What does Revlon Consumer Products Corp. s acquisition of Creative Nail Design Systems, Inc., mean to Revlon, Creative, and the rest of the industry?
Flashback: 1931. A woman who got a manicure could expect to choose from just a few shades of nail enamel, all of which were not much more than translucent stains. But this all changed in 1932 when Charles Revson teamed up with his brother Joseph, a production expert, and Charles Lachman (the “L” in Revlon), a chemist, to create a long-lasting nail enamel in a rainbow of colors. As the story goes, Revson mixed his own polish colors in buckets in his garage, painted each of his own fingernails a different color, and drove from salon to salon, showing manicurists the colors and taking orders. Today, Revlon holds 23.5% of the dollar market share in retail nail polish, according to Nielsen Market Research (percentage figure for the nine month period ending September 30, 1995).
Flashback: 1978. Acrylics were to nails what polish had been in the 1920s: the technology existed, but it was far from perfect. During a visit to her dentist, one dissatisfied nail technician recognized the smell of the material her dentist was using to make a temporary crown for her as the same .smell that came from the product she used to sculpt nails. The nail technician explained to her dentist how she used acrylic to coat and extend natural nails, and then complained to him that the product she used yellowed and became brittle with age. Her complaints piqued the interest of her dentist, a closet inventor. Dr. Stuart Nordstrom went home to his garage laboratory and mixed up some test batches of a product he thought would work well for nails. He sent his patient a sample to test, and it wasn’t long before nail technicians were calling him at home, asking how they could get the product. Soon Dr. Nordstrom’s wife, Mary, and children Jim, Jan, and Tommy, were going from salon to salon demonstrating the acrylic product. Eighteen years later, Creative is one of the top professional nail care companies.
The times were different, the needs were different, but Charles Revson and Dr. Stuart Nordstrom had visions that wrought changes to the professional industry. While both men are gone now, their visions live on in Revlon Consumer Products Corp. and Creative Nail Design Systems, Inc. As of last November, those visions became one.
Creative Takes Revlon Back to Its Roots
Rumors had been circulating for about two years before Revlon announced its acquisition of Creative on November 10, 1995. Since the deal was announced, speculation has turned to whether Creative’s products will be taken retail. No chance, say Jan Arnold, president of Creative, and her brother Jim Nordstrom, CEO. “Revlon already leads retail. If they wanted to enhance their retail position, they wouldn’t have bought Creative. Revlon wants to get closer to the professional side of the business, so Creative’s commitment to the professional is only strengthened by the acquisition,” says Arnold.
John Hammer, president of Revlon Professional U.S.A, explains Revlon’s motives for acquiring Creative. “We have a strong desire to strengthen our professional division,” he says. “There are two ways for a company to do this: It can grow internally and it can grow by acquisition.” Hammer cites Creative’s energetic management team, innovative products, strong relationships with its distributors, and proven successes as the reasons Revlon chose to pursue Creative.
Creative s current management team will remain in place, and the company will operate independently of Revlon. “As a freestanding, independently managed company, Creative has total continuity, and there is no plan from Revlon Professional to change any of that,” says Hammer.
Adds Nordstrom, “Revlon has made us a stand-alone operation. Our entire management team is intact and in place, moving toward the future. We’ll continue all manufacturing and distribution from our Vista, Calif., facility and we’ll continue to manage our own distribution network.”
Arnold adds, “As long as our company grows and excels, it would be foolish to mess with our magic. We have personality, vision, and style. The word from Revlon is to just keep doing what we’re doing.”
Creative Gains a Gold Mine in Resources
What does Creative gain from moving under the Revlon umbrella? “Tremendous resources,” responds Nordstrom. He says Creative will reap benefits in three areas: research and development, international expansion, and marketing research.
“Revlon has a real commitment to research,” says Nordstrom. “We have two chemists; Revlon has about 100. For a company of outsize, most of our R&D dollars, by necessity, go into project-oriented spending. But Revlon, which is a $1.8 billion company, can look into new areas of opportunity.”
Internationally Revlon’s products are sold in 175 countries, says Nordstrom, which gives Creative access to manufacturing facilities and distribution networks worldwide.
As for marketing information, “We have access to all of Revlon’s market research on colors for the upcoming seasons,” says Nordstrom. “Revlon also has a phenomenal database of consumer information from surveys and focus groups on consumer habits, needs, and expectations.”
While the company foresees many changes in these areas, its strategies at the salon and distributor levels remain unchanged, says Arnold.
One change Arnold hopes to see is at Revlon. She says, “If you see nail enhancements on Revlon’s supermodels, the consumer exposure will be nothing but excellent news for the salon business.”