that's out there.
Like I said, it's not about thesale, it's about the consumer.
Speaker 3 (14:41):
It's such an interesting concept because we
see across a lot of brands thattension.
Obviously, everyone is lookingto sell more, they want to get
into more channels, they want tosell across more retailers or
regions, et cetera.
Yet it's so easy to getoverextended.
You start putting your productsin places where, yes, you're
going to sell a little bit more,but you can damage your brand.
(15:03):
It's very interesting hearingfrom you great products, You've
got a great partnership insaying, hey, let's keep working
on this one.
I'm sure you look for otheropportunities as well, but not
just taking everyone who'sinterested.
That requires a lot ofdiscipline.
Again, it's something that wesee.
We see brands expand out andthen start to pull back as they
realize okay, that's a lot ofwork.
(15:24):
We're damaging our brand.
We need to optimize.
Speaker 1 (15:27):
Yeah, we're not perfect either.
We've dipped our feet in otherwaters.
We've tried out some retailerswhich we were maybe a little bit
hesitant on.
It just didn't work out.
We agreed to mutually.
Part ways we didn't hurt ourbrand.
We try new things every once ina while, but we know the heart
of the message that we want toreally share.
It's through very, veryparticular partnerships and with
(15:47):
partners that really believe inthe same exact mantra as we did
.
Speaker 3 (15:50):
Something that we know about your business is that
you have started sellingdevices.
It's a bit of a new category.
You start talking aboutdifferent supply chain,
different, I imagine, salesmotion.
Maybe there's more similaritiesthan I would normally expect.
I'm curious to betterunderstand what led to the
decision to expand.
What's the process of entering,kind of a new vertical?
Speaker 1 (16:10):
Yeah, we actually entered the device market, I
want to say maybe 10 years ago,maybe a little bit more.
We entered initially with thesteamer device that we had,
which did very well for us, andthe most recent I think one of
the hottest items on the marketand doing a phenomenal job, is
the LED faceware device that wehave.
I think it's a little funnythat it's a shocker for some,
(16:30):
you know, for I guess the waythat you made it sound is, if
you're surprised, the devicemarket.
But I don't think it'ssurprising at all.
I mean, we're a skincare brand,right, we're not a moisturizer
and serum brand.
You know, once again, our goalis to bring the practice home to
the consumer, right, we want tobring Dr Gross's message and
what he's doing in his practiceto the consumer so that they're
able to kind of replicate thatat home in a safe environment
(16:50):
and safe way.
So we're constantly developingnew technologies, and by
technology I don't mean a device, I don't mean the actual
steamer or the actual LED deviceitself.
I mean the technology is.
It's a means of delivering aningredient or a for me, leg
benefit to a certain target air.
A moisturizer's technology,right, that's a means of
delivering a benefit to acertain area.
(17:12):
A serum is a technology, and sois a device right.
So a device is a means ofdelivering the benefit of light
therapy to the skin.
Speaker 2 (17:22):
What about more on the the execution side?
Did it present new challengesin terms of production and
transportation and forecastingand planning, or did you even
find through this that itoperates fairly similarly or you
were well equipped to handlefrom a supply chain perspective?
Speaker 1 (17:39):
Supply chain wise.
Surprisingly, it isn't thatmuch different.
Of course, now you know youhave the batteries that you have
to worry about and, as I'm suremany people have heard already,
there are certain regulatoryrequirements that we have to buy
by when it comes to devices andlike batteries and light
therapy in general.
There was quite a bit of alearning curve, but not as much
as some would think.
(17:59):
What really helped us succeedin this market was I can't say
we were the first market movers,for sure, but we definitely one
of them and we definitely didit best, which is why our name
is really attached to a high endLED device product.
So right now, I want to saythat we probably have the number
one selling LED face mask andthere's quite a bit of imitators
(18:21):
out there.
So you know, imitation is aform of flattery, but I do want
to consider us as a first marketmover and it's really tough to
knock out a first market mover.
It's tough to knock out a kingand that face or device is a
king.
Speaker 2 (18:34):
We find new product launches, from the conception
all the way through to execution, are really key to people's
overall strategy.
So I think you've mentioned twokey concepts right First mover
or near first mover, great brandbut do you have other
perspectives on why your newproduct launches go well, or how
do you think about that sort ofin the whole life cycle of new
(18:57):
product launches?
Speaker 1 (18:58):
This was an unorthodox life cycle of a
launch, because we launched theface or device five or six years
ago and it hasn't been tilllike the last year and a half
where it's really resonated withconsumers and in the market.
It's really interesting becauseit's not as if we're constantly
pushing out marketing.
Behind it there's quite a bitof organic growth.
(19:18):
You know we're seeing thedevice in Netflix shows, we're
seeing the device in Hulu shows,we're seeing influencers and
celebrities posting about thedevice and these aren't seated
placements.
A lot of these things weresurprised and shocked to see
like, oh, look at that, thisperson posted about us.
Holy crap, did you see that?
So I think that actually speaksfor the product itself.
You know there's two life,there's two life cycles to
(19:39):
launch.
There's the marketing andthere's kind of the regular run
rate, right.
So a product coming out the gate, the success of the product net
gate is based on the marketingitself.
If it doesn't come out well,chances are because it wasn't
didn't have a strong enoughmarketing campaign behind it.
The consumer wasn't educated tothe point why they need to.
They understood why they neededto try this product, why it
would help them.
How is it beneficial?
(19:59):
So at the very beginning it isvery much the product.
After maybe a six week, andsometimes it could be as long as
a six month period, that'swhere you really start to
understand whether the productresonates with the consumer
themselves.
Did the consumer come backbecause they understood the
benefits, because it works forthem, it's beneficial to them?
So now they're replenishing onit, they're purchasing it on it
again, right?
(20:19):
So now we really have anunderstanding of the run rate
and the success of the productitself versus the success of the
actual marketing campaign.
Speaker 3 (20:26):
I'm visualizing the sales curve for this product
right now, which sounds a littlebit unconventional yeah, it is
Versus your typical launch andwhat that looks like.
Was that something that you sawcoming as it really started to
take off?
Was that something that caughtyou completely by surprise?
Were you able to forecast that?
Okay, I mean, if it happened inthe last couple of years, when
there were all the supply chainissues, did you find that that
(20:47):
impacted things?
Speaker 1 (20:48):
I can't say that I am too surprised because even over
the past five or six years wehave had an issue of really
producing to demand.
Not to the extent that we'rehaving, you know, over the past
six to 12 months that we've seenrecently, definitely not to
that extent.
But you know, the demand wasthere and it was gradually
growing at a very healthy rate.
(21:09):
And then it's just this, youknow, all of a sudden this spike
or this foraging that we'veseen, and now it's just like are
we need to get ahead of this?
So now we're planning, like twoyears down the line as opposed
to, you know, the next sixmonths of inventory or 12 months
past that we actually we don'teven think we've hit the run
right yet.
We still don't understandexactly what the average, you
know sales volume is, becauseevery once in a while you know,
(21:32):
every other month or so therewill be a retail that's out of
stock and we just can't fillthem completely to their full
demand.
So we're still learning.
But at no point did I questionthe possible success of this
product.
Our CEO, kerry Gross, drGross's wife, who has been, you
know, the key person to reallybring the brand to where it is
today.
She had no doubts about it, andI mean, she's the one that
(21:53):
lives with Dr Gross on a dailybasis, right?
So she knows where his mind isand she knows exactly what he
believes the true benefits ofany of his products to be.
Speaker 3 (22:04):
Do you find a lot of cross-selling across?
You know people that buy yourLED device.
Are they also gonna be buyingmore traditional products?
At least in the way that I lookat it, is that something that
you look at or do you find thatit's kind of a different
consumer?
Speaker 1 (22:16):
Funny, you're actually hitting on a lot of key
points.
We actually have reached thepoint of the life cycle of this
product where it is a newcustomer acquisition.
It's really hard to believebecause the product is a high
price point product.
Right, when we look at customeracquisition skews or products,
we typically look at lower costproducts because you know the
consumer.
When they're hesitant toactually dip their feet into the
(22:38):
water and really test out a newproduct or formula, they're you
know the price point can be adeterrent.
So a lot of the new customeracquisition skews or products
that we like to test out aremuch lower price points.
We're seeing this across our ownwebsite, which where we have
the most data sets, you know toreally understand the consumer
behavior and all that.
(22:59):
And we're seeing that.
You know customers are buyingor trying our brand for the
first time through the Face Worddevice and then they're coming
back and trying the AlphabetAppeal, which is our flagship
skew.
That's what the brand was builton.
They're trying the newmoisturizer, they're trying the
new serum.
It's a very unusual customeracquisition product, for sure.
But, like I said, when theproduct resonates with the
(23:22):
consumer and the consumerunderstands the need and the
benefits and the results, thenyou've not only want to sell,
but you've won the consumer'sheart.
Speaker 3 (23:32):
I think there's going to be a lot of jealous people
listening, thinking of wow, ourcustomer acquisition strategy is
selling our highest priceproduct.
Just thinking of this wholestory and you know, I guess in
my mind this was a more recentlaunch you're like, no, this is
seven to eight years in themaking to get to this success.
And it was an instant.
You know, it was solid and it'sgotten better and better.
(23:54):
That's an amazing story.
Speaker 2 (23:56):
Yeah, I just hear discipline, discipline in making
sure there are results,discipline in maintaining the
brand, sticking with somethingthat people believed in it's so
it doesn't happen overnight,exactly.
Last question we have for you,vitali, because you've worn a
lot of hats, I think you'reuniquely positioned around
finance and sales and planningand understanding consumers, and
a lot of people are asking thequestion right now what do we
(24:19):
make of this market?
Right, we've got thesecompeting forces around what
we've got?
Inflation and pretty healthyconsumer demand, but also you
know other signals thatcompanies are being more
conservative.
And so, from your vantage, whatdo you make of the market today
?
Speaker 1 (24:35):
If I had the answer to that, you know, I probably
would be working in Wall Street.
I'd be the head fund, exactly.
You know, let's start kind ofwithin our own industry.
You know the beauty industry.
I think there's a lot ofoutside or external entities
that are really understandingand starting to really realize
how beauty is important and howsuccessful a beauty brand can be
(24:57):
or a skincare brand can be,because there is a need.
Where there's a need, there'sdemand.
It's a very tough market.
Competition's very fierce andthe only tool we have is to
really fight the misinformationthat's out there from brands.
You know there's a lot ofpeople getting into the skincare
world that don't really have abackground in, you know,
skincare or dermatology.
There's a lot of celebritiesthat are jumping into skincare
(25:20):
right here.
Hearing a lot of thesecelebrities that are starting
their own brands, I don't know.
Would you buy a car engineeredby a celebrity?
Personally, I probably wouldthink twice about that.
The market itself you know,economically I do think it's a
very skeptical market.
There's a lot of new trendsthat we've never seen in the
past.
Especially when we're dealingwith inflation.
You would expect certain thingsto happen, certain key
(25:44):
indicators to flash, which we'renot seeing in the market.
I mean, inflation was at over10% not too long ago and yet the
markets are still some of thehottest markets.
Some would still say we're inthe bull market at this point,
right now.
Right, it's definitely one ofthose areas where you're trying
to really understand what'shappening.
The way that we're approachingright now is we're prepared for
(26:05):
anything to happen.
Right, we're building two tothree different scenarios.
Financially, you have to beprepared for the worst If there
is a recession, if we are in arecession or a recession does
come, we're not invincible.
We likely will feel the impact.
So we're prepared for ourdecline in sales and you know,
we have certain strategies thatwe will implement.
We want to make sure they'reflexible.
(26:25):
If revenue drops by a certainpercentage, you have to be ready
to make certain cuts.
So we have scenario A, we havescenario B, there's a doomsday
scenario and, yes, you knowwe're part of what's the saying.
There's two recession proofindustries.
There's the alcohol and there'sthe beauty industry.
You drink when you're happy,you drink when you're sad.
Well, beauty, like I said,beauty is not just cosmetics.
(26:50):
It's I think it's, I considerit personally a health industry.
And, of course, what do you do?
You put your health above all.
So we just happen to be verylucky to be in this particular
industry.
But we start to be verycognizant of the consumers.
Right, we have to be cognizantof the average everyday consumer
, the blue color workers, and sowe have to be very cognizant of
our price points.
(27:10):
We actually haven't done aprice increase for the past five
years.
This was the first time we everdone one.
So over the past five years, asour own costs have been
increasing year over year overyear, we've been really
absorbing a lot of that.
We haven't been passing thatdown to the consumer and
fortunately it got to the pointwhere, you know, we couldn't any
longer.
So we did have to look at aprice increase, but once in five
(27:31):
years is I'm sure.
If you ask anyone in anyindustry to only increase the
prices by, you know, once infive years, that's unheard of.
And we understand.
You know we're not the averagepharmacy moisturizer that you
find for six or seven dollars,but the ingredients and the raw
materials are efficacious for areason.
You know the raw materials thatwe use and they're expensive
(27:53):
and that's what leads us to haveto really set these high price
points.
Speaker 2 (27:57):
That really is amazing, vitaly, for five years
in today's environment, not tohave gone through a price
increase.
I mean, we work with a lot ofbrands and that is genuinely the
first I've heard that.
Yeah, as we're talking, it justkeeps coming back to me
discipline and sort of reallypreserving the brand.
It's really cool to hear aboutthat.
Well, fantastic, vitaly.
(28:18):
Really appreciate you joiningus today.
So many interesting insights.
Thanks for joining us here.
On Shellfly oh, thank you forhaving me.
This is, this is great.
This is fun.
You've been listening to VitalySimonian, vice president of
finance at Dr Dennis GrossSkincare.
That's all for this week.
See you next time on Shellfly.
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