What’s gone wrong at Avon? The beauty brand’s bust-up, explained

The lipsticked smile of Avon’s salespeople has been wiped. The brand’s US-based non-operational holding company Avon Products Ltd (API) has filed for Chapter 11, a legal process that shares similarities with a brand going into administration in the UK.

Avon has stacked up $78m in liabilities due to multiple lawsuits which allege that some of its products contain asbestos, causing cancer.

This is the setting spray that may have sealed the future for the company, which was purchased by the Brazilian cosmetics group, Natura in 2020. But it is also $1.3bn in debt, and in truth, its troubles began years before the current controversies.

Avon’s non-US operations have not filed for bankruptcy, so there will be no impact on customers in the UK. But the news still has repercussions for the wider Avon brand.

Below, we examine how Avon’s legacy became so smudged, and what small beauty businesses can learn from the 138-year-old company.

It’s not over until the Avon lady leaves

It’s hard to think of Avon without their famous doorstep sellers. Known as Avon ladies, or Avon men, these employees were an early example of customer advocacy.

Clients were brought on as staff who could then personally recommend products to Avon customers in a way that felt authentic. But in the years since, Avon ladies have gone from being the company’s best asset, to a blocker that has contributed to its fall from grace.

While it was ingenuitive in the 1950s, today’s era of Amazon Ring doorbells and scams has made doorstep pedlars unwelcome to many Brits. Perhaps this is why, although Avon’s door-to-door reps still exist, the company has pivoted away from them.

Like many brands, Avon has shifted towards the modern-day version of the doorstep seller; social media influencers. These affiliate partners are an excellent way to build rapport with younger shoppers. But as a global firm, Avon has been slow to innovate compared to shinier, celeb-backed newcomers, such as Selena Gomez’s Rare Beauty.

Emulating Marks & Spencer, a fellow ‘granny’ brand that successfully turned the tide on its decline, the company hired a new Chief Marketing Officer this year for some anti-wrinkle cream. But coming as late as 2024, the strategy change is about playing catch-up.

We’ve written previously about how crucial marketing to Gen Z is and will remain in today’s e-retail landscape. Avon’s inability to win over this market has led to a steady decline in the eyes of the consumer, who today view the brand as something their Mum would wear.

Inability to innovate

At a time when retail has never felt less secure, Avon made the bizarre move of announcing plans to open their first ever brick-and-mortar stores last November.

For a multi-level marketing company (a business model which is famously direct-to-consumer or D2C), this was a big swing. It also, sadly, turned out to be a miss.

Avon shop fronts never materialised on the high street, and the sense grew that Avon was years behind their cosmetic competitors, many of whom have moved onto social media.

Niche make-up brands, such as Bread Beauty Supply, may sell wholesale in department stores such as Debenhams. But they will predominantly flog their products on TikTok and Instagram to an established, cult following, rather than trying to attract random foot traffic.

The issue suggests that Avon has lost sight of where its core audience is now based, which is making it harder for its product designers and marketers to hear Voice of the Customer.

That personal touch

Another problem for Avon has been its product line. As the UK’s beauty industry widens (it was estimated to be worth £22.6bn in 2022), brands are marking their territory by going niche; focusing on a particular sub-sector such as haircare or nail care.

Take the viral ‘blursh’ from Made by Mitchell, or P.Louise, which focuses on eyeshadows. Avon, in comparison, has had no hero product by which to introduce itself to new audiences, partly because its product lines are so diverse.

The problem comes back to personalisation. Whether diets or dandruff, consumers today want to buy items that solve their increasingly specific customer needs (just look at Hello Klean, the shower head for Southerners who hate washing their hair with hard water).

With consumers now searching for products that speak exactly to their hair type, skin colour, and complexion, the idea of a ‘do-all’ brand like Avon which can capture the attention of every consumer feels out-of-touch with today’s market trends.

It’s no wonder that Avon International reported a 17% fall in revenue to £267 million in the last quarter of 2023, due to weak sales across its beauty, home and style categories.

The Big C

It’s not a fun time to be in Avon’s legal team. The company has been fighting hundreds of lawsuits which allege that the talc in its beauty products contained asbestos, causing cancer.

There’s not much for cosmetics businesses to learn from here, besides don’t sell carcinogens in your lip balms. API has reportedly spent $225m to defend itself in 368 talc-related cases. Even with a billion-dollar valuation, it cannot afford the legal fees.

By filing for bankruptcy, the company has said it hopes to address its debt obligations in an “orderly manner”. When a business files for Chapter 11, all lawsuits are paused to give the bankrupted company breathing room to develop a contingency plan.

Owner Natura & Co has said it will buy back its non-US trading operations for £97m once the bankruptcy process is complete. The Brazilian beauty conglomerate also purchased and then sold vegan beauty chain, The Body Shop at the end of last year.

What’s next for Avon?

Avon, once a household name, has faced its fair share of challenges. But like a well-applied concealer, Chapter 11 can sometimes cover up the blemishes of the past.

It doesn’t mean Avon is ready to call it quits. The company’s UK arm will remain in operation and, for now, job cuts seem to be off the table.

However, there’s no denying that Avon needs a fresh coat of lipstick to appeal to a younger generation. The beauty landscape has evolved dramatically, and the brand risks becoming a relic of the past if it doesn’t adapt.

As the market becomes saturated, today’s make-up brands need a waterproof USP to build stronger connections with an increasingly segmented customer base.