How Avon Plans to Rectify Its Discounting Problem

Avon Products Inc. is still struggling to regain momentum. The direct-selling business faced further sales declines, representative declines and losses in its second quarter, but management chose to focus discussions with Wall Street Thursday on the positives — improvements in how much sales reps are selling, and a decrease in discounting, from 98 percent of all products to 93 percent. “Over the past years, we have allowed discounting to become the norm,” said Jan Zijderveld, Avon’s chief executive officer. “We drove purchase frequency through a heavy reliance on promotions as the main lever. This dependence is something we know we must slowly wean our consumers and representatives off as we modernize the brand and strengthen our business.” In order to do that, Avon has cut 23 percent of all stockkeeping units and is focusing on higher-priced innovation, management told Wall Street analysts on a Thursday earnings call. Zijderveld noted that Avon has 20 percent more sales from new innovations, with a 30 percent higher price point. Future innovations include Distillery, a nine stockkeeping unit line of skin and makeup products that have high concentrations of active ingredients and “less unnecessary fillers,” Zijderveld said. Avon is also launching two antipollution products, slated for the fourth quarter. “In

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