Wednesday, August 21, 2019

New Owner! New CEO! New Hope!

"It is our time. Let's get busy." 

Let's begin with a few FAQs: 

Avon North America is a separate entity from Avon International. That split happened 3 to 4 years ago, and about 80% of the Avon North America stock was purchased by an investment company, Cerebus. Naturally, changes were made that were designed to help the financial footing of the company. While many were good, others did not work out so well as Representatives hoped. Having been an Independent Avon Sales Representative myself for over 32 years and having been the Leader of the Cloud Climbers Team for about 20 years, certainly I want what is best for the company and what is best for the Representatives of the company. 

This past year, plans were made to sell Avon North America to LG H&H, a company that is also firmly established and well know around the world. Actually, most people in America know the LG name, but may not be familiar with the "H&H" - Household and Healthcare - division of the company. It is that division that has complete ownership of Avon North America, as of August 14, 2019. LG H&H already owns many beauty brands, including Avon in South Korea, and now they own us!

We have been anxiously awaiting our first words from our new CEO, and they came to us in the form of an email yesterday. Can I just say that Avon Reps in the USA are EXCITED?!!!!! I was reading posts and comments by my peers in several different groups on Facebook yesterday, along with posting my own, of course, and everything has been upbeat and positive. Mr. Paul Yi spoke clearly and to the point and gave us information that we can get fired up about. While other companies are closing or taking away networking opportunities, Avon is ready to keep on doing what we've been doing for 133 years, namely selling quality products at affordable prices while offering a great business opportunity to those who are ready to "get busy" as Avon entrepreneurs!  

And now, those words from our new CEO: 

Dear Avon Representatives, 

Together, we find ourselves here at a crucial juncture in Avon’s proud history. Our founders invented a new kind of company based on direct selling that unleashed the entrepreneurial spirit of women, providing economic opportunity for generations. In recent years, external challenges to our business model, and declining business performance, have created self-doubt around their original vision of self-reliance and empowerment. 

We now share the heavy responsibility to turn the page, and open a new chapter in our story. Despite past setbacks and turmoil, we must look to the future with resolve and determination—and regain our place among the world’s most admired direct selling companies. We will earn the right to be winners. 

My optimism is not unfounded. More so than at any other time in our history, Avon is poised for success. 

First, LG H&H has both the resources and long-term mindset required to sustain proper levels of investment. Like Avon, LG H&H is also an iconic brand, and a company of global significance that affects countless lives. The match between the two was conceived in hopes of what can be accomplished in the next quarter century, not where we will be in the next quarter. Investment, after all, is just another form of confidence—a deep conviction that our best days are ahead of us. 

I know first-hand that the leadership of LG H&H has no interest in band-aid solutions, or in kicking the can down the road. Instead, LG H&H will deploy its significant resources—money, people, R&D, brands—to put Avon in the best position to succeed. These investments will be strategic, impactful, and will be driven by what the business requires, not constrained by the limit on our credit line, or how much cash we have on hand. Avon is thirsty for investment, and LG H&H is a parent company that generates over a billion dollars in operating profit per year. 

Second, LG H&H has re-affirmed its commitment to the direct selling model, and to the Avon Representatives that make it work. As with any transition, changes are required. What will become crystal clear over the coming months is that the entire company is being aligned to support a single objective: the success of Representatives. The changes are sweeping. All company functions including marketing, supply chain, IT, sales, R&D are being re-organized around the direct selling model, and in support of Representatives. 

Such clarity is a powerful management force. Consider Avon's past reaction to internet adoption and to the rise of e-commerce. 

While online tools and platforms are useful, they must be deployed thoughtfully so they reinforce the Representative model, rather than undermine it. Direct sales to consumers on, for example, puts Avon in competition with Representatives. So this practice will be ended immediately. Also, since Representatives are the living, breathing connection to our consumers, there’s no need to push the internet as a substitute for human contact. Avon must leverage Representatives as an asset, rather than diminish their importance through automation. So, the regional support structure for Represenatives will be restored, and physical centers are being created across the country. 

With the combination of Avon and LG H&H now complete, we have the wind at our backs like never before. It is our time. Let’s get busy. 

Paul Yi 
CEO, New Avon

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