Tony and Steve Cuccio, founders of Star Nails Products, are a couple of guys from Brooklyn who have taken a private label and bulk packaging and turned them into “magic” for the nail care professional.
By offering their line of products and private label theory, which includes a growing contingent of nail products and accessories, and an impressive array cosmetic, Star’s growing success has established this firm as a legitimate manufacturer and supplier for the nail industry.
It hasn’t been easy. Their low price and unique marketing approach have made them a wholesaler with more than one enemy. But as Tony puts it in the interview that follows, ‘We care only for the professional manicurist.’
It is precisely this outspoken behavior and reputation, however, that have enabled the firm to present their vision that includes bulk packaging (primarily in clear, plastic tubes) as an avenue toward lower product prices to the retail care professional, and as an effective tool for in-salon retailing .
“Our purpose,” reiterates Tony “is to make the manicurist money. We make a nickel, she makes .95, she loves us forever.”
Tony and Steve saw the demand for nail products in California and ... moved from New York to be in the middle of Los Angeles, “the nail capital.”
Star (Steve-vice president, Tony-president and Roberta secretary/treasurer) entered the industry in 1981 when they arrived in California with 13 suitcases, one of which was filled with nail polish and lipsticks. By selling them on the corner in Venice Beach, they soon realized the demand for nail polish and “discovered” the nail industry.
With their private label cosmetics background and contacts, they established Star in a similar manner ... that being the then unheard of approach of selling no-label polish and cosmetics to the manicurist and nail salons direct ... with the further option of salon private label.
They used polish as a loss leader, buying it for .50 and selling it for.60 in an effort to prove that no label polish, at least theirs, was top quality. It was a tough choice. They not only had to prove themselves as a company, but they had to prove that price is not always indicative of quality. (Star still goes to extra expense to ship thousands of gallons from the East Coast to California to be bottled.)
Ultimately they did both. But the interesting thing about this company is that the no-name wholesaler is now a sought after label in it’s own right, as the manicurist realizes the benefits of their program and their growing reputation for quality products at reasonable prices. In a sense they have come full circle.
For Tony and Steve, this successful transition presents no dilemma…they are quite proud of their growth and company.
“It’s the manicurist,” they say. “We have always had her best interests in mind and always will. It is her and our private label that got us here and they are both areas we will never neglect.”
NAILS: I would like to move you into a discussion about your bulk packaging efforts, but first a background on your firm, and the reasons behind your decisions. Star Nail Products as a company made an impact from the beginning because of your low prices. What was your intention?
TONY: We really sacrificed for the first three years with very, very low profit. As an example, when people were charging $2 for glue, we were charging .50 to .70. But it was something we needed to show the manicurist that she can get quality products at inexpensive prices so she doesn’t have to charge ridiculous prices for her work ... and she can retail to her customers.
NAILS: But this policy created animosity towards your company. Were you prepared for that reaction?
TONY: No one likes us, no one in the nail industry, the cosmetic industry, distributors, or manufacturers, no one likes us. And it’s because of our prices and selling direct. The only people that like us are the professionals manicurist, and cosmetologists, and those are the only people we care about.
NAILS: But if that was the reaction, why take that approach?
TONY: Initially, we saw a tremendous demand from the professional to buy their own polish depending on their area and what their traffic could bear…without worrying about the beauty supply down the block. So what we did was a little crazy ... when we were paying .50 a bottle, we sold it for .60, and we used that polish as a leader item, a way of getting ourselves established in the nail industry.
STEVE: Our philosophy then and now is that we make a nickel, you make.95, you’ll use forever. We knew the reaction from the industry because of our prices, but we were trying to build a long term acceptance of our products.
TONY: The real thing is that in the beginning we cut prices because we knew we had no other choice.
When we first came into this industry, we got together with a lot of the nail manufacturers and proposed our wholesale approach, but, they did not want us to sell cheap; mostly because they didn’t know how long the nail industry was going to last, and they wanted to make their money now. So the big nail companies of the past took a different gamble. They gambled that nails weren’t going to be here in 1988, so why not take their money now? Our gamble was low prices in an effort to build the market for tomorrow. We wanted to prove to the manicurist that they can get any product at the best possible price so that they can still pay their rent and stay in business and that is exactly what our concept is built on.
STEVE: Also, we didn’t make a mistake in the early days of the company with the so-called big distributor like a hair company would. We didn’t go that route. We avoided the full service and kept our distribution in-house to retain better-control of our products and pricing.
TONY: We were forced into doing that because the beauty suppliers boycotted us and would not buy from us for the first two years because we sold nails and cosmetics direct to the salons. The dealers and others saw us as a competitive threat.
NAILS: Then part of the reasons for your success is based not only on selling direct to the salons, but in combination with low prices?
TONY: Yes, as well as bulk sales with no minimums. Most people in the beauty industry told us that you can’t sell directly to the manicurists and that we’ll go broke trying.
NAILS: Then what pushed you in that direction?
TONY: We made that decision because the professional beauty supply, the full service beauty supplies, knew nothing about the nail business and they weren’t willing to listen to us or to buy from us. All they were involved with was hair. Every time I went to a big meeting I got aggravated and walked out because all the people were talking about was hair companies and hair products. (Even our cosmetics connection in New York doubted the nail industry.) So I finally said to my brother, ‘There is no sense in trying to make these people sell nail products. Nails are our livelihood, so we have to go to the people that do nails for a living.’
NAILS: You must have pursued product distribution is some manner, in addition to selling direct.
TONY: Yes, and that is the aspect that really kicked it off for us…when Steven and I decided we wanted an underground of individual distributors.
STEVE: They are better described as private distributors…these are individuals that we have personally set up in business. We tried to make sure that they were not in the beauty industry, and set them up as private, individual distributors.
NAILS: Why someone without beauty industry experience?
T0NY: The reason was that we believed that anyone who is in the beauty industry has a tremendous disadvantage in that they have blindfolds on them. They want to do things the way they were taught which was yesterday’s news. That was the hair world’s way of doing it ... and this is a new way. The nail industry is a special business requiring special handling.
NAILS: These individuals were to service nail salons only?
TONY: Yes ... what we did was to set up 30 people, and instead of having them push our name brand company, we gave them their own company, with their own name products to service the area in which they lived.
STEVE: The idea was for them to take a 150-200 mile radius and go to all the nail salons in the area and service them. Additionally we gave them the availability of buying the best products at the best possible price with no minimums. And distributors get our new products before they hit the market.
NAILS: Selling price must have had its disadvantages … quality image problems perhaps?”
STEVE: Yes, and that was the biggest problem we had the first two years. Nobody believed that we had the best product in the country just because of the price. But as we started developing new products, such as the nail color corrector, the Pro-Pack, people became aware that there was more to the company besides price.
NAILS: And now?
TONY: Now we are having an impact ... and the reason is that the manicurist is shopping around and looking for a quality product at a reasonable price. And they are trying us. And because of the central difference in the way the nail industry operates ... for example, the big difference we see between the nail business and the hair business is that in the nail business, people are interested in making money. In the hair business, even though they are interested in money, they are very egotistical and artistic. Even though the professional manicurist is artistic and professional, they are also business-minded and willing to listen to how to make money ... and they react.
STEVE: Other companies can’t understand how we are so successful. The key to it is the loyalty of the customers, because we have made them money by giving them a quality product at a reasonable price.
NAILS: So where does this position your company now?
TONY: The important thing right now is to give the manicurists the opportunity to buy our products locally, and the only way to do that is to give the line to the professional beauty supplies because their network is already set up.
NAILS: But isn’t that the opposite of what made you successful? How are you going to retain control of your product?
TONY: Our first and only love is for the professional manicurist. And as such, we are demanding from the professional beauty suppliers that if they want to sell to the professional manicurist, they must keep our prices because we will always sell direct. In the last year we have had many offers to be bought out but the main stipulation has been that we only sell to full service dealers and not direct to the salon. We will never do that. Because when we sell a bottle of polish for 40 cents to a beauty supplier, and they mark it up to $2.50 and then give the professional manicurist 20 percent off, all they are doing is giving the manicurists nothing and all they are doing to me is having my polish sit on the shelf.”
So what we are doing now is that we want the professional beauty supplier to make money, with the recognition that we’ve built the market up for them, and they will make what they deserve to make, but they still have to stick to our prices because if they don’t, the manicurist can call up any day, anywhere in the country and I will sell any of them in front of my biggest dealer. On the other hand, we will give our accounts to the beauty supply if they follow our programs and service the professionals like a professional.
NAILS: What impact do you feel your approach has had and will have on the industry?
TONY: I think it has a tremendous impact on the nail industry because people are starting to think and realize that nails are a separate business and requires special handling.
NAILS: But your approach is quite alien to most of what is happening in the marketplace.
TONY: Entirely alien, entirely different and that is why we are so successful and that is why the nail industry is so successful as an industry. We are going to do the best thing for the professional manicurist and for us… not for the hair people and not necessarily for the beauty supplier.”
NAILS: That’s quite a broad statement.
TONY: Well, the beauty supply dealers are going to have to change in order to properly service the nail industry. They are going to have to look at the nail industry as a separate industry and they are going to have to look at manicurists as professionals and business-oriented people.
STEVE: If the beauty supplier is to sell to the professional manicurist, they must realize that they can’t force a big name on them, because they don’t want it. If it’s not the best, it doesn’t matter whose name is on it, they won’t use it and won’t buy it, and won’t sell it.
NAILS: But what you’ve told us earlier is that this approach works direct with the salons, in combination with a bulk program. How does this now fit in with beauty suppliers?
TONY: It all comes down to the tube, and our bulk marketing of products in them. What Steve and I understood, even in the early days, was that you can’t produce everything the best. There are many professionals in this industry that have taken years to build a quality product, and our feeling is why change it just to make it different to carry our own name? We will go direct to market their product.
NAILS: And this is where the tubes come in?
TONY: Yes, because the tubes are the best and most inexpensive way of getting quality products in bulk packaging. The key is that the manicurist is too smart to buy names or one or two of an item. They cannot retail it and they cannot use it. The tube idea is the best idea in the nail industry for the simple reason that it is for the manicurist so that they can get their bottom line down so that they can go ahead and carry on their own business. Five years ago, when competition was far less severe, manicurist never really bothered with prices. But as the industry has grown, and competition has heated up, they are becoming very aware of their bottom line, and the numbers they need to survive and profit.
NAILS: You first effort with the tube was your Pro-Pack?
TONY: The first item was the Pro-Pack in the tube, a product that gave the manicurist eight times the polish with a speed tilt bottle that offered twice the application time at a very reasonable price. But the tube idea as such is one that revolutionized the package industry for nails, because there is no way that anyone can compete against the tube.
NAILS: Give me a specific example.
TONY: The professional nail tip business was starting to grow to a tremendous level a year ago and we saw that the professional manicurist would buy master packs and maybe use all the middle numbers and none of the 1s and 10s. And when we went to the manufacturers, the manufacturers had the same problem. As we looked into the marketing of tips we found that no one sold them in bags bigger than 50 a size ....which was totally ridiculous.
STEVE: A salon with 10 girls in the shop isn’t going to buy 10 bags of 50, she wants a tube of 500 for half the price.
TONY: So what we did was go out and find the best tips in the United States, the Star Gazer, and put them in bulk packaging so that the manicurist could buy from Star at the same price that the beauty supply pays for the identical tip under a different brand name.
STEVE: Then what we did was say to the beauty supply, “Here’s two rows of tips. The front you can sell individually to every person who wants them, and then we left the back row sealed so that you can sell in bulk to the professional.” That display, with the two rows, really forced them into wholesaling nail tips because the back tube was sold to the professional at a significant discount. So in effect, we were giving them both options.
TONY: The key thing that that taught them is that beauty supplies do not sell to the professional manicurist unless there is a dire emergency or unless they are just filling in waiting for their orders to come in. We sell to more professionals than any other nail company, because we sell to the real professionals. We have salons that order more than twice what some of our beauty suppliers do, and that is for their own in-house use.[PAGEBREAK]
NAILS: But let’s get back to the tube. At this point you have a variety of products in tubes… tips, your Pro-Pack, files, emery boards, brushes, just about anything that will fit and that can be sold in bulk.
TONY: Right ... the key thing to the tube, again, is that not only is it a great marketing tool because you can see what’s in it, it enables us to package bulk. It gives the manicurist the chance to see what they are buying. So not only is it cost effective for bulk packaging, it's cost effective for the beauty suppliers to get involved and it's cost effective for in-salon retailing. Now the salon can get great prices on the items she uses most, and on those items she can retail to her customers.
Whether it is files, nail clippers or whatever, they must in order to survive in this increasing competitive environment, sell to their customers to the point that 25 percent of their income is from retailing. We want the manicurist to buy her products from the professional beauty supplier and still have enough room to retail and make money. And unless you offer it to them in bulk, they can’t do it. And that is why the tubes are so important.
NAILS: Then to further enhance this positioning to the salons, you still maintain your private label program as well?
TONY: Definitely ... we give our customers the option of having our brand name or creating their own label in which they have the best product on the market with no minimum.
NAILS: And I understand that this approach has been styled to a certain extent from your private label cosmetic program?
STEVE: Both work together. The basics and background of private label is very familiar due to our five year experience with private label cosmetics for several large name companies. So we took the same private label theory and applied it to nails. What we end up with is whether nails or cosmetics, the manicurist knows that we have quality products and reasonable prices ... and that now she can buy in bulk and put her own name on it and really start to retail.
NAILS: Why do you think that your private label cosmetic program is so important to nail salons?
TONY: Because the nail salon cannot live off of 40 percent. Nail salons and nail technicians are used to making a lot of money, and there is no way that they are going to play with a name brand line for any more than a 40 percent markup. If they want to make money, they can make up to 5 times that with our items and they can push their own name and salon.
NAILS: This involves all your products from polish to acrylics, from make-up to lipsticks?
STEVE: All of them, especially the cosmetics . . . they are a very high profit item for the salons. It is very easy to get into, and very profitable.
NAILS: What exactly does it take and what can you offer?
STEVE: I can put together a program for nail salons that for all purposes puts them in the cosmetic business and gives them a department store presentation that immediately establishes them in the cosmetic business in the eyes of their clientele … and they don’t have to spend thousands to do it.
For under $500, the nail salon will get a full cosmetic line complete with display and backup stock and their salon name emblazoned on the materials. This display itself is a Lucite counter top display containing a full range of products and customer convenience for self testing. It holds over 100 different items....from lipstick, eye shadow, to brushes.
NAILS: And the long term benefits?
TONY: Is that you as a salon are building your own clientele instead of the brand name’s clientele.
STEVE: Maybe this will help explain. Let's say you jump into selling cosmetics in your salon, and you want the insurance of selling a brand name, so you carry X. Now you’re selling products to your customers, maybe a matching shade of lipstick to her nail polish. And this customer goes to a party, where the shade knocks out four or five other women. And do you know what she says when asked about her lipstick ... she’ll say it’s #3. Now those four or five will go out and buy X #3 where it's available...everywhere. Can you see the potential if that same salon owner carried her own name on those quality products? She not only sells it at a better mark-up, but she helps establish and build her clientele. That’s what our private label program can do for the nail salon.
NAILS: This diverse yet unified direction has become very successful, and helped in a way prove your private label theory as it applies to the industry ... but where does this position your firm now?
TONY: It puts us in the best position to be the largest nail supplier not only of nail supplies but of related items to the professional manicurist. It puts us in the middle of the fastest growing industry in the beauty industry in the best possible position. Everybody else tried to accomplish what we have done through education. But we took the opposite approach because in our minds, the professional doesn’t need education, she needs products and she needs retail.
STEVE: The bottom line is that the manicurist is in this thing to make money, and that is what we can offer them.
TONY: Basically, if I had to summarize, I would say that Star Nail Products is here to help take the manicurist to the next step in her career. Many of our manicurists, in fact, have come to us to put them in the nail supply business. But that is what has made us what we are today ... the largest group of nail professionals in the world today.