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Avon pledges to keep lid on prices despite cost pressures

·3-min read

The boss of global beauty giant Avon has vowed not to hit customers with high price hikes, despite soaring global costs and efforts to tackle the UK’s lorry driver crisis.

Angela Cretu, Avon International’s global chief executive, said cost pressures are mounting worldwide and cautioned they are unlikely to ease for some time.

But she pledged to keep prices fair for its customers and five-million strong army of representatives, with prices rising in line with inflation in spite of soaring commodity costs.

She told the PA news agency the group was well prepped for Christmas thanks to early buying among its representatives, while in the UK the group took action to head off the lorry driver shortage.

Together with its logistics partners, Avon moved early in the summer to increase lorry driver pay and secure long-term contracts.

The move has helped shield the group from supply chain woes that are crippling many other sectors, leaving supermarket shelves increasingly bare and now leading to fuel shortages in many parts of the UK.

But it adds to rising costs seen worldwide for raw materials and freight as a result of the pandemic disruption and sudden surge in demand as economies reopen.

Ms Cretu said the group would look to avoid passing on extra costs wherever possible, driving efficiencies within the wider Natura & Co group, which also includes The Body Shop and high-end skincare brand Aesop.

“I’m keen not to put this global turmoil on consumer shoulders,” she said.

“We are able to synergise procurement and tap into the eco-system of partners and ensure we protect the final prices.

“We made that commitment that we’re not going to price up, but to keep a fair value for all our products, to not pass on as much as possible and to mitigate.”

Avon’s chief executive Angela Cretu took early action to head off the UK lorry driver shortage (Avon/PA)
Avon’s chief executive Angela Cretu took early action to head off the UK lorry driver shortage (Avon/PA)

Since Avon’s takeover by Brazilian beauty group Natura was completed last January, the group has been brought into the fold of a wider business with over 6.3 million consultants and representatives, combined revenues of more than 8.9 billion euros (£7.7 billion) and operations across 100 countries.

Ms Cretu said the firm has been able to share manufacturing resources with sister brand The Body Shop, as well as raw materials and sourcing within the wider group to bring costs down.

But the cost pressures will persist for the foreseeable future, she cautioned.

“It will rebalance, but I can’t see that happening in the next three months,” she said.

“It’s going to be challenging, but we’re ready.”

Avon, which is celebrating its 135th anniversary this year, has made a dramatic shift online since the start of the pandemic, arming its representatives with tools to sell via the internet, apps and social media.

It still drives a significant amount of business through traditional face to face sales, but online sales jumped 132% over the first three months of 2021 and are now nearly three times higher than before the pandemic struck.

This has helped the group recover strongly from the crisis, with recent figures showing Avon’s total net sales jumped 27% higher on a constant currency basis between April and June.

The group has also struck a chord with British women looking for more flexible work and for those made redundant in the crisis, with representative sign ups soaring by 30% in the UK amid the pandemic.

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