It's OK to Shop In Your Salon

One of the reasons I hear that consumers often buy from unauthorized retailers is that they need to replenish their products in between visiting their stylists. People confess that they feel uncomfortable stopping by a salon without an appointment. I can guarantee that it is OK for you to stop by your salon or any salon to only buy products. You can visit any your favorite brands’ salon finders to find the closest authorized outlet which could be as close as your local mall. Your stylist will be glad to see you and you may even get a quick consultation to ensure you are purchasing the product that is right for you.

Bloggers Supporting Salon Guaranteed Products

I want to personally thank all of the bloggers and online beauty editors who have covered the topic of Diversion in the past month. I enjoyed speaking with many of you at the anti-diversion event we held at the Tribeca Grand Hotel last month. The response has been overwhelmingly positive and we are happy that more consumers every day are finding out about the dangers of buying professional products at unauthorized retailers.
Check out the list on the side of supporters who have covered Diversion on their websites:
LadiesHomeJournal.com
Seventeen.com
Style.com
BeautyInRealLife.blogspot.com
39Online.com
PhillyBurbs.com
GoBeautyBeast.com
ThatsSoCouturable.com
AdviceSisters.net
MakeUpLovesMe.com
TheBeautyCounter.blogspot.com
ModernSalon.com
BeautyBloggingJunkie.com
TheDailyObsession.net
TheBeautyofLife.com

Happy Thanksgiving

I wish you and all your families a happy and healthy Thanksgiving. I'll be traveling during this holiday and will be back blogging in December. Keep your comments coming and if there's anything you'd like to me write about, please share with me.

Cheers,
David

Anti-Diversion en Español

As we continue our efforts to educate consumers about the risks of purchasing products outside of authorized salons, I received the feedback that we needed to reach out to Spanish speaking clients and salons because they are unaware that diversion is a problem. I worked with my team to translate the anti-diversion information that we have been sending to salons and clients to spread the word. The Spanish information is now available on L'Oreal websites like Matrix & L'Oreal Professionel.

We hope that you share with all of your friends, Spanish speaking or not, what you have learned, so that they can be informed shoppers and protect themselves from diverted professional products.

Shopping and a Mini-Movie

Today I attended a fun event at the Tribeca Grand Hotel, where I was able to speak to my fellow bloggers & beauty editors about Diversion. We invited our attendees to watch the premiere of a new investigative video about the risks associated with purchasing salon products from unauthorized retailers. I truly enjoyed sharing the evening with them and will be sharing the links of our attendees who pledged to join us in our anti-diversion efforts.

Please watch the Investigative Video which was featured at the event:

Please copy the embed code and post on your blog or Facebook page to help us spread the word.

Thank you to all the bloggers and beauty editors who joined us and pledged to help us spread the word!

Check out the picture gallery from the event, I will be adding pictures for the next couple of days.

Thank you YouTubers

I was very pleased to discover that consumers are helping spread the word about Diversion. A great example of this was a video recently posted on YouTube by the user pinkiecharm. In her review of Matrix Biolage Smoothing Shine Milk, she explains that she recently found out about Diversion and encourages her viewers to purchase the product from a salon. Watch pinkiecharm’s video.

I hope that more users like pinkiecharm help spread the word. I encourage you to create a video of your own and recommend to your friends to watch my video.

Diversion Update – Q3 2008 Results

Although it’s far too early to declare victory, we have some great news regarding the fight against diversion.

According to Information Resources, Inc. (the world's leading provider of enterprise market information solutions and services), diverted sales of L’Oreal professional products have declined by 9.1% in Quarter 3 2008 compared to Quarter 2.

This is really a good sign because it shows the stock of starting to dry up.

This performance is particularity positive given that our competitor sales of diverted good remain constant.

This means that we are cleaning up and making consumers safer as we go.

YouTube Stylist Testimonial

I was excited to come across a passionate Redken stylist who has his program on YouTube called, “Ask JD” an artistic director from the Antenna Salon in Norwich, CT. In this episode he answers a few questions about why you should only buy salon products from your professionals and I think it’s great to also hear it directly from one of our passionate stylists.

BusinessWeek.com Makes it Clear That Counterfeits Risk Our Safety in More Ways That We Can Imagine

These past months I’ve written about counterfeit shampoo, toothpaste, fragrances, pharmaceuticals, and even wine to create awareness of the risks associated with purchasing unauthorized products that touch you and your family’s bodies.

It would be nice to think that we have complete control over our exposure to counterfeit goods, but I recently read an article on BusinessWeek.com titled “Dangerous Fakes, How counterfeit, defective computer components from China are getting into U.S. warplanes and ships” which explains that counterfeiting goes far beyond these household goods, and could potentially affect our national security.

In a July 24 e-mail, an F-15 engineer, whom BusinessWeek agreed not to identify, wrote: "Suppose that a part like that makes it onto a flight-critical piece of hardware or mission-essential piece of hardware. The[re] is a very good chance that the part may work...but what happens at 40[,000] ft and -50 degrees? Hardware failure. Not good."

As Harper’s Bazaar explained to me, we need to keep in mind that by purchasing goods from unauthorized retailers we are potentially funding these criminal organizations that could potentially threaten our national security.

Anticounterfeiting Measures Seen as Boost to Battle Bogus Goods

In WWD, I was excited to learn this week that the U.S. government has enacted a bill that will fund a cabinet level position in the White House focusing on anticounterfeiting initiatives.

The proliferation of so many bogus apparel, footwear, handbag and accessories hit record highs this year, especially on the West Coat as products come in from China.

This new bill provides increased resources for the Department of Justice to fight against fake goods and intellectual property infringements.

I’m glad to see that the government is helping businesses fight this issue, especially during these tough economic times.
To read more about it, click here.

I Experienced IndiviDUALity

A couple weeks ago, I attended a Matrix event introducing a new trend called IndiviDUALity. I was surrounded by hundreds of stylists who gathered at the new MGM Grand at Foxwoods to witness the IndiviDUALity runway show in which models were transformed on stage to show how their cut & color could be used to create two styling interpretations to bring out their inner duality.

Afterwards, I enjoyed a night of dancing and mingling with the Matrix Artistic Design team. I personally enjoyed speaking with Errol Douglas, one of the Matrix Global Designers responsible for the trend. I had read that Errol was honored earlier this year by the Queen of England as a Member of the Order of the British Empire (MBE) – for his services in hairdressing, so naturally I wanted to speak to him more about it.

The event was a huge success and I know many will be inspired to visit their salon and challenge their stylist to create a look that represents their IndiviDUALity.

A Good Riesling

I enjoy a good glass of wine, and like to occasionally browse Food & Wine Magazine for the latest wine news. I was browsing the latest issue the other day and came across an article titled “Wine Scams: A Counterfeiter Confesses,” which immediately called my attention for obvious reasons.

The author, Lettie Teague, narrates how “…the most publicized claim of fake wine (so far) involves billionaire American wine collector William Koch, who has filed four lawsuits alleging that he was sold fraudulent wine, including a 1784 Château Lafite reputedly owned by Thomas Jefferson.” This inspired Lettie to take a look at the history of wine counterfeiting.

Apparently since the Roman times, Romans doctored wines with various substances like lead to make wine sweeter, then in the mid-1980’sin Austria produces employed diethylene glycol as a sweetener to obtain higher ratings. Unfortunately, we know lead can cause death, and diethylene glycol is a compound used to make antifreeze and can kill or cause kidney damage.

Coming back to the present day, Bill Kock’s court case inspired Lettie to try to fool her own discerning friends. She was only successful at fooling some of them, and if you read the article you will see that they did not appreciate the joke.

Bill’s story on the other hand, is one you will hear more about as it has spawned a book, The Billionaire's Vinegar by Ben Wallace, and Will Smith has bought the rights to the story to turn it into a film. This is a movie I look forward to watching.

Fortunately my favorite wine, a good Riesling Marceau, is not on the list of the top five most commonly frequently faked. Although I will make sure to look for signs to make sure my purchase is legitimate.

A Documentary Worth Watching

Over the weekend I watched a great documentary made by National Geographic entitled “Illicit, The Dark Trade.” I wanted to share with you how Dr. Moises Naim, Editor of Foreign Policy Magazine for 10 years investigating illicit trade and author of the book that inspired the documentary, explains that consumers' insatiable demand for counterfeit merchandise has given birth to a vast and dangerous criminal system.

When someone buys a fake handbag, they are touching the tip of an iceberg. They are touching the end very long chain of networks that in fact constitutes a criminal enterprise of global nature," said Dr. Moises Naim in the documentary.
I work in New York, a city where illicit goods are available on every street corner. The documentary points out how the counterfeit trade which includes everything from sunglasses to watches to pharmaceuticals, and even car brakes, supports additional illicit underground activties such as…a kidney bought from a broker in India, the illegal nanny paid for by a professional couple, the drug dealer with heroin from Afghanistan.

And if it doesn’t already seem dangerous enough, it gets worse. Dr. Naim explains how the demand for these counterfeit goods creates an underground network through which other illegal activities can also take place. The handbag you purchased in a NYC corner may seem harmless, but in fact it travels through a supply chain that can carry far more sinister products from an AK-47 to machinery to build atomic weapons.
This film really demonstrates how we all need to reevaluate how our desire to own a “name brand" knowing that we are purchasing a fake product not only supports a grey market but also fuels global crimes against humanity and even national security. The first step is educating ourselves and our friends about this issue and this film is a great vehicle to spread the word.

Purchasing Products on eBay

I was browsing at Staples, and noticed their price matching guarantee sign for all new computers EXCEPT for those purchased on eBay. I did a little online research and found that HP is experiencing some of the same issues as our salon professional brands, as many of their products are being counterfeited or sold at unauthorized online dealers and in some cases, customers are being scammed and not shipped products at all from eBay sellers.

While I realize that cost of a laptop is much higher than a bottle of shampoo, I want to stress the importance of what it means to purchase products from an authorized retailer and what that means to you. As exemplified by the Staple’s policy, they not only match pricing but they also provide servicing and a return policy for products as an authorized retailer of HP. If you buy a computer from eBay and it blows up or doesn’t work, chances are HP won’t guarantee your product. We also do this for our salon products purchased at our authorized salons. While you may think that you are finding a great deal on eBay, you may be purchasing a fake, defective or in some cases unsafe product. We simply do not offer our professional product brands such Redken, Matrix, Kérastase, Mizani and PureOlogy to be sold on eBay. Purchase them from your salon professional!

Counterfeit Kérastase Product Found at Wegmans

Recently, as our team in the field buys back products at unauthorized retailers in our fight against diversion, we came across a suspicious looking bottle of the popular Kérastase Bain Miroir at Wegman’s. As you can see in the photo below, the packaging was NOT created by our manufacturer.



In most cases, when the packaging is counterfeit, so is the product. As we suspected, in this particular case, the shampoo is also fake and full of cheap detergent.

So, what does this mean to you?

1. You are paying $32.49 for a counterfeit bottle of luxury shampoo that is full of undocumented ingredients. You could have bought the real product for .50 less at your local salon with a guarantee for the product and furthermore, had beautiful hair.
2. This is a fake product sold outside of a Kerastase salon or from Kerastase.com which exemplifies how these unauthorized retailers do not have final control over the products they place on their shelves putting their customers at risk.
3. This counterfeit Kérastase contains chemicals and ingredients that are not part of the Kérastase approved formula. Do you really want that to touch your head?

This may be one example and to the untrained eye, I understand that this bottle could be mistaken for the real thing which is what a good counterfeiter wants. To protect yourself, ONLY PURCHASE products from your salon professional or in this case from an official Kérastase salon or from kerastase.com. Wegmans has cooperated with us-they have removed Kérastase from their shelves and are divulging their source so we can follow up, but really, one may ask, should this be necessary? Consumers and brands should be protected and this grey market should be avoided.

Take Care of Yourself

I know times are tough in this economic climate, but I also know that your local salon can be a nice way to treat yourself and relax. I find I always get a spring in my step after a fresh shampoo and haircut. Your local salon can be a great oasis during stressful times and be sure to purchase products from your stylist to take the experience home with you. Also, remember, your stylist needs help during these challenging times.

Harper’s Bazaar Tells Readers that Purchasing Counterfeit Products is Not a Victimless Crime

I wanted to share with you some insights about a great meeting that I had on 8/21 with Harper’s Bazaar about their Anticounterfeiting Initiative. Valerie Salembier and Julia Fry from Bazaar shared with me that each year, Bazaar publishes an editorial feature exposing the atrocities of the fake trade, hosts an Anticounterfeiting Summit attended by industry insiders, attorneys and law enforcement, and supports the effort with “Fakes Are Never In Fashion” marketing extensions. This is a very inspiring program, and I hope that you visit www.fakesareneverinfashion.com to learn more.
Valerie shared with me that their objective is to spread the word about this global problem. Just like L’Oreal, Harper’s Bazaar is committed to fighting this criminal epidemic. Counterfeiting does much more than damage brand image and profits; it funds some of the most serious crimes of our time.
You probably don’t think of in this manner, but it is important that you realize that whether you buy a luxury bag or a bottle of shampoo from an unauthorized retailer, you could be supporting child labor, organized crime and even terrorism.
If you are a fan of cinema like me, or just want to learn more about the shadowy world of illicit trade, I recommend you watch a National Geographic documentary titled “Illicit, The Dark Trade.”

Is It OK to Purchase Professional Products Online?

I’ve received some comments asking me about online purchases of professional products. With the exception of www.kerastase-usa.com, all other websites are not authorized to sell professional products and we cannot guarantee the quality or legitimacy of professional products purchased from them.
In the instance of www.Kerastase-usa.com, Kerastase has developed a partnership site that allows consumers to buy online while supporting their salon. This provides a quality service for consumers who may travel a lot or who may want to purchase between visits. This practice is completely normal for luxury brands who have limited distribution.

Other than www.kerastase-usa.com, no other websites are authorized to sell professional products. There are sites that mask themselves as salon websites, have fake anti-diversion statements or claim they obtained products from a manufacturer. Please beware of these websites. Clients might be tempted to risk the purchase from eBay.com, for example, because they believe that they are getting a better price. In instances like this , it is especially important to remember the 4 Cs (cost, counterfeit, contaminated & crime) which are the dangers of buying diverted products both online and offline.

I urge you to visit a salon near you, or www.kerastase-usa.com to purchase your professional products.

Victoria Beckham's New Short Haircut

I was very excited to see Victoria Beckham’s new short hair style. In my professional role, I love when a style icon like Victoria chooses a short cropped hairstyle. First of all, I think it looks stunning but I also think this look really celebrates the expertise of a gifted stylist (in this case, NYC celebrity stylist Garren.) Like the style icons before her Audrey Hepburn, Mia Farrow and Linda Evangelista, this short cropped hairdo will inspire a lot of women to go pixie short, which is great for the hairdressing business. In order to maintain this look, you will need to go to see your stylist about every month.

The Today Show Talks About Professional Theives

Today Show Talks About Professional Thieves

The Today Show aired a segment last week entitled “Hunting Down Professional Thieves.” It investigated how criminal organizations hire professional thieves to steal products from major retailers and resell them online or to major distributors.

The Today Show guests provided the following example:

A consumer searching for an online deal on baby formula on a website like eBay could potentially “find baby formula that was in someone’s truck for a couple of days in 90 to 100 degree weather.”

In other words, an unsuspecting consumer can endanger their baby’s health with a compromised product sold illegally. In this blog I’m always reinforcing the 3 C’s—contamination, counterfeiting and cost, but I never mention the potential “fourth C” which is crime. Consumers purchasing suspect products online solely looking for a deal may also be supporting organized crime. This is story we hear a lot about regarding the counterfeit handbags being sold on city streets.

The conclusion of this piece was very interesting and relevant to our salon business. When you purchase personal products, you should not soley base your purchase on the price and be sure that the manufacturer authorizes the sale in that location. When you purchase salon products from authorized retailers, you know they are guaranteed and that in most cases, you are actually saving at least 10% on your purchase.
Support our hardworking hairdressers while protecting yourselves and your families.

Reflections of NYC Fashion Week

Last week, designers in New York City showcased their Spring 2009 collections. I was surprised to learn that aside from traditional journalists covering the shows, bloggers were everywhere covering the fashion, beauty and hair trends. Redken sent a contest winner backstage to cover the events and you can read her blog at www.redken.com/fashioninsider. If you want to achieve the great looks you see on the runways, be sure to visit your stylist to get the tools and expertise you need for your own runway look.

Your Questions Answered

Dear Esteemed Readers,

Thank you for your comments and your questions. Here are the answers to some of the questions I have received lately:

1. Why doesn’t L'Oréal buy out its products from the Diverters?
If L’Oreal were to purchase all of the diverted products from unauthorized retailers, we would actually be fuelling the demand for products in that location, funding more demand and more purchases, and consequently, drive further diversion.

2. What happens when I report a Diverter?
When you report a diverter through an email to nodivert@aol.com or by calling the Diversion Hotline (1-800 503.3997), our strategy is to log the location and send an investigator to purchase samples and then use our coding technology to track the product. We can then determine if the product is counterfeit, and if not, who was responsible for diverting it to that location. Through our national buy-back program we have been able to cut down over $30 million dollars in product sales by cutting off diverters.

3. Why doesn’t L'Oréal take legal action?
We have. Please read my Quality King Story post from August 19th. We have filed and appeal and will keep you posted on our status.


Have more questions? Please submit them as comments and I will do my best to address them.

Thanks!
David

Good News!

I received an email this week from one of our valued customers, who was very surprised to discover that a major US mass retailer has taken it upon themselves to label professional products by saying that "this product is intended for sale" by them and if found at other outlets they should call an advice line. They are printing this copy on a supposed security label.

I think this is a good indication that we are starting to win the battle, because when a major retailer finds it necessary to legitimize the sale of a brand is us a sure sign that our campaign to keep professional products in the hands of stylists is starting to work.

Hopefully we will have more good news soon.

Updates to our Anti-Diversion Hotline

Recently, I was disappointed to learn that our anti-diversion hotline was not as responsive as it could have been. We had too many people involved in the process and I wanted to confirm with you that we have now harmonized the functions.

Chris Lyden has taken over the role of leading our anti-diversion team as Sr. Director of Brand Equity Protection. Chris joined the professional beauty industry 17 years ago as a Distributor Sales Consultant and has worked closely with salons over the years. Throughout his career, he has visited nearly 8,000 salons so he understands what stylists care about most, and fighting diversion is at the top of their list.

If you spot diversion occurring in your area please report it.

You can call 1-800-503-3997 or email nodivert@aol.com and be assured that your concerns will be responded to and addressed.

A New Season

The end of August typically is the slowest news period. I know many of my colleagues have kids going back to school or are enjoying the last few weeks with their family. I recently had the pleasure of spending some time with my sons and their friends. One of my son’s friends told a story over dinner how when she was in college she decided she wanted to come back her sophomore year a platinum blonde so she went to her local drugstore and purchased some bleach, a developer and some gloves without any instruction or training. I think she said she was majoring in Literature. She had previously dyed her hair to a dark auburn using a mass product. As you can imagine, her hair turned out a wonderful shade of light pink and she painfully burnt her scalp. She returned the drugstore and the man behind the counter who also sold cigarettes sold her a “toner” which turned her hair to a dull shade of beige. She told me she was lucky that her next door neighbor was a colorist at a tony NYC salon who saw the damage and immediately took her to his salon to do some serious color correction. She claimed he “saved” her life and that she continues to only see a salon professional to tend to her hair. I love hearing stories about real people having relationships with their stylists because I see how the expertise of a professional stylists and colorists can evoke confidence in myself, my colleagues and my family. All of our brands have salon finders where you can find a professional in your area to achieve the look you want for the fall so that you can enter the new season with style, confidence and a healthy scalp.

Counterfeit of Everyday Items

I truly hope that each day, more and more people become aware of the risks associated with purchasing products that could potentially be counterfeit and especially those that touch your body.

I recently read a story in the NY Daily News about “counterfeit Colgate toothpaste contaminated with bacteria and a chemical used in antifreeze.” It’s really a shame that there are products out there, being distributed through unauthorized channels and that consumers are exposed to such dangers in products that they use everyday and that their families and children are exposed to.

In my opinion, the highlight of the article was this quote:
"A parent should never have to fear that buying an everyday item like toothpaste could put a family at risk," Assistant U.S. Attorney General Matthew Friedrich said Thursday in Brooklyn Federal Court.

I can’t reinforce enough the importance of knowing where your products come from. In our industry, the only sources you can ultimately trust are the salons and respective brand websites.

Counterfeit Fragrances

I have been following the issues that cosmetic companies including our counterparts are facing regarding counterfeit perfumes as many of the challenges are similar to those we face in salon products being sold in unauthorized outlets such as grocery stores and mass retailers. I came across this article (link to article) about the differences regarding a Coco Mademoiselle product sold on eBay versus sold at the Chanel counter of a department store. The author of the article points out that the first thing to look at if a product is real is the pricing. If the price is too good to be true, then you should be suspicious the product is fake. Ironically, with professional haircare in the United States, we find that diverted products are expensive in mass. He also points out to examine the packaging as well which is something we found with products sold outside of our salon partners. His article concludes that the product sold on eBay was fake.

I want to reinforce the “three C’s” for salon products sold in unauthorized outlets—Counterfeit, Contamination and Cost.” As Good Morning America and ABC15 have reported, the “bargain” you think you are purchasing in your discount store appeared to be watered down and packaging was not in the original materials and was very noticeable in the cap. Unlike the fragrance industry, we learned that you are not getting a better deal when you purchase outside of an authorized salon. News outlets such as ABC and Good Morning America continue to show that you are paying MORE than you would from your hairdresser.

L’Oreal Against eBay

I was disappointed to learn that Belgian courts dismissed L’Oreal’s claims brought against eBay over the sale of counterfeit Lancome fragrances and cosmetics on the site. The Lancome brand is part of our L’Oreal family under our Consumer Luxury division.

Because of the demand, performance and popularity of many of brands including our salon professional products, our company is challenged across all brands to educate our customers about the risks of purchasing products outside of authorized retail channels such as eBay. Across our global organization, L’Oreal is fighting to ensure that when you purchase one of our brands you are receiving an authentic and safe product. Remember, cosmetics, hair products and fragrances touch your body and our company’s high level of quality control for all of our products ensures that you are using products that include ingredients displayed on the packaging. L’Oreal is appealing this decision. I’ll keep you posted as developments occur and how this impacts our Professional Products division!

Bloggers Unite

Recently, I have been browsing blogs where I see bloggers write posts and comments about purchasing professional products. Unfortunately, since a lot of people are still not aware that diversion is a problem, they encourage readers to purchase these at unauthorized outlets. This concerns us.

We know that if they knew the facts about diversion, they would not post this type of information. If you spot a blog like this, please take the opportunity to help protect your fellow bloggers. Write a comment and let them know that if they buy professional products from unauthorized retailers, they could be contaminated, counterfeit and even cost more.

I strongly believe that if we work together we can help spread the word.

Thank you for your help.

David

The Quality King Story

I have received several comments asking if we have ever taken legal action against diverters, as well as some addressing the lawsuit between L'Oreal and Quality King (one of the country's leading grey market wholesalers of salon products), regarding the unauthorized sale of our products.

To give you some background information - in 2004 the Professional Products Division of L'Oreal USA, Inc., served a motion for contempt against Quality King Distributors, Inc. (Quality King), and related companies for repeated violations of an injunction stemming from the gray market wholesaler's buying and selling L'Oréal's Matrix professional salon brand.

According to the court papers, Quality King, based in Ronkonkoma, NY, acting independently and with several related companies, violated a longstanding court order prohibiting it from acquiring and redistributing the Matrix brand. L'Oréal USA's Professional Products Division produces this brand, among others, exclusively for use and sale by professional hairdressers at authorized salons.

It is true that in November 2007, after three years in litigation, a judge lifted a 1990 injunction that prohibited Quality King from selling Matrix. We were very surprised by the ruling because all we were asking was that the court enforce its own order. We believe the 1990 ban should be reinstated and have already filed for an appeal.

US Quality Guarantee Policy

I wanted to take this opportunity to clarify that for now, the Quality Guarantee Policy that the L'Oréal Professional Products division launched is currently for the US only. We are working with our international offices to branch out the policy, but currently this policy is valid only in the US.

Remember, if you purchase our products at your local salon or spa and you're not satisfied with their performance, return the product with a receipt within 4 weeks for a full refund. See you salon or stylist or brand product website for more information.

What the Grey Market Means

After we launched our aggressive anti-diversion campaign, I continue to receive a lot of comments and questions from frustrated salon owners who still see our products on unauthorized shelves. This is not going to be a battle that we win overnight and my goal is to educate the consumer about the risks of purchasing products from outside of a professional salon in what we call "the grey market." Diversion is not always illegal, but affects the general economy while potentially compromising the authenticity of the product. Other industries from champagne to pharmaceuticals are battling similar issues as we are with our diverted salon products. Grey market goods can range from "designer" luxury bags sold on eBay to premium denim copies sold on city streets to designer fragrances sold at your local drugstore. According to Wikipedia, the grey market is defined as the following:

Grey-market goods are not generally illegal. Instead, they are sold outside normal distribution channels by companies which may have no relationship with the producer of the goods. Frequently this form of parallel import occurs when the price of an item is significantly higher in one country than another. This situation commonly occurs with cigarettes and with electronic equipment such as cameras. Entrepreneurs buy the product where it is available cheaply, often at retail but sometimes at wholesale, and import it legally to the target market. They then sell it at a price high enough to provide a profit but under the normal market price.

To clarify how our salon products get into the wrong hands, take the following example. A salon with a professional only contract will order professional products and after six months, they are approached by a grey market agent who in many cases may represent a distributor who sells to mass retailers. These distributors may carry a variety of goods such as DVDs, cigarettes, fragrances and other items they can mark up to make a profit. These agents purchase excess inventory from a small salon at a cost that allows everyone to make a profit. This scenario is a breach of contract and as the business becomes profitable to the diverter and the salon owner, things can sometimes become shady. In an attempt to try to cover their tracks, so they cannot be traced through our product codes, they may change the packaging and/or formula and as we have proven, the mark up becomes greater for the consumer. Products can be diluted, counterfeited or full of bacteria. Because mass retailers make a profit on these goods, the temptation is high to resell. By taking control of our distribution process, one of our objectives is to be able to monitor and track these sales to salons and to ensure that salons are only ordering for their legitimate businesses.

Online Counterfeit Good Legislation

I'm always reading about the challenges other corporations face when their goods are resold in the black or grey market or counterfeited. I receive a lot of comments and messages from customers regarding our products being resold on eBay and other online retailers. The products that you see on these sites are the same diverted products you will see in your mass retailer or local grocery store. We do not sell to or guarantee our products available on these sites. I recently read an interesting article about legislation pertaining to stolen and counterfeit goods sold on eBay. US Representative Brad Ellsworth of Indiana introduced legislation last week that would make organized retail crime a federal offense and would make marketplaces like eBay more accountable for stolen goods listed on their sites. Last week, many companies were disappointed that Tiffany lost their suit against eBay for selling counterfeit products. This new proposed law could provide protection for brand equity where no online laws exist. If the law gets passed, online sites such as eBay could be considered "facilitators" for the sale of unauthorized goods.

NRF Vice President for Loss Prevention Joseph LaRocca said, "A significant portion of this bill deals with on-line fencing of stolen goods. On-line auctions and other markets on the Internet provide a Wild West environment where thieves can re-sell stolen property to customers on a national or even international level with virtually no questions asked.


The bill would define organized retail crime as "the acquiring of retail merchandise by illegal means for the purpose of reselling the items" and make such activity - including transportation, sale or receipt of stolen retail goods, - a federal crime. Among other provisions, sale of stolen or counterfeit gift cards, or items with faked Universal Product Codes or Radio Frequency Identification chips would be considered fraud. Those found guilty of committing or facilitating organized retail crimes would be subject to appropriate existing fines, prison terms and forfeiture, and the legislation would require the U.S. Sentencing Commission to review its guidelines for cases involving such crimes.

I'm not sure what this could mean as we continue to battle diversion, but I'll definitely be following this story.

What I Love About My Job

Recently, I attended a new hire breakfast for our Redken employees which included a Q&A session. Even our new employees were asking insightful questions about what my role is in fighting diversion. I was also asked about what my favorite thing is about my job. I responded at the time about how I enjoy working on large strategic initiatives for the company and managing such a diverse and talented group of employees.

After this meeting, I reflected on my answer and began to think about my role within the salon industry and my commitment to our salon professionals and their customers. I was taken back to my first salaried job in the late 1960's where on my way home from work, I'd stop on King's Road to admire the work of a young hairdresser named Keith Wainwright who opened up a salon called Smile, the first unisex hair salon in London. (His salon still exists in Chelsea.) All of the London scenesters including Jagger and the Beatles went to Keith and I would watch his impressive skill creating some of the signature looks of many style icons of the day. A haircut with Keith cost almost as much as I made in a week so I never was able to sit in Keith's chair. Now, I'm lucky as part of my role at L'Oreal, I work with some of the greatest stylists and educators in the industry (who will sometimes cut my hair) and I think about the confidence and aspirations that these professionals inspire in their clients and students.

I Want Your Feedback

First of all, I wanted to say thank you to all that have taken to time to write comments to my blog posts. I believe in the importance of listening to our salon professionals and clients and strongly believe that with your feedback we can make L'Oreal a better company.

I want to welcome any ideas that you may have regarding initiatives that you would like to see L'Oreal explore for 2009. Whether it's about how to fight & spread the word about Diversion, new products that you would like to see in the market, or other opportunities you would like L'Oreal to participate on, please click on the Comments link below.

Cheers!
David

NAHA 19

How inspiring!

As all our stylist readers know, the North American Hairstyling Awards (NAHA) is the pinnacle of hairstyling competitions in North America where the very best stylists and leaders in the world of hair and beauty are acknowledged. The winners for NAHA 19 were announced this past weekend and if you haven't had a chance to, you should check out their winning styles.

This year, three Matrix Artistic Designers and Matrix C.R.A.F.T. Global Academy instructors were nominated, and among them Nicholas French won for his Avant Garde work. Check out the talent from Matrix.

Congratulations to all the artists!

Why Pay More?

While it may surprise you, you are probably at a price disadvantage when you purchase salon products from retailers such as food, drug and other mass retailers. In fact, through our price checks we have found that salon products purchased at mass retailers are AT LEAST 10% higher than when bought at your local salon or spa.

ABC Phoenix recently reported on diversion. The investigative article explains what diversion is, that it ultimately can rip off consumers and that products may be contaminated. Consumers need to know that non-authorized stores can charge anywhere from 50% up to $5. For example, ABC15 found Redken Color Extend Shampoo for $15.69 at a popular supermarket vs. $11.50 at the salon across the street. Matrix's Sleek.look Shampoo was found for $17.99 at a drug store, vs. $13.95 at a salon.

Click here to read the full article.

If you are a salon professional, I urge you to educate your clients about your commitment over mass retailers to provide fair pricing and guaranteed products.

Please share this with your friends and family so they know the facts.

Myths about Diversion

One of the myths associated with the diversion topic is that we have perpetrated it ourselves by soliciting unauthorized business. I would like to reassure our millions of cherished customers that there is no truth whatsoever in this rumor.

On the contrary, we have always done everything in our power to ensure that professional products stay within the professional channel.

But, this is a fragmented distribution. There are 200,000 salons in the USA and policing that number of outlets is difficult. We continue to redefine our policy and won't give up fighting to protect the interest of our salon professionals and consumers.

Quality Guaranteed Only in Salons

We have great news. Because of the confidence we have in our products, for the 1st time ever, we are offering a QUALITY GUARANTEE on L’Oréal Professional Products – Matrix, Redken, PureOlogy, L’Oréal Professionnel, Artec, Kérastase, Shu Uemura Art of Hair and Mizani. If you purchase our products at your local salon, spa or online from L’Oreal Professional Salon Products websites and you’re not satisfied with their performance, return the product with a receipt within 4 weeks for a full refund.

Please visit these websites for step-by-step instructions:
www.matrix.com
www.redken.com
www.pureology.com
www.shuuemuraartofhair-usa.com
www.kerastase-usa.com
www.mizani-usa.com
www.lorealprofessionnel.com

Only products purchased in a salon or spa are guaranteed to perform to our standards. Thank you for supporting your salon and spa community.

International Pricing Policy and Product Availability

I have had a couple of comments this week from customers regarding our international pricing policy and asking why products are not always available in every country.

As a company, we market price locally based on the competitive dynamics of each country and the economic equation associated with our product sourcing. As a company, we comply to the highest standards of international health and safety but we also comply to local laws. As far as product availability is concerned, we as a company conform to local laws, and different countries allow different ingredients. This is one reason to buy professional products in professional outlets to ensure that you as a consumer purchase compliant products that are appropriately priced.

Customer Service Numbers

Thank you for your many comments on this blog. Although I cannot personally respond to each one of you, I am really excited that you are communicating with me and please know, I'm reading all of your comments. I've noticed that a lot of your comments have included unique customer service inquiries. I am directly forwarding your customer service, brand and technical issues to highly trained experts in our customer response center. If you have a specific question about a L'Oreal product or brand, you can click here to find the appropriate phone number. I've also listed our Professional Product hotlines permanently on the blog.

GMA Consumer Report

Diversion was the topic of today’s Consumer Alert segment on ABC’s Good Morning America. The 3-minute segment provides consumers with three reasons (the three C’s) to not to buy salon products in unauthorized outlets – Counterfeit, Contamination and Costs more at what you think of as bargain stores.

Additionally, they featured these tips to spot Diverted products:
1. The products appear to be watered down
2. The packaging is not the original and this is especially noticeable on the cap

Click here to watch the video, and learn how a client could have saved $15 by purchasing the products featured in the video which include Biolage & Redken at a salon.

What is Diversion?

Please watch my video explaining what diversion means and how it can impact your stylist.

Welcome to My New Blog!

Welcome to my new blog. Many of you are probably already asking why I have decided to enter the blogosphere? My two main reasons are to explain to our valued consumers and hairdressers the risks associated with buying professional products from unauthorized outlets (the process we call product diversion)and to use this great medium to dialogue with the most exciting professionals in the world- our stylist community.

As you can see, there is a comment box below each post. Please feel free to send me messages in this section. I will read all of your comments and while I may not be able to respond to every one of you, I will continue to address hot topics in this forum.