It's a Matter Of... Integrity
The Secret Weapon of Indie Beauty with David PirottaAugust 24, 2020 BeautyMatter
August 24, 2020
Sponsored By Happy Farm Botanicals
Developing a distribution strategy with the right partners at the right cadence while achieving growth and profitability is an art form. David Pirrotta (CEO of David Pirrotta Brands and Materiae) is the secret weapon for indie brands carving out their place in the hyper-competitive beauty category. Every brand has a story to tell and needs someone like David to help tell that story to the retailers and customers who need to hear it, leaving them wanting to learn (and buy) more. David sits down with Kelly Kovack to share how he and his team think about making retail magic happen. And for David, in the end, it is a matter of Integrity.
Kelly Kovack [00:00:00]: This episode is presented by Happy Farm Botanicals. Happy Farm Botanicals is a leader in custom solutions for prestige brands specializing in non-toxic and natural formulations. Just a quick note on this episode. It was recorded prior to the impact of the COVID-19 pandemic. While there may be some references which may have a different context now, we believe you’ll find the conversations remains highly relevant and useful, and so we’re presenting it in its entirety. We hope you’re healthy and safe.
David Pirrotta [00:00:43]: Hi, my name is David Pirrotta. I’m the Founder and CEO of David Pirrotta Brands. I’m also the founder of Materiae.com. To me, it’s a matter of integrity.
Kelly Kovack [00:00:56]: While the death knell of the retail apocalypse has been ringing for years, and the casualties have been significant, raising out of the ashes is a new world of vibrant retail. I’m Kelly Kovack, founder of Beauty Matter. Retailers that have failed to innovate are simply not going to survive. Others will emerge reinvented, delivering better stores and more experiences. A confluence of factors, economic, technology, consumer behavior, and niche innovations have removed any concept of structure when it comes to distribution. The beauty landscape has completely changed. The lines between online and offline have not blurred, they’ve blended. Consumers are channel agnostic, and the very strict rules that once governed the distribution of beauty brands have been told re-written. Known for his passion for beauty, contagious enthusiasm, and endless energy, David Pirrotta, CEO of David Perrotta Brands and Materiae, is the secret weapon for indie beauty brands carving out their place in the hyper-competitive category of beauty.
So, David, thanks for joining us on It’s A Matter Of. You know, we’ve known each other a long time. I think we actually met at Barney’s on the sales floor about 20 years ago.
David Pirrotta [00:02:32]: Yes, wow.
Kelly Kovack [00:02:33]: So, you know, what was…for me, you’re kind of the…you know, if I had to say sort of like the quintessential sales person. When I see you on sort of a sales floor or doing a training or talking about a brand or sort of having a conversation with a consumer, it’s such a pleasure to watch because it’s almost like you’re putting on a show, and you have such passion and love for what you do. Can you give us kind of like just a little bit of history on sort of how you found your way, not only into beauty, but into brands and sort of ultimately setting up your own business?
David Pirrotta [00:03:16]: Wow. It started right out of college. Actually, when I was in school, in university, I was working in shops that sold a lot of beauty brands, and I didn’t realize it at the time, but I loved lotions and potions and candles and fragrances, but again, what really happened was when I moved to New York and I went to school for theater and also for accounting.
Kelly Kovack [00:03:36]: Well, that’s not surprising.
David Pirrotta [00:03:38]: So, I had both the numbers side and also the theatrical side, and I started working in an accounting department, and one day I just couldn’t handle it anymore. Everybody had graduated from Rutgers and they were all very unhappy and very unpleasant, and you could tell that they were actually just going through the motions to collect a paycheck, and they weren’t loving what they did for a living. So, I left for lunch and went to a Puerto Rican restaurant in Hell’s Kitchen and had two glasses of Chardonnay and Arroz con Pollo, and I read an article in Vanity Fair about this brand called Natura Bisse and at the time, I was smoking a lot, because I was in my 20s and I was looking for an oxygen cream which would like really help with bringing back oxygen to the surface of my skin from the deplenishment of me having too much fun in New York City and smoking. And so, I ended up walking into Bergdorf Goodman, and I went over, I went downstairs, and the new department had just opened downstairs, and I went to the Natura Bisse counter and there was this older woman, her name was Antoinette Rigerio, and she was in her early 70s, and she was a true New Yorker with a Queens’ Accent, and she said, “Sweetheart, what can I help you with?” and I said, “I’m looking for this oxygen cream,” and she looks at me and goes, “You have beautiful skin,” she goes, “You ever work in retail?” and I was like, “I did, in college and in high school,” and she’s like, “Are you looking for a job?” I was like, “As a matter of fact, I think I just quit my job and never went back after my lunch break, so I could use a new job,” and so I started the next day on the floor at Bergdorf Goodman, which how many people can just walk into Bergdorf Goodman and get a job there? And by two weeks in, I was one of the top sales people on the floor selling a ton of Natura Bisse, and then later on all the brands starting poaching me, specifically one called Sundari, and tt was Christy Turlington’s brand, and you know, what gay boy doesn’t want to work with a supermodel?
Kelly Kovack [00:05:38]: It’s really interesting, you know, she really tried, with that brand, to modernize Ayurveda, and talk about being too soon, because if she had launched that brand today, it would be a huge success.
David Pirrotta [00:05:50]: Huge, huge. It was like way before its time, and I was very lucky to fall into it, because I learned a lot of my foundation for my career, because I learned early on that I wasn’t really into the heritage brands; I was really much into the indie brands, and meeting Christy and her partners and learning about Ayurvedic principles, and learning about your dosha and your pitta and your kapha and all of that kind of fun stuff, and also learning how oils work on your skin. At the time, no one wanted to put an oil on their face. So, it did prepare me for when, fast-forward ten years later when I met Linda Rodin, and she was launching a face oil line, I knew how to sell it.
Kelly Kovack [00:06:27]: So, can we – before we fast-forward to Linda, because I think that’s sort of a really interesting…I think almost case study in you, if I can say that. So, you know, I think sales people, or sales roles, are kind of the hardest roles to fill, because they’re really, you know, kind of the engine, especially for indie beauty brands, to keep the lights on, right? So, I know you were kind of like a hot commodity. What made you go from that sort of VP of sales role and walk away from the security of a paycheck? I mean, indie beauty brands are only so secure, but to sort of moving from New York to LA and opening up David Pirrotta Brands, and what’s that business model?
David Pirrotta [00:07:15]: Wow. Yeah. I was fortunate, after leaving Barney’s, I did work with a showroom when I was a sales director there, and the owner was the king, at the time, of like indie brands, and so I don’t think anybody remembers – we do, but I don’t think anybody remembers who he is nowadays, but he was the frontrunner at the time. There wasn’t – there was a handful of indie brands, and he had them all, and so…
Kelly Kovack [00:07:37]: He was sort of…Jeffrey Scott, and he was sort of like a one-stop-shop for retailers.
David Pirrotta [00:07:42]: Totally, for retailers. And so, I kind of like learned from that. I worked with him for a year and then eventually became a VP of a few brands, and then moved to LA. When I moved to LA, I was offered a few different in-house jobs, and then I realized that my passion, again, going back to living your best life and doing what really drives you and loving what you do, because that’s really what brings success in life, is enjoying what you do for a living, I met this woman named Melanie Mayron, and she was, within a week or two of living in Los Angeles, I met her tenant. She had a guest house she was renting out to a New Yorker who met me at the DVM and I caused a scene.
Kelly Kovack [00:08:25]: Because you’re a New Yorker in LA.
David Pirrotta [00:08:27]: Totally, and I had security come over to me, and she was like, “Are you from New York?” and I was like, “Yes,” and she was like, “What do you do?” the last five minutes of our conversation, I told her I had worked for the company called Red Flower, she’s like, “I love Red Flower,” and I told her I had worked for The Art of Shaving and all of these other brands, and so she was like, “Oh my god, my land lady/friend has this baby line and she needs your help. I don’t know what I’m doing, I’m helping her on the side,” so I met her, and I realized my true passion and my calling in life was to help people launch their brands.
Kelly Kovack [00:08:59]: But, you also come from sort of an entrepreneurial family too, so it wasn’t such a stretch.
David Pirrotta [00:09:05]: No. It’s like a lineage of all entrepreneurs like coming from like my parents and my grandparents, they all had their own businesses.
Kelly Kovack [00:09:13]: So, maybe it was in the card, it was just a matter of presenting the when.
David Pirrotta [00:09:18]: The when. You know, I think the when happened when I got to Los Angeles, and at that time, not like today, because there’s tons of beautiful brands coming out of Los Angeles, but when I moved there, there was nothing great coming out of Los Angeles. I literally slept in a fetal position for a year and a half and rocked myself to sleep and cried, I had little tears coming down my cheek, wondering when I would go back to New York, and luckily, after meeting Melanie Mayron, you called me about a project and I came back to New York six months after moving to LA, and I met Linda Rodin right after that, and so I started signing really great brands, and then I realized I had a company. It just started organically, I started with $300, I had to incorporate. Listen, at the time, it started with like a banking account with like $300, not even a credit card, and I ran with it, just selling products. Loading my trunk with samples and hitting the road and hitting every store, old school style, going into accounts and opening them, and as the cash came in, I’d get on a plane to another market and open that market up. So, it just began organically, and that was eleven years again.
Kelly Kovack [00:10:22]: But, I would say that like, you probably didn’t do a formalized business plan, but you knew the business plan in your head once you started rolling, right?
David Pirrotta [00:10:31]: Yeah. It just started happening, and I was just like, “Oh, it’s just going to be a show room, brand management kind of model, and eventually, when there’s enough cash flow, I’ll create the distribution model where I would import brands, and then eventually have a model where I’d have my own 3PL and eventually my own .com and eventually, my own stores.”
Kelly Kovack [00:10:49]: And so, you’re – I would say that it seems like you’re 75% through, so, you set up the brand management, which you still do.
David Pirrotta [00:10:58]: Which I still do, which is still my biggest kind of growing business, because it’s where we launched Rodin and Odin and Ilia, which we still work with Ilia nine and a half years later. That was kind of the bread and butter of my business, and it still today is the bread and butter of my business, because it’s a commission-model business with a small retainer. And then, a few years after starting that, I was approached by an incredible haircare line that had a situation with their distributor, and so I literally jumped on a plane to Sweden and made a deal happen and came back to the U.S. and started the distribution side of the business, and that was seven years ago, and during that time, we launched under the distribution umbrella Grown Alchemist, Sachajuan, David Mallett, all of these amazing brands, and now we’ve launched two new brands from Australia, because you know, I have like an affinity for Australian brands, for Scandinavian brands, and then of course, the European brands. Yeah, so that model happened, and then after that, I was working with 3PLs, and you know, it’s such a big direct-to-consumer business now, and I am the guy that has friends order things from my warehouse and I Venmo them so they can show me what it looks like, so they know it’s not me that’s ordering it, so they get to keep the samples and test it out, and I was seeing all the packaging, even though I showed everyone how to pack everything perfectly and how I wanted it, was just arriving to the consumer in a terrible way, just like, you know, when I ordered things from Barney’s in the last few years, it was a terrible experience.
Kelly Kovack [00:12:39]: Well, we’re going to go back to Barney’s, because that’s a whole conversation.
David Pirrotta [00:12:44]: But, yeah, so that’s why we started the 3PL in July I signed a lease, and then in the fall, we got all our licenses from the city of Burbank, so we have our own 3PL, which is for our own brand management brands, pretty much we work as their 3PL, and then also for my distribution brands and any new brands that are looking for a smaller kind of warehousing structure.
Kelly Kovack [00:13:05]: A bit more hands-on.
David Pirrotta [00:13:06]: Hands-on, where they can walk in, see their inventory, our warehouse manager talks to the owner and lets him know what’s going on, what he sees low on, so it’s not only just…it’s very kind of…kind of very hands-on, but I think the future of our business is you have to know everything that’s happening. My issue with 3PLs is you never know exactly what your inventory is.
Kelly Kovack [00:13:27]: Right. You know, I think – so, what you’re essentially building is a vertical operation, sort of on the distribution, all the way from sort of the brand is built, so from distribution to retail and even direct-to-consumer with your latest venture.
David Pirrotta [00:13:44]: Exactly. And then for a passion project, I like, in the spring of last year, we launched our own beauty website, so that was more so a passion project for myself, because I’m always working now more so as a CEO versus as a creative, so the Materiae website was launched because it was going to be my hobby of the years of me being on the floor at Barney’s and finding new brands that you can’t find everywhere, we’re going to test it and have the consumers test it, and we also have a lot of editorial on it as well.
Kelly Kovack [00:14:16]: No, it’s beautiful. Congratulations.
David Pirrotta [00:14:19]: Yeah, it’s so exciting, because we haven’t even pumped in that much money into it, and it just organically has grown like 800%.
Kelly Kovack [00:14:25]: I think organically is sort of the best way to build. So, let’s talk about, you know, you have this very solid business and you definitely know kind of what you’re doing, but we’ve been hearing about sort of the retail apocalypse, which I’m sort of like, enough with the click bait, and we hear all of these, like the death knell of retail, and I think yeah, online is going to grow, and maybe it’s just me being nostalgic, but I really think that you know, the retailers that are going out of business, they just need to go out of business, and there needs…there is going to be this kind of new way of doing business that’s almost maybe kind of a throwback to how retail was that was based on good old-fashioned customer service, but I don’t think retail is ever going to go away.
David Pirrotta [00:15:18]: I don’t either. You know, it’s interesting, because when I was looking at my growth, 2019 was an interesting year for retail and also for my business, but what I’ve noticed is our dot com business, of course, is up, but our local specialty business is up significantly. So, I think people, not only are they buying local food and produce, but they’re also still shopping locally, and the reason for that is because these small retailers are creating an experience, and I think what’s happened to the stores that are closing is that they forgot what their experience was. They forgot their point of difference, and they also lost the ability to kind of relate to the customer.
Kelly Kovack [00:16:00]: Do you also think that in some cases, these retailers were sort of leveraging technology in a way that was kind of more of a gimmick, and thinking like, “Okay, I’m going to add animation and create experience by like, this magic mirror,” you know, instead of really using technology to – and, again, this might be my nostalgia, of empowering, kind of the people on the sales floor that are selling. So, like, why not give the people on the sales floor the same access to information that the consumer has when they’re walking in? But, it seems like that human connection has sort of been missing, and maybe – and to me, I think maybe that’s sort of part of the downfall that’s a little bit soulless.
David Pirrotta [00:16:55]: Well, again, I think the consumer, like with the way social media and technology has happened, I think people are shopping differently, and people are – they don’t know how to connect, so even the sales people on the floor aren’t trained how to connect with humans either, because they’re also always on their mobile device, and so it’s interesting because I think what ended up happening with all of these gimmicks and mirrors and all of these things that people are launching, I think every retailer is following each other’s trends, and they’re not – they’re following each other, so everyone is doing the exact same thing at the same time, and it’s not exciting. So then, it’s like…so, no one goes to any of the stores, they’re all empty, because they’re all doing the exact same concept, and then the sales people don’t even know what the concepts are, because no one is even talking to them. So, there’s this disconnect between the corporate, the creative team, and the floor team. Back when I started on the floor, we were the first to know everything. They told us before it was even announced to everyone else. And, also, the experience was you wanted the consumer to walk in and feel like they wanted to stay for a while. I remember, like right now Nordstrom’s opened up here in New York City, and when I walked in, I was like, “Wow, they’re actually doing what I enjoyed doing. I loved walking in – when I left Bergdorf’s and went to work at Barney’s, I loved it because it was like a party down there. People would just come in to listen to great music, to look at beautiful peoples selling you product, and you didn’t want to leave because we were even allowed to order champagne from Fred’s for our customers at our counters, and people would stay for a while and spend $15,000 or $20,000, and then just recently, before they declared bankruptcy, I would go down to the cosmetic floor, and the department manager would shush me, like a librarian, and I was like, “Excuse me, I’m a distributor selling products here, why are you shushing me,” and the reason why I was being loud was because I had seven customers I was trying to sell skincare to, and I was trying to get them excited. So, the excitement disappeared, and so I think what ended up happening was the cosmetic floor, online became exciting, all of these concepts became exciting, the floor just lost its soul and lost its way to connect with the consumer.
Kelly Kovack [00:19:01]: I would agree. I think also, sort of what happened in parallel to that is you know, at one point, the beauty landscape and how brands were distributed was, it was so regimented and it was sort of “the law,” and all of the sudden, it’s a bit of a free-for-all. Consumers are totally sort of channel agnostic, so your brands, regardless of whether they’re luxury, premium, masstige, mass, available sort of across touchpoints, across channels. How do you even go about building a distribution channel strategy with your brands that you work with?
David Pirrotta [00:19:47]: Well, currently…like, back in the day when I started my brand management side of the business, it was very regimented. I think people came to me specifically because of my relationship with Barney’s.
Kelly Kovack [00:19:56]: You had the access.
David Pirrotta [00:19:57]: I had the access to Barney’s, and Bergdorf’s and the right buyers, where you would start with Tier A, and you’d just be really strict with keeping it just tight until you launched Barney’s or Bergdorf’s or Niemen’s, and after that you would just segue down the trickle effect of the pyramid, and then now, like we’re launching a few brands, luckily wellness is a huge space for me right now, so we’ll go into that later, but a lot of the way I’m strategizing and working on brands is I’m trying to put them into experiential spaces, so in New York, there’s a place called The Well, so a lot of my new brands are in The Well’s retail, and on the west coast, a lot of my other brands that aren’t always sold at The Well are at this other place called Remedy Place, so they’re both just new wellness kind of membership SoHo houses of the future, and so I’m starting with getting them into experience, and then after that retail, we can open anything. We have to get – like what’s keeping them interesting is getting them into something that’s outside the box so they can get some press and some traction, but then we’re like launching them of course at like Niemen’s and Nordstrom’s and all of the department stores, so we open them all at like the same time now.
Kelly Kovack [00:21:10]: Interesting. And you also, I think one of the reasons people come to you is that you also have a mass – this network of really interesting, independent retailers and service concepts. So, how did that sort of factor into the building of your business, and kind of if you had to put percent total, how important is securing a network of indie brands from a financial standpoint?
David Pirrotta [00:21:37]: It’s really important, because that’s our bread and butter. So, I always tell every brand when you’re developing, so if we go into, say, the majors, all too quickly, there’s not enough cash flow to sustain unless you’re heavily funded. So, the balance of opening one major and 20 specialty; and then you open one major and another 30 specialty, there has to be a balance because all of the specialty doors are pretty much prepaid cards, and so basically what happens…
Kelly Kovack [00:22:04]: It’s nice.
David Pirrotta [00:22:05]: It’s so nice. Who doesn’t want that? And also, it also takes away the risk factor, you know, with all of these retailers closing, all of these majors closing, it’s a risk. So, when you’re trying to build the brand, and I think that’s why a lot of people come to us, because we do work with a lot of service doors, which are salon and spa, as well as some of the best independent concept specialty stores across the country. We have accounts in Nebraska, we have accounts all over Alabama, all over the southeast.
Kelly Kovack [00:22:32]: That’s amazing.
David Pirrotta [00:22:33]: Yeah, you know, it’s like it did take 20 years of my career to build that, and as of right now, I think I’ve worked with over…I’ve launched and worked with over 80 brands in my career. I like made a list but then I just didn’t want to look at it anymore because I was like, “Oh my god, I should be…”
Kelly Kovack [00:22:48]: It makes me feel old.
David Pirrotta [00:22:50]: I feel old, and I should be a lot richer, too. I was like, “What happened here, girl?”
Kelly Kovack [00:22:58]: Something that I’ve noticed that I find kind of interesting, and very hopeful about, is that we’ve…there’s all this talk about the indie beauty trend, which I’m like, yeah, I lived through that in 1996, and it’s not new, and I really think of…I think it’s probably a little bit easier to launch a brand for lots of reasons, but you know, I think what has also come out of this is that I’m seeing really cool, indie retail concepts open, and so am I imagining that? And, do you think it’s happening because there’s so many brands and there’s not enough places? So, most indie brands are not going to land at Sephora, they’re not going to land at Ulta, so like, where do you go?
David Pirrotta [00:23:54]: Yeah, so luckily, there has been, you know, an influx of a lot of these kind of indie multi-channel doors. Everyone knows that there’s the Credo’s for the all-natural and the detox market, but in the middle of the country, there’s Alia, she’s decided to go after the markets for Credo and Folane, and you know, detox haven’t gone into, and those are the markets, Atlanta, North Carolina, she’s in interesting places in California which no one knows that she’s there, but she actually has a very strong business model with some of the best brands.
Kelly Kovack [00:24:29]: Well, you know, it’s very interesting, because I mean, I’m sure you remember kind of how Blue Mercury started.
David Pirrotta [00:24:37]: Wow, that really dates us.
Kelly Kovack [00:24:39]: I know, I know. But, it started in Washington, D.C., which, you know, I kind of feel like there may be…as people are sort of ringing the death knell of retail, there may be kind of the next Blue Mercury, Space NK, Sephora kind of in the making.
David Pirrotta [00:024:56]: And there is. You know, I think right now, there’s another one out of Nashville and Houston, and it’s Lemon Laine, and she has created this concept which is just so refreshing. So started in Nashville and she opened her second in Houston, and I’m sure she’s someone to look out for because she’s going to open so many more. We have another strong account that’s been around for a while called Citrine in Scottsdale, and she has been one of the first…like, after the second round of indie, because of course, when we started, people forget that in the ‘90s, like in the ‘90s, that was the first round of indie brands.
Kelly Kovack [00:25:31]: Sure, Noirs, Crème de la Mar, Bobby Brown, Bliss.
David Pirrotta [00:25:34]: Eve Lom, yeah, all of these indie brands, even The Art of Shaving was an indie brand then. So, you think about it, we were there during that time.
Kelly Kovack [00:25:43]: Kiehl’s.
David Pirrotta [00:25:44]: Yeah, Kiehl’s. These were all indie brands. Wow, yeah. Wow.
Kelly Kovack [00:25:50]: Sorry.
David Pirrotta [00:25:51]: I’m having a moment where I’m realizing how really old I am. Anyway, let’s go back. But, no, so again, there was this kind of…there was a small time where there wasn’t a big influx, and then right after that economy, like 2008, 2009 happened, and that’s when I started my business.
Kelly Kovack [00:26:11]: The great recession, as the millennials refer to it.
David Pirrotta [00:26:13]: Yeah, the great recession actually was when I started my business. My current job here in New York wanted to reduce my salary by 35%, so I was like, “Oh, there’s no room but going up,” so I ended up moving to LA, and all of these stores closed – all of these boring stores that were suffering already just fell off the radar and the stores that stuck around were the ones that had really great concepts.
Kelly Kovack [00:26:38]: So, there’s sort of a beauty about a recession, not that anyone wants to have a recession, but there’s this culling that happens where businesses that are really solid business models will always find their way out the other side, probably stronger, and those that were kind of just kind of skating along, like the rubber hits the road, and you’re out of business. There’s sort of, you know, it’s just not possible anymore. But, I feel now, sort of we’re in that moment where there’s sort of a glut of brands and concepts and sort of where I walk through these shows, and I’m sort of like, “Where are all of these brands going to go?”
David Pirrotta [00:27:23]: Yeah, it’s a really, really loud space now. When I first started, I had to find the brands, and now, we get on average 16 to 22 brands sending me boxes that I didn’t even ask for, and my mornings start with cleaning out my email box of so many brands wanting to talk, and that leads me to saying like, when I started my business, I only worked with brands that have their own formulations; I don’t work with brands that are private label. I can tell when they are private label because I know how many units they’re running at a time. I’m like, there’s no way that it’s your formula if you can run a thousand units or a few hundred units at a time. So, I get a little discouraged by brands like that, because again, going back to integrity, I love working with people that have integrity, brands that have integrity, and brand founders that are creating brands for the right reasons. What I’ve found in the last decade is people are creating brands because they’ve heard that they can sell it for a hundred million to a billion dollars. I think you should just try auditioning and trying to be a superstar.
Kelly Kovack [00:28:34]: Or, playing the lottery, it’s probably easier.
David Pirrotta [00:28:36]: It’s easier, clearly. And like, they think because they’ve read an article or even one of my distribution brands that I helped build for a long time, I realized later on, after I worked so hard launching it, that the creators read a book about creating an all-green brand and that it would sell for a lot of money. So, going back to…I really like working with people that come from a genuine place, that have integrity, that are creating a product or a company that serves a purpose, that also, it comes from a genuine place, and that they own their own formulas. I’d rather work with a brand that has one skew, but it’s their formula and we can build on that and launch more products after that. I also only work with doctor brands that are published doctors, that are doctors that actually also have an accredited client base and they have a practice. I have an issue with doctor brands that don’t have a practice or are published and I can’t find any published documents about their studies. I don’t want to use their product on my face. So, my job as a brand manager and as a product distributor is really to vet the business and like, get through all the bullshit, sorry, am I allowed to say that on here?
Kelly Kovack [00:29:47]: You can say that.
David Pirrotta [00:29:48]: You know, get through all of that, because there’s so much noise and so many influencers coming into my office because they’re influencers and they’re creating a brand and private labeling that brand because there’s always manufacturers creating products for these people because they know they can make money off of them, too. So, there’s a lot of things…
Kelly Kovack [00:30:09]: There’s a lot of noise.
David Pirrotta [00:30:10]: There’s a lot of noise, and then there’s only a few brands that are coming out the other side.
Kelly Kovack [00:30:16]: Yep. So, I think this is the perfect way to segue into two really hot topics that we’ll go into next.
David Pirrotta [00:30:23]: Oh, I feel like we’re on The View.
Kelly Kovack [00:30:25]: Amazon and Barney’s.
Kelly Kovack So, that was a very big sigh when I mentioned Amazon and Barney’s. Why?
David Pirrotta [00:33:28]: Well, you know, I think after choosing this to be my career for the last 22 years, at first, you know, when Amazon started coming out, my son used to say, “Dad, you’re going to have to really get behind Amazon, because it is the future,” and he’s right. Most of our brands that sell on Amazon Luxury or even fulfill for Amazon, it’s gotten to be like 50% to 51% of their business.
Kelly Kovack [00:33:54]: Well, it’s very interesting, because you know, I see a lot of similarities between QVC and Amazon. So, remember back in the day when being on QVC was sort of the kiss of death, and it was thought to be very sort of down-market and all of these things, and Philosophy did it because they had to financially; they weren’t getting the revenue they needed. And, Teak and Leslie Blodgett with Bare Minerals, those people kind of changed the perception of QVC to sort of fast-forward, everyone wants to be on QVC. And, I sort of, I guess, very early on, because I was working with retailers that had figured this out, independent retailers that were selling brands on Amazon, and making a killing, and I felt like the canary in the gold mine, and I was just like, every client, I was like, “You really need to consider Amazon. Are you really going to say no to that many eyeballs?” and they would look at me like I had ten heads, and now, it’s just sort of…I kind of feel like the beauty industry had its head in the sand, and now everyone, you know, is kind of playing catch-up, and some brands really had massive clean-up to do because they weren’t controlling it and they weren’t paying attention to it, and now, like you said, it’s a really important part of revenue.
David Pirrotta [00:35:21]: It’s an important part of revenue, it’s also important for brand presence and awareness. Also, like you were saying, the clean-up. A lot of our young brands, because they didn’t want to go into Amazon early on, there were all of these independent retailers, or even all of these retailers, we don’t even know how they got our inventory, and so working with Amazon Luxury or Amazon, we could clean that up very quickly. So, we chose to do a few of our brands, and we noticed very fast that it was a very profitable, great business model to work with Amazon, but it also increased brand awareness throughout the country, and so even when people – like we had retailers like, “You’re selling to Amazon,” customers would walk into their store or salon like, “Oh, I know that brand, I’ve seen it!” So, now we have a lot more awareness, and it’s not shunned upon anymore. I remember the days of when Philosophy did do QVC, and Barney’s exited Philosophy. And, Arcana got exited too, because they did another TV, you know, like all of these brands were doing…and I think when Amazon, you know, one of our retailers that is anti if you sell to Amazon, there’s another department store which comes from the same area of the country as Amazon, I’m not going to say their names, but it’s another big department store, they choose not to carry a brand if it’s also on Amazon Luxury, and that was part of their business model for about three years, and now they’re changing their minds.
Kelly Kovack [00:36:43]: Well, I think that in a similar way to you know, when a brand would go on QVC, retailers would see a bump in-store, because it was like a paid commercial, and I think now, you can’t discount the fact that if you’re looking – if a consumer is looking for a beauty brand, I think the stat is something like 54%, like more people go on Amazon than Google to search and research a brand, and that’s really powerful. So, even as a retailer, I think what I’ve seen is that retailers want to see how you’re doing Amazon, and are you controlling it, and I think another thing that brands don’t think about is if you are either raising money or contemplating an exit, how you run your Amazon business is sort of a very good indication on how you run your business. If you are messy on Amazon, you’re probably running a very messy business. So, it’s sort of like a very interesting window into brands. I think Amazon business has become one of those metrics that investors look for.
David Pirrotta [00:37:57]: And, I agree with that. One of the models that I looked at when I was contemplating working with Amazon is there’s a group called Luxury Brand Partners, and they had Oribe before they sold it and RN Co, and they chose not to put those brands into Sephora, but they chose to go the Amazon route, and I was like, this is a very clear, smart company, and they’re only sold at salons and very key retailers. Actually, in all of my retailers that I sell my brands in, those brands were also sold to. So, when I saw that they were partnering with Amazon Luxury, I was like, “Okay, this is a really smart channel that we have to focus on,” and they actually have always run their business very clean and perfect and structured, and like you said, I saw how structured all of their businesses are and their channels of distribution, and I’m sure they followed my channels of distribution as well, and I’m like, “Okay, we’re in. If they’re doing it, I’m doing it,” and then I think a lot of people saw me putting brands in there, and people were like, “Okay, it’s safe,” and I think that’s – now, you have to like set it up and it’s more of a drop-ship model than them purchasing direct.
Kelly Kovack [00:39:02]: But, I also think that when I talk to small brands, you know, they think that Amazon, you know, Amazon is very good at the romancing of brands to sort of get them on the platform. Fantastic job. But, I think what brands need to realize is that ultimately, Amazon cares about the consumer, and their consumer. They don’t care about the brands. The brands are kind of a means-to-an-end. So, I think that brands need to actually go into Amazon with their eyes wide open, because Amazon’s not going to help them build their business.
David Pirrotta [00:39:37]: No, they’re not. And, it’s actually interesting, because now Amazon has created their kind of service side for salons, and so a lot of like, I’m also a haircare distributor to the salon businesses, so for me, it’s like, you look at that model, now they’ve created a whole portal for salons to order through them and skip the distributor. So, they really are on top of everything faster than…you know, they are really a beast to watch and like, that’s one of the reasons why I actually ended up opening my 3PL, because I realized that the warehousing business is something that is never going to come to an end, and so I always knew that someone has to be shipping these products out to people, and why not do it like, on the indie level?
Kelly Kovack [00:40:24]: I mean, I think at the end of the day, Amazon is sort of a widget. You know, it’s category agnostic, and the better you know how the widget works, the bigger your business is going to be.
David Pirrotta [00:40:35]: Exactly.
Kelly Kovack [00:40:36]: Alright. So, let’s do it. Let’s talk about Barney’s.
David Pirrotta [00:40:39]: Another sigh.
Kelly Kovack [00:40:40]: I know. You know, I think for both of us, Barney’s played such…kind of such a pivotal role in our careers. I mean, I can speak for myself. When I was building the Bliss catalogue, it was Heidi at Bliss, so Heidi Manheimer was the DMM of Barney’s at the time. I was kind of building this catalogue thing at Bliss. Robin Kohutching was doing her thing on the west coast, and you know, Barney’s really was the first incubator of indie brands. They were the first ones to have sort of the Apothecary and you know, gave so many of the brands that we’ve built kind of their window to the world, and actually, you know, Kiehl’s, Malin+Goetz, these small brands that were founder-driven are now sort of strategic heritage brands, and it’s really…I mean, it’s really sad because I think there’s this cultural touchpoint that’s lost in New York, and there’s, you know, this kind of vacuum in the indie world. So, do you want to share a little bit about like, your history with Barney’s, and…
David Pirrotta [00:41:57]: I have a long history.
Kelly Kovack [00:41:58]: Yeah, but also beyond that, I think there are a lot of lessons to be learned, right, for a lot of brands, they signed exclusives with Barney’s, right? So, Barney’s was a great marketing vehicle. You really tried to just not lose money, but it served a purpose, and I think everyone knew – it was obvious they were having financial troubles, but also, what are the lessons you can learn in kind of this uncertain retail time of, okay, you need the window of a Barney’s for a marketing purpose, but how do you also sort of protect yourself? Because there are an awful lot of people that were left hanging.
David Pirrotta [00:42:41]: Oh yeah, including myself.
Kelly Kovack [00:42:43]: I mean, you know, for indie brands, it doesn’t matter - $5,000 is a lot of money. So, there are a lot of people owed a lot of money, and I guess, is there a way to sort of take lessons and learn? All of these brands are now kind of negotiating new deals with brands that may or may not be more financially stable, I don’t know.
David Pirrotta [00:43:08]: Well, it’s interesting, because, you know, Barney’s did help build my career. It built my career. I started on the floor there, but it started before that, like when I was a kid, my Aunt LaClair, who was like my Auntie Mame, she was a customer that used to eat at my parent’s restaurant in Hartford. She didn’t have any grandchildren and she was an auctioneer, and she was pretty fabulous, like she just had this very Anna Wintour haircut and she would just sit and eat dinner by herself, and I found myself eating dinner with her all the time, and then one day, she asked my parents if she could borrow me for the Saturday afternoon because she had to go into New York City to go to Barney’s, and my mom said yes, my dad was very upset because he needed a dishwasher at the restaurant that day. But, luckily, that afternoon, she took me to Barney’s. She picked me up in her vintage Ashton Martin, and she was an older woman in her 70s at the time, and she had a little back-spine disease, so she was a little hunched, so people looked at her and couldn’t figure her out, but she drove into New York City in an hour and a half, which would usually take two hours, she valeted her car, we walked into Barney’s, and I remember just the smell, the music, the customers. I looked around, the sales associates were stunning, I saw like famous – for me, they were famous, but they were all of my favorite soap opera actors, shopping, and so I thought to myself, “Wow, this is a magical place,” and she taught me about stationary, she took me to the stationary store, and three-point cashmere, so much in that one afternoon, that the next decade of my life, all I did was dream about being able to shop or work at Barney’s, and then that was 1989 when that happened, and then in 1999, I started working at Barney’s. So, I started on the floor, and I watched some of the best indie brands start there. When I started in the Apothecary area, there were brands like Aesop started on the few shelves back there, like we even had brands like Red Flower started there, but Philip B started there, we had Davenith, we were the first point of retail in the United States, Diptyque, literally the Pressman’s brought their candles in their suitcases from Paris. Molten Brown. The list goes on, and it was just so amazing to have been able to work in that area, but then when I started launching my own brands for my own business, it was a big platform. Every brand really wanted…we had to…my goal was to get the brand into Barney’s, because as soon as I got the brand into Barney’s, every other store in the country would want it. So, that was my strategic side of it, and what’s painful for me to see is there aren’t a lot of places that kind of have that fragrance bar or that Apothecary.
Kelly Kovack [00:45:56]: I mean, they really took a curatorial approach to merchandising that I think is lacking, especially sort of in the kind of department store world.
David Pirrotta [00:46:07]: Yeah, and the thing is I think what ended up happening is the customer doesn’t want the department store experience anymore, they want to go back to maybe how the original Bendel’s was.
Kelly Kovack [00:46:15]: You know, that’s the irony of it, right? So, I remember when – I was so angry when Bendel’s closed, because I did some research and Bendel’s was the first retailer to bring Chanel to the United States, and you had this visionary who essentially creating shop-in-shops or pop-up-shops and created an experience a hundred years ago, and I think that the connective tissue between the failure of both of these brands is the influx of money. So, all of the sudden, you have people with big bank accounts and ideas of, “I’m going to take this beautiful business that was someone’s blood, sweat, and tears, and I’m going to make a billion dollar business out of brown and white stripes,” and ultimately, it becomes a business decision, “Oh, that didn’t work out, we’ll just pull the plug,” but it’s sort of like, there’s no respect to history or what it was or what it took to become that, and I think the same thing happened with Barney’s: you had this family-run business with a real point of view, and then money came in, and then it changed hands, and I remember, I was like thinking to myself, “This is the beginning of the end,” when I went up to Madison avenue, and I went there the day they were ripping up the mosaic tile and taking out the fish tank, and I was just like, “Who, how, rips up a hand-laid mosaic floor?” and the end result was a flagship that looked like it could have been in Dallas, Texas. To me, it was like this chipping away of the soul of what made this retailer great.
David Pirrotta [00:48:12]: That mosaic wall, the floor was incredible, and even though – because that’s where the cosmetic floor was when and I started, and they jewelry area was, and they moved us downstairs. So, when I walked in, they were like tearing it apart and they laid these square tiles.
Kelly Kovack [00:48:26]: It was horrible.
David Pirrotta [00:48:27]: I was like, “Oh, this is the beginning of the end.”
Kelly Kovack [00:48:29]: But you know, there’s also a perverse irony. So, I don’t know if you’ve gone up there lately, but I was up there this weekend, and, I mean, it is like some bargain basement, I don’t even know what. They’re not even cleaning the awnings. There’s bird shit all over them. On Madison Avenue. And, there’s kind of this perverse irony that Barney’s started as a discounter and is ending as a discounter. I mean, on that note, do you really think that there’s a future for Barney’s?
David Pirrotta [00:49:04]: No.
Kelly Kovack [00:49:05]: You don’t.
David Pirrotta [00:49:06]: I think there’s going to be a place probably online, but I think the beginning to the end is when Barney’s held the luxury space in beauty and in fragrance, and then Net-A-Porter came along, and Barney’s wasn’t fast enough upgrading.
Kelly Kovack [00:49:17]: They were slow on the digital.
David Pirrotta [00:49:18]: They were slow on the digital, and they lost the opportunity to actually sustain their customer base, because everyone started going to Net-A-Porter, me included, because I loved the way they sent me my packages and I loved how quickly I would get them. Again, Barney’s would send them to me in a box with popcorn, again, my expensive fragrance thrown in a box without any thought. So, I knew that that was already the beginning to the end when that’s how they were treating their customers’ online business side, and then I also realized it when they just had no point of difference anymore, and everything they did, like when they launched a new wall of product that had already been done somewhere else. Oh, like I remember CBD came out, but everyone else launched a CBD area actually before Barney’s did too, so it was just very frustrating. Oh, face masks – that’s when it all started.
Kelly Kovack [00:50:09]: The beginning of the end was face masks.
David Pirrotta [00:50:11]: (unclear) had a face mask wall, so did Sephora, everyone had to have it, and so Barney’s had to have one, so you knew that they were trying to play catch-up and they weren’t thinking for themselves and they weren’t creating an experience for themselves, and the main reason why people still go to the seventh floor of Bergdorf Goodman is because every season is a new theme, and they’re creating a new experience. Like, I have to go see the holiday floor while I’m here.
Kelly Kovack [00:50:35]: Of course, it’s Santa wearing Etro, there’s nothing better.
David Pirrotta [00:50:38]: Oh my god, I love it. And then, so the experience – they’re creating an experience for you to come in, and so I think that’s where I knew it was going to be over. I think, for me, I’m not upset about it. Yes, I lost – I’m actually one of the people that lost a significant amount of money. They owed me a lot of money, and I trusted my buyers and I probably shouldn’t have trusted them, but you know, my 20 years of working – ten years there, ten years as my own business, I look at it as like my MBA. I had to pay my MBA degree somehow, so that’s the way I’m looking at it. What really hurts me is the 2,600 people losing their jobs. There was a woman that worked downstairs in the stock room, her name is Sarah, and she has great grandchildren, but she has been there for 37 years, and she, for me, like thinking about where she’s going, or thinking of these other cosmetic associates that I’ve known since I was in my early 20s, they were my age now when I started, so they’re at retirement age, but they still need to work and they’re like, “Who’s going to hire me?” So for me, yes, I lost a lot of money, but I’m 43 and a half years old, and I know this is a learning curve, and what I’m taking away from it, and what I think brands should take away from it, is you can’t just trust one store being your end-all, be-all. Fortunately, I knew that I had to build my relationships with other department stores, so I do have great relationships with the Niemen’s, the Nordstrom’s, you know, we even have great relationships with the Ulta’s of the world because a lot of brands are launching in Ulta now, just Ulta, direct-to-consumer and Ulta direct-to-consumer, and Sephora. I’m actually just signing brands just to launch them into Sephora and Ulta now. I have a whole different model that’s just to launch them into those majors. So, it’s like…it’s interesting, because you don’t need the Barney’s anymore. I think I’m being selfish because for me, I always needed Barney’s, because when I go there, it’s my alma matter, it’s my heart, it’s my soul. When I walk the floor – I actually stopped walking it before I saw any sales signs, and I went up there before the auction went through and went up to Fred’s and I said my goodbyes.
Kelly Kovack [00:52:50]: I know. I’m having my last lunch at Fred’s on Friday.
David Pirrotta [00:52:53]: Are you? Can you have a French fry for me?
Kelly Kovack [00:52:56]: I know, right?
David Pirrotta [00:52:57]: I just have decided, it’s like I drove by the Beverly Hill’s store and I saw all of the yellow and red, and I was in west Hollywood last week driving, and there was somebody like flipping one of those pancake signs which is normally for like mattress stores saying “Closing sale at Barney’s, all must go!”
Kelly Kovack [00:53:13]: Have you seen the TV commercials they’re running here?
David Pirrotta [00:53:16]: Oh, I have not.
Kelly Kovack [00:53:17]: It’s tragic.
David Pirrotta [00:53:18]: I’m glad I don’t watch that much TV.
Kelly Kovack [00:53:20]: You know, I think kind of coming back to integrity, you know, you talk about kind of integrity a lot. What are the sort of lessons, I guess, around integrity that you take away from that whole Barney’s experience?
David Pirrotta [00:53:34]: I think what I take away is I have had relationships within there, and I wish the people I had worked with had some more integrity, would have given me some heads’ up, since they know that I am also a self-funded company, and so I kind of…I don’t want to like, I’m not going to put any negative energy towards it, but I am a little bit, like I’ve just realized that you just can’t trust anybody, you have to go with your instincts. I’ve always followed my instincts, and I probably should have followed them earlier, but I never wanted my brands to look poor or look terrible in the store, so I kept shipping them when I knew I shouldn’t have. The great thing is I’ve had my business for ten years and I have three different companies, so literally, they all self kind of move, like a machine, but I take away from it, my integrity side is I’ve always had integrity, and I’m always a man of my word, and I will always do what’s best for the brand I work for, my relationships, because those relationships are decades of relationships, and so that’s why I think when I said integrity is the word, the reason why we’re still close friends and colleagues is because you have so much integrity, and I love that about you, and you’re always – I always, when I think about you, I’m always trying to think to myself, I was like, you know, it’s always about staying relevant. We’ve been in the industry for a long time, and it’s about staying relevant, and also changing with the times, and a lot of people don’t know how to change with the times. So, for me, it’s like, my integrity is one thing that can never change.
Kelly Kovack [00:55:10]: And it’s yours.
David Pirrotta [00:55:11]: And it’s mine.
Kelly Kovack [00:55:12]: No one can take it away.
David Pirrotta [00:55:14]: No one can take it away. My grandpa always said, he’s like, “Your name is everything.” Maybe I shouldn’t have named my company with my own name.
Kelly Kovack [00:55:20]: So, just one last thought, kind of in wrapping up. How do you square all of the bankruptcies and store closings that are happening on one end of the spectrum with the door expansions that are happening sort of on the other side? So, Ulta, while they’ve had a couple of rough quarters, is expanding; Sephora is expanding and evolving. Interestingly, people never talk about the Dollar Store, and that’s not sort of where our businesses are, but Dollar Stores are killing it and expanding like fire. So, you know, I think…what do you think the future of retail is? If you could fast-forward ten years, what does traditional retail look like, and how does it dovetail with sort of online and digital?
David Pirrotta [00:56:10]: I was having this conversation just recently with my team. You know, I actually look at the luxury space changing significantly. Our luxury space is pretty much, you know, the Ulta’s and the Sephora’s is luxury in the United States. For a lot of people, that is luxury. My son is in the army, and so when I go visit him, there’s only an Ulta in those towns, and there’s like a Home Goods and a T.J. Maxx and Marshall’s, and that’s where the middle class and the upper middle class shops in that area, and so for me, it’s like, I do see – especially stores still being around, I see a lot of the dot com businesses growing, I think a lot of the dot coms will also close. A lot of the dot coms I’ve been selling to before Amazon, that actually used Amazon to drive their business, they’re slowly going to dissipate because their only point of difference was their website and Amazon, and so now that people are going Amazon direct and selling to Amazon, they no longer can sell to Amazon, so I’m seeing a lot of those dot coms probably going away. I do see – like we had talked about before, I see the influx of a lot of young, conceptual stores coming to fruition. I do see a lot of new ideas that people are working on. I definitely think the online platform and the specialty platform will always be alive, and I think the department store platform, we’re going to see, all of these people that are expanding, I think are going to expand and then have to contract, and I think a lot of these department stores are going to stop opening these massive department stores. I really think the future is a smaller footprint which has just an evolving – like we were talking about pop-ups, it’s just like energy, like Nordstrom’s has this pop-in that they always change every season, and it’s one of their best revenue areas of their business, because it’s always newness that they’re bringing into that. So, I think a lot of these department stores are going to just really kind of go smaller in their footprint, and I think it’s not going to happen – it’ll happen the next ten years, it will be much more conceptualize, like we were saying, much more Hirshleifers, you know, it’s funny, because Hirshleifers isn’t online, you can only buy in-store, and they’re still a healthy business.
Kelly Kovack [00:58:19]: Oh my god, so healthy.
David Pirrotta [00:58:20]: And people don’t realize that it’s like, they don’t have to go online. The customer goes there because it’s an experience, and it’s in Manhasset, and people on their way to the Hamptons stop there. People from all over the country stop in there. I stop in there because I want to see what they’re doing, and they don’t have to have a dot com. So, there is still a really big space for retail. My dear friend that created 45/10, Brian Bulkley created a new concept called The Conservatory, and he opened one here in Hudson Yards, but the one he opened, The Conservatory in Dallas, is killing it, and he opened another small one in another area of the country, and I think that is an area where he is curating and creating the experience, and I think that is kind of the future of retail for luxury retail, and then, of course, it’s going to be the Ulta’s and the Sephora’s and the Amazon’s of the world, and even Target is going to be luxury, too.
Kelly Kovack [00:59:11]: Yeah. So, is there one piece of advice either that’s been given to you or that you’ve experienced that you think could make a profound impact in someone’s business?
David Pirrotta [00:59:25]: Yeah. You know, years ago, an 83-year-old Fortune 500 owner of a company said to me, “You can never stop learning, and you never know anything.” What I’ve kind of noticed with brands that hurt themselves is the brand owner knows everything and has no room for advice or criticism. The one bit of advice that I do give young entrepreneurs and brand owners is just listen to everyone around them, not to get too caught up with the emotions, and also, to stay true to what they believe in and to keep their packaging strong and their integrity in the ingredients very strong and solid with their formulations, and also having an incredible brand story, but always keep learning from the people around you.
Kelly Kovack [01:00:14]: Thanks, David.
For David, it’s a matter of integrity. The beauty category has never been more crowded, and the retail landscape more complicated. Developing a distribution strategy with the right partners at the right cadence, achieving growth and profitability is an art form. David and his team know how to make retail magic happen. As Niemen Marcus and Nordstrom enter the Manhattan retail landscape, icons like Barney’s, Henry Bendel’s, and Lord & Taylor have closed. The irony is, there’s never been a better time, a more meaningful time for the kind of choice, the kind of service, and the kind of differentiated offering these stores had a hundred years ago; it’s what consumers want now. Creating experience at retail isn’t about gimmicks or creating Instagrammable moments, it requires identifying, dissecting, and making each and every potential consumer touchpoint intentional and meaningful. This isn’t superficial window dressing work; it requires putting yourself in the customer’s shoes, hard work, and throwing out preconceived ideas. Every brand has a story to tell and needs someone like David Pirrotta and his team to help tell that story to retailers and customers who need to hear it, leaving them wanting and learning and buying more. So, in the end, it’s a matter of integrity. I’m Kelly Kovack, see you next time.
David Pirrotta [01:01:50]: Hi, my name is David Pirrotta. To me, what matters is loving what you do for a living and enjoying it every day, having integrity in what you believe in and in the profession that you follow through in.
Kelly Kovack [01:02:04]: It’s A Matter Of is a production of Beauty Matter LLC, copyright 2020. You can find more content and insights on BeautyMatter.com and follow us on social media @BeautyMatterOfficial.