Just a month before the Government declared total and mandatory quarantine, Diego de Leone, Natura’s number one in Argentina since 2016, was promoted to VP of the brand for the entire region in a company that stopped being called as its iconic label to become a group, Natura & Co (Natura, The Body Shop, Aesop and Avon). Thus, he is in charge of six countries that, of course, do not include Brazil, a unit that represents almost 20% of company turnover.
His year started hectic, to his new position was added the closing purchase of Avon and the beginning of an integration process although each brand will continue to operate separately. Thus, the coronavirus encountered the company with its own challenges.
“A little over a year ago we had already been working on committees or agile teams one global, others regional and other multi-areas. Precisely, the idea of these squads was or is to identify opportunities and where to accelerate the strategies. And when situations like these happen, multidisciplinary and multi-geographic work teams are automatically assembled to focus on Covid, ”says the executive.
-This situation forced them to convert …
-Yes, what we did was adapt our proposal to a greater demand. And we were accompanying the announcements of the governments in the different countries. In the case of Argentina, we went through the first week of total quarantine without operating and the following week we restricted our portfolio to hygiene and essential care products: soaps, liquid soap. And we were transforming our manufacturing, this throughout Latin America, from what we typically produced as perfumes, makeup to basic necessities such as, in addition to soaps, 70% alcohol and gel alcohol.
-Did you stop producing perfumes and makeup for the moment?
-Yes, at the moment we are not producing. And we allocate that capacity to basic necessities.
-Did that conversion require any investment?
-No, no investment is required, the lines were adapted to new products that are considered essential activities.
-You have a particular business model and your consultants, as independent entrepreneurs see their income diminished today, are you doing something about it?
-Natura comes from several years of strong growth, well above the market, growing even when the market contracts. And we were already prepared, not for a pandemic, but for an evolution in the way of relating with our sales force. We had launched many ways to connect with them digitally, we had developed an online sales model, a very particular model, where the same consultants sell through their page that lives within the Natura site. And the company provides the backoffice service: it delivers the products to its clients, it helps with the collection process, payment that goes for them.
This platform was not as relevant in our business as a percentage of the total, but now it has become very relevant and there are more and more consultants who are looking for ways to keep their business running.
– Do you have quantified the fall that this situation means?
-This takes 15 days, some of which were holidays, which is too recent to quantify the decline they have been experiencing. We do see that the orders that are taking place today are smaller.
What we did, in the case of online sales, was to double the profit margin of the consultancies that use this channel. That means an important plus that, in some way, helps them compensate. However, we are aware that their volume of business surely fell because they have a smaller portfolio and the consumption of families dropped a lot.
-Is using that platform a decision of each consultant?
-Yes, it is their decision. In fact, the last number I have seen before all this began was more than 50,000 registered to market products online, out of 200,000 consultants that we have in the country. Now I don’t know the number, but online sales did grow a lot. In some countries, it has already doubled in the past three weeks. Even with a portfolio that is very restricted.
That is why, also through our sales force, 350 supervisors who are employees of the company, we propose training, development, talks with consultants that still today have not joined online sales. We are taking advantage of this moment to develop those capabilities across the network. At the same time, we also explore the possibility that, without having to completely transform into online sales, they can place their orders and that they can be delivered directly to their consumers. We are exploring all the alternatives at our disposal to accompany them as well as possible.
-And how does this continue with a very resentful economy?
-As well as we have agile teams that are working on how to navigate this period, we have the same number of teams thinking, when this situation ends, how to accelerate that return, especially thinking of the consultants and their families and the consumers who chose the brand. We want to be prepared to, the day after each stage that the government decides, give the best value proposition for that specific moment.
-Natura came with strong growth, in 2019 10.2% in Latam …
-Yes. And in Argentina, I cannot give the number, but much more than that. We had significant growth in real terms. In a context where consumption was falling. In fact, in the first quarter of the year, consumption fell by around 4% and we had managed to grow. We got well into this situation.
-And now, what is the expectation?
-This year is going to be an atypical year but we have gone through many crises throughout our history. It is one more challenge.
-You had specific projects for this year, are you still standing?
-No project we have is canceled. Yes, they take a bit of time due to the same operational impossibility of carrying them out. For example, the proposal to make perfume packaging with 30% recycled glass that was intended for the middle of the year. We also have in our portfolio a new brand of products for hair, Lumina.
– They were studying the possibility that The Body Shop and Aesop arrive in Argentina?
-The pandemic, what we are going through will last a while and will leave its aftermath but it will happen. And yes, it was part of what we were exploring, we had no definitions taken yet.
-How is the integration with Avon being implemented?
-The Avon thing was announced in January and until then we had no contact. From there we begin to work together, to get to know each other, to learn how we can leverage each other and after 30 days or a little more we start with this context. Which, if it had something good, is that it helped us as a group to make a mega integration: to get to know each other better, face these moments together, understand and share good practices
-Aren’t the consultants going to sell Natura and Avon products?
-The consultants are free, they are independent businesswomen who decide which brands to sell. And in fact there are already some that sell both brands and others too.
-But, aren’t they going to have a joint catalog?
-No, it’s not the idea. We will have separate brand value proposition, sales force and business management, separate brand marketing too.
-They will compete …
-In practice, they are competitors that work in the same market, although the positioning of the two brands is very different and the publics to which both brands speak are also different: Natura is positioned as an accessible prestige, that is, it is in the Premium segment, while Avon is in a lower price segment.
Although all this, you can imagine, is in the process of being redefined.