Traditionally a high street oriented market, cosmetics suffered a considerable hit during the coronavirus pandemic. The “try before you buy” principle favoured physical stores for fragrance and make-up sales for decades and with much brick-and-mortar retail forced to close in 2020, the market saw an 8% drop. However, the industry has adapted quickly and this blip will likely be forgotten pretty swiftly, with projections skyrocketing over the next six years.
Much of cosmetics’ buoyancy is due to diversification. Recent social trends have meant that some cosmetic products, such as skin moisturiser or types of make-up once solely used by women, are now increasingly also bought by men. Sustainability has become a big issue; consumers are eager to know the steps taken to preserve the environment. Meanwhile, globalisation has opened huge markets in Asia and Africa for international brands to utilise.
However, many brands have been reluctant to venture into the Nordic nations. Led by CEO Heidi Behrens, TMC Nordics was founded to address this void.
We believe that value is not created solely by generating profits
Established in 2004 with headquarters just north of Copenhagen, TMC Nordics distributes international fragrance, cosmetics, hair, and skincare brands within Denmark, Norway, Sweden, and Finland. This is a region four times the size of Germany, but with only a third of the population. It’s also a region with a high cost of living, meaning warehouse and logistics expenses for businesses are also high. As a result, some very large cosmetics entities such as Coty, Puig, Shiseido Group, and Hermès Parfums – companies which have subsidiaries all over the world – have so far avoided Scandinavia.
A self-confessed beauty fanatic, Heidi founded TMC in 2004. The idea was to partner up with brands, help them to understand the Nordic market, and develop sales and distribution strategies. The fact that TMC’s leadership has always been diverse is a big part of the business model.
“There’s no doubt in my mind” she explains, “that when you’re selling lipstick, you cannot have a company led solely by men in their 50s wearing dark suits. You need that diversity.”
Heidi has an inherent understanding of the products TMC sells. She has always evaluated them personally by testing them herself along with other directors. As TMC grew, it ensured this approach remained imprinted on the company, with a board of directors comprising three women and two men, all of different ages.
Heidi says: “We are successful when we understand what makes a brand successful in the eyes of a consumer. That’s what sets us apart.”
This vision has enabled TMC to make some stellar decisions, such as the introduction of OPI nail varnish, the world’s leading brand, to the Nordic region.
TMC operates with a very clear distribution channel – the company focuses on the premium market, both offline and online. Traditionally, this would have meant primarily department stores but increasing digitisation is changing this. Heidi likes to work with brands that have strong stories: “Consumers expect a lot from cosmetics brands these days. Do they take actions and responsibility when it comes to sustainability, human rights issues like fair trade programmes, and even animal rights views come into play when brands are chosen by the consumer? All of these sorts of questions are very important in today’s market.”
All of these issues are considered by TMC when selecting brands to work with, which is a full-time part of the business considering the company receives between five and seven pitches weekly from companies wishing to partner up. In conjunction with environmental ethics, TMC also has a clear view on business ethics and will not work with a brand that’s a direct competitor of one they already work with.
“Our role is to build new categories to the market, to build those categories and do it wisely.” Heidi says. “We try to read and stay ahead of market trends.” TMC operates not only by supplying products, but also helping retailers with strategy. The growth of internet shopping has strengthened the bond consumers have with brands, while weakening th
bond they have with some retailers. During 2020, 70% of all cosmetics sales worldwide were through e-commerce. This potentially represents a seismic shift in the way cosmetics are bought.
“It’s possible that a significant part of the market will begin to move away from retail altogether,” the CEO predicts. “If consumers develop affinity and shared values with a particular brand, why not buy from them directly and skip out the middle-man? Our contributions must play a significant role in the value chain and retailers are forced to be a justifiable participant in our common mission to reach and satisfy the consumer.”
TMC seeks to mitigate this with its retail partners by helping retailers to reconnect with consumers. Much of this is now digitally focused. Basic strategies such as search engine optimisation must be built into an industry that has traditionally functioned without them. This is something TMC emphasises with all its clients. In this way the company operates, to some degree, as a business development partner to those it works with.
At TMC we have a market driven approach, not a product driven approach
“We believe that value is not created solely by generating profits” Heidi explains. “You must focus on establishing value and the profit will then come from that.” In a constantly changing market, that means flexibility.
In this way TMC’s CEO feels her company can differentiate itself from its competitors through an agile approach. The company’s tight management team decisions can be made quickly to react to new trends and events.
On both sides of the business – retail and supply – TMC adopts a partner model with those it works with. “We try to understand where a brand wants to go, understand why they want to go there, then help all parties to achieve that. In that way, everyone grows together.”
However, partners may be told news they do not necessarily want to hear. “When you have that relationship, you can do that,” Heidi explains. “Perhaps they have a product that is too niche, that perhaps might generate press, but no sales. If we feel that is the case, we will tell them that.”
“The landscape is changing so much out there” she explains. “So, it is important to be humble in the face of that. At TMC we have a market driven approach, not a product driven approach. That is how we see the future. Don’t think of it as a crisis, it’s a transformation.”
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