An update from Pai Skincare as the business expands into new markets.
RELATED ARTICLES
Sense and Sensitivity: Interview with Sarah Brown, founder and CEO of Pai Skincare
NB: Sarah Brown will contribute to a panel discussion session on exports at the EEF National Manufacturing Conference on March 5.
When TM interviewed Sarah Brown, founder and CEO of Pai Skincare last year, the growing cosmetics company had just started implementing a new strategic approach to the development of its export markets – particularly for the sale of its sensitive skin care products on-shelf in selected retail outlets.
Getting this strategy rolling was tricky act of discipline says Ms Brown as we caught up last week.
“I’d love to be everywhere,” she enthuses. “But I have to restrain myself. We’re a small firm – our marketing goes a long way and people think we are bigger than we are – and we have to be careful not to overstretch ourselves.” Pai offers dispatch within 48 hours to all its retail customers and it does not want to jeopardise its ability to deliver that service – or its same day commitment to online orders made directly by consumers.
Brown says that the international success of Pai’s direct to consumer business – which accounts for around 50% of sales – makes the methodical export strategy for on shelf sales all the more frustrating for her – but she recognises that developing retail partners and markets is a riskier and more complicated business. “We took a long time selecting the right partner in Denmark where we decided to trial our more strategic approach,” says Brown. “You have to be sure that partnership is right. We tried to launch into Germany before but couldn’t quite find the ideal partner – which is a shame because it has strong market potential for us.”
Over the past 18 months, Pai has used its experiences in Denmark in order to refine its approach to market research and development. Brown says she is now happy that the company has a template it can apply to attractive new export targets like Sweden and Germany which are both friendly to Organic products like her own.
“We’ve got a focussed methodology now,” she says. “It works and we will roll it out in newmarkets this year.”
This international push will see Pai’s export business become the dominant source of all sales – the company already sell 50% of its products to customers outside the UK with 25% of exported cosmetics going to the US and the remainder going to the rest of the world, including a strong European customer base.
Bureaucracy bars growth
Brown is openly ambitious about the recognition she would like Pai to receive around the globe. “I aim to see Pai become the premium sensitive skin care brand in the world,” she told TM last year.
But progress on that journey to global brand presence has been hampered by more than just the need for slow and careful development of distribution and retail partners.
“The costs of defending your brand and IP in export Europe are explosive,” she gasps. “I think there is more government could do to assist small firms in coping with these costs. We saw £3,000 go down the drain defending a trade mark claim made against us in Germany which was frankly ridiculous – we should never have had to defend it.”
Brown is full of ideas about what government could do. “There could be rate relief for small firms registering their brand in an export market. Or perhaps government could match fund small firms for every trade mark they buy abroad. Any help would relieve a huge burden on SMEs and really encourage international ambition and entrepreneurialism.
“I also think that firms should not have to pay their legal fees for the defence of spurious claims. The claimant should have to foot the bill.” Brown says she is sure this would discourage time wasters or opportunists from pursuing brand and trade mark battles.
Banking battles
The unplanned expense of paying for these bureaucratic realities of international business are made all the more galling to Brown given her long standing battles to raise finance for growth investment.
It took three years of trading before she was able to secure her first bank loan, which moved Pai into its current factory.
Last year the company received another loan of around £80,000 to support capital investment for new capacity and efficiency in production. “We asked for a loan three times that size,” comments a frustrated Brown. “We need about £250,000 in order to fulfil our current vision for what our manufacturing should look like. It’s disappointing that it should be so hard to get support from the banks because we are a good growth story and we make our money go a long way.”
Far from being churlish about the shortfall however, Brown is enthusiastic about the investments it has enabled. These include a new Kruger homogeniser which was installed before Christmas and a new filling line which will be installed in the next two to three months.
Once these investment have bedded in, Brown is on the hunt for an ERP systems to bring greater efficiency to sales order processing, production planning and visibility of materials.
“As an ex-marketeer and someone who is intensely involved in product development I’d rather spend the money on something more exciting,” she admits. “But improving our IT infrastructure Is critical is we are to be able to handle the larger orders we hope will come as we seek out business with departments stores and more international retail chains.”
