Is Liz Earle unravelling?

liz-earle-cleanse-and-polish

I’m very grateful to Eric for drawing my attention to a job advertised on the Liz Earle website. It is described as a continuous improvement buyer. I suppose “Purchasing Manager” would sound a bit old fashioned.  But most job adverts have their fair share of trendy verbiage.  This particular one has some interesting features.

For a start there is an obvious emphasis on cost reduction.  The third paragraph spells it out.

Your main responsibility will be to reduce costs and deliver value across our packaging category

So bring your own hatchet.  Needless to say you have to do this

whilst maintaining excellent standards of quality and delivery.

Of course.  We all know that cutting costs can be done without loss of quality.  No problem.

Well sometimes you can reduce costs without adversely affecting quality – there are better ways of doing things that might have been missed or opportunities arise.  We all need to keep our eyes open and our brains receptive to this.  But the place where costs really need to be thought about seriously isn’t in the purchasing office but in the NPD process.  Getting the margin right is pretty much the most important single aspect of New Product Development.  If you need to get a bright new purchasing manager in to solve your cost problem you really aren’t doing it right.

I don’t know what is going on at Liz Earle.  I have been keeping an eye on them since they were bought by Avon.  But I have no insider knowledge and I don’t even know anybody involved with the company well.  So I might be well off the mark.  But the impression I am getting is that they are changing the nature of the business quite significantly and the changes are causing strains.  Going back to the job advert.

You will be required to lead cross-functional teams with conflicting requirements to decisions relating to supplier selection, quality issues resolution, cost/service/quality choices.

It sounds like there are a lot of arguments going on at their headquarters on the Isle of Wight.  One has to be impressed by the honesty of the HR department in putting that in the public domain, but it does make you wonder what you will be letting yourself in for if you applied for the job.

Liz Earle had some well publicised redundancies late last year.  I think it is a good rule of thumb that if a company is making people redundant that is a company you probably don’t want to go and work for.  A company that has an emphasis on cost reduction isn’t such an obvious red flag, but when you think about it the risk is the same.  Saving money by cutting your staff is not very different to saving money by cutting your costs.  Indeed you might well simply oblige your suppliers or ex-suppliers to lose staff.  It is all part of the same general approach.

And cost cutting will never create new sales.

The real answer is to do NPD properly.  New Product Development has as its aim creating new value which creates new sales and widens your customer base.  Doing that well is hard work and time consuming.  You shouldn’t have time to have “conflicting requirements to decisions”.

As I say, I don’t know what the actual situation at Liz Earle is.  I am talking in general terms.  It might well be that Avon’s long term plan is to incorporate the Liz Earle brand into their overall manufacturing and distribution network.  This would make it a sub brand rather than an independent business unit.  Their current product portfolio is a strong one with a loyal following.  Their sales are certainly respectable.  And I would have thought that getting listed in Boots must have brought them to the attention of large number of customers who previously hadn’t even heard of them.

I’d be surprised if they were to vanish altogether. In fact I am sure the products will be around for many years to come.  But will they continue to be made on the Isle of Wight, or even in Britain?  I am not so sure.

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Here is the job on the Liz Earle website

http://uk.lizearle.com/job-continuous-improvement-buyer

And here are some of my other Liz Earle posts

Liz Earle – Naughty Marketer

Cleanse and Polish Review

11 thoughts on “Is Liz Earle unravelling?

  1. Charlie

    I was thinking about the company last night, about how they used to have fantastic in house PR who simply couldn’t do enough either in terms of information or samples, truly a helpful, polite team who excelled….now, nothing. I see no coverage on blogs anymore and contact is rare and when it does appear it is largely because they want you to blog about something for nothing. Such a shame, bloggers were amongst their biggest promoters!

  2. Colin Post author

    Yes that is a good point Charlie. They used to be very good at that sort of thing. I think it is interesting the way when things start going wrong at a company it sort of affects everything. People get more interested in avoiding and assigning blame than coming up with great products or listening to customers. I am not saying this is happening at Liz Earle, but it is a pattern. Cost cutting and getting rid of people always seem to be part of the picture when things go bad, and it gets hard to spot what is cause and what is effect.

    Keeping bloggers happy isn’t likely to lead to big effects in the short run so you can see why that is one of the first things to go.

  3. Lenny Polley

    Great article, Colin. I totally agree with you. I believe that cost cutting will never create new sales. It’s all about NPD with great advertisements.

  4. Musicalhouses

    Great comments, Colin, I love it when you talk about the business side of things. I absolutely agree that designing new products to cost/margin goals is also more likely to produce successful competitive products than designing something that is not cost-competitive, hoping that you can cost-down it later. I am very sure the same could be said across all industries, B2B and B2C (unless you are, say, a farmer or something). Cost-down via cutting margins once the product is already developed is rarely that simple! And as a beauty blogger I echo Charlie’s thoughts on Liz Earle’s PR – they used to have a couple of in-house PR staff who were fabulous – great rapport with bloggers, responsive, and pleasant to work with, and sometime end of last year they subcontracted out their PR work to an agency. The agency is doing alright, as far as I can tell, but of course some of the great rapport is lost as relationships are not 100% transferable. The treatment I get is now identical to that from other PR companies: mass email blasts with a press release and little else. The problem is that I do get quite a number of such email blasts a day, so it no longer stands out in the trickle. An email from an in-house PR is always more likely to catch the eye, for some reason – perhaps the @company.com instead of @PRagency.com makes a difference when we scan our inboxes. Nevertheless, I do like the company and I hope they succeed! Nothing makes me sadder than hearing bad news from company I am fond of (and that has some good products).

  5. Ed

    Hi Colin,

    I know several of Liz Earle’s suppliers – with a couple of honourable exceptions, these suppliers are substantially more expensive than others in the sector for the same quality.

    Former employees and suppliers to LE told me that the company was overmanned and the products were overpackaged – I don’t know if that is or was ever true as I haven’t seen the figures, but their honest job posting certainly suggests it might be.

    Up until Avon took over, Liz Earle didn’t have much distribution – John Lewis and QVC being the big ones – but the company got a substantial portion of its sales from its website.

    If you’re cutting out the middleman and selling direct, you can afford to overservice your customers and not worry too much about margins – you’re still making money….not as much as you could perhaps, but it is hard to fault a company that is profitable.

    Yes, creating a product formulation that allows you to earn a margin is important and with the Liz Earle main range, they do sell at what I’d term “value” price points – £13.25 for a 100ml cleanser for instance, which is tricky.

    However, I think in LE’s case, I can’t see the cost of ingredients being a problem and I’m sure they’ll be doing what we all do with ingredient suppliers – as your annual requirement goes up, you negotiate better deals with suppliers.

    Where you will likely see savings is in the boxes and bottles and cutting back on the inserts, glossy catalogues, generous samples, pouches, custom mail boxes, tissue paper and ribbons – all of which was done to a higher standard at LE than many premium brands charging 5 to 10 times the RRP.

    Margins become a much bigger issue when you are selling to stores that just eat it up. I’ve met LE’s Boots Account Manager – a very smart guy who would have told LE that Boots’ 65% margin is just a jumping off point – you have to pay for the shelf fees, marketing displays, fully funded two-for-ones….and even chip in to the Christmas Party!

    So yes, NPD is important if you’re selling at the value end to Boots or one of the supermarkets, because every penny really counts – and with 300 stores (i.e. just the premium ones), every extra penny of profit soon adds up too.

    However, in this case, I think Avon are making a smart move in getting on top of their packaging costs which will be the low hanging fruit of cost cutting – they can make substantial savings without affecting product quality.

    Where LE may come unstuck is on the Avonisation of the brand – once you lose the founders (OK, Liz is sticking around to do some ambassadorial work) and you lose lots of the nice little extras that made the brand special (if less profitable), and it is run by Avon execs who care little for the Isle of Wight heritage and the longserving staff who built the brand…..then what are you left with?

    Lets hope it is a profitable company that can win some new customers.

  6. Lily Parkes

    If they were bought by Avon, there’s a greater chance they can improve their company’s performance. Avon is very popular and it can boost their sales. IMO, they will win more customers with this new development.

  7. April Jacobs

    I think the problem was the poor marketing management on the part of the company. Most products were unknown to millions of prospective buyers . If they feel like its not getting so many earnings, they tend to sell it immediately to bigger companies fearing that it might get so many loses.

  8. Sandra Blaine

    I’m sure Avon can make something good for the future of this product. Cost cutting is not the answer to their problems. It just need a good marketing strategy.

  9. Jessie Bryant

    I’ve been using Liz Earle for almost a year now. I’m satisfied with this product. I never thought it was bought by Avon. Well, I don’t mind if they have troubles in the past as long as I’m totally satisfied with this product. 🙂

  10. Jo James

    People writing on these pages have no idea how a successful business is run. I expect Avon came in and took one look at the over heads and realised that they were paying way over the odd for a lots of things and that there were staff/roles in the business that were just not contributing to the bottom line. Cutting costs does not always mean a business is in trouble. Most likely means that there is a pressure from Avon to make a bigger profit from margins. Having some experience of the previous owners of the business (who have expensive taste) i’m sure corners could be cut with out compromising quality.

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