LONDON — Neal’s Yard Remedies is cozying up to customers where they live, as part of its growth strategy.
This story first appeared in the November 13, 2009 issue of WWD. Subscribe Today.
The natural treatment brand is considering expanding its home-selling business to English-language markets, including Australia, South Africa and New Zealand, after it began selling its products via consultant-hosted parties in the U.K. and the U.S. earlier this year.
“We wanted to get to places like Scotland, for example, where you can’t get as much penetration with stores as you can with home shopping or the Internet,” said company chairman Peter Kindersley, adding the home-shopping channel offers an opportunity to stake a claim on a market without a massive initial investment. “We see it as a great way into the U.S.”
After having only a small U.S. presence for a number of years, Neal’s Yard is available in 30 states since its associates began selling there on Sept. 14. (In the U.S., the home-selling business is called NYR Organic.)
“It’s going extremely well. We’re very pleased,” said Kindersley, noting the timing was right for such a move despite the economic downturn, since people are still concerned about the environment and interested in learning about natural skin care.
“With home selling, we can speak with the customer for two hours, whereas it’s a tall order to have as much as six minutes with them in stores,” said Kindersley, who acquired 85 percent of Neal’s Yard in 2005 and then the remainder of the business in 2007. “That way we have the ability to explain the brand to them.”
Through the home-shopping channel, Neal’s Yard is selling 120 references — mainly from its skin care lineup as well as some essential oils.
“We give the associates training on the products, on how to hold a party and attract business,” said Kindersley, who has prior experience of home selling via the Dorling Kindersley publishing business he cofounded. “Home selling is one of the largest growing micro businesses in the world. Through it, a brand can be associated with empowering people to live the types of lives they want to live.”
On average, a Neal’s Yard party comprises seven guests and generates sales of 330 pounds to 350 pounds, or $541 to $573 at current exchange.
“The home-selling channel works well outside urban settings,” said Shirin Valipour, Neal’s Yard’s marketing director. “[In this economic climate] it’s also good to have a presence in multiple channels.”
The move into home shopping follows a year of retail expansion for Neal’s Yard, which opened nine stores in the U.K., including the Organic Beauty Spa on the storied King’s Road in London. It also introduced a 13-unit treatment line for men and revamped its baby-oriented offering.
“This year is about home selling and the U.S.,” said Valipour. “We want them to be consolidated perfectly before expanding further.”
Neal’s Yard is also looking to open stores in the U.S. in the medium term, ideally in New York, Los Angeles and San Francisco. Rollout plans for mainland Europe are also on the cards in the coming years.
Kindersley is projecting sales growth in the region of 20 percent for 2009, which would see the brand’s revenues hit 17 million pounds, or $27.8 million.
Today, Neal’s Yard’s own stores and franchises generate about 65 percent of its sales; direct selling via its catalogue and the Internet, 11 percent; international business, 10 percent; wholesale, 10 percent, and home selling, 3 percent.