Retail

Adore Beauty buys back the 25% stake it sold to Woolworths: Founder Kate Morris explains why

Emma Koehn /

Smart50 alumnus Adore Beauty has bought back the 25% business stake it sold to Woolworths in 2015 for an undisclosed sum, with founder Kate Morris saying that while the partnership boosted the business, the cosmetics retailer will now focus on new strategies to grow its global customer base in 2017.

In May 2015 Morris told SmartCompany Woolworths’ decision to buy into the business marked an exciting time for Adore, given the expertise of retail heavyweights at the supermarket giant.

“They have confidence we know what we’re doing as far as premium beauty goes. We understand the premium beauty customer,” she said.

However, Morris says the two companies’ priorities no longer match up, and while there were great things to come out of the partnership, the online cosmetics retailer has new plans in the pipeline to expand its customer base.

“In terms of the additional opportunities and synergies we hoped would be there, probably in the end they didn’t eventuate to the extent that we had hoped,” Morris tells SmartCompany.

“It’s just that when you’re working with another company of any size, you are a leaf on the wind a little … you’re not always in full control of where that company’s going.”

Although it’s less than two years since the partnership began, Morris says the decision to part ways doesn’t mean the experience wasn’t worth it.

“I don’t consider any aspect of it to have been a negative,” she says.

In fact, Morris says Adore was able to hit its growth targets over the past two years of the partnership; the company says it has grown 125% since the relationship with Woolworths started.

It’s that kind of growth that landed the retailer the 28th spot on the 2016 Smart50 Awards list, with close to $16 million in annual revenue in 2015-16 financial year.

Read more: Adore Beauty founder Kate Morris: Why I sold a 25% stake in my $10 million business to Woolworths

The power of the Woolworths machine

Morris says the relationship with Woolworths allowed her team to work with some of the sharpest retail minds in the country, and while it may not have been obvious before the deal was done, learning about the financial and business strategy approaches of a big corporate will help Adore Beauty in the long run.

“I found it a tremendous learning experience with the calibre of people there,” she says.

“I think it was very beneficial to be working with people with very corporate backgrounds, very business heavy backgrounds. When you’re talking to a business like that it’s a totally different ball game to a business that you’ve built out of our garage.”

While the Melbourne-based business had not been working with financial and business strategy approaches on the same scale as an operation like Woolworths, seeing how a big business dealt with these things was beneficial, especially as the Adore business grows, says Morris.

‘I kind of was worried that that sort of stuff [around the world of big business] would hold us back, I don’t feel that was the case,” she says.

Sparking a “many-way” conversation

Morris says the Adore Beauty business is now focused on securing new types of customers across different demographics, and is dipping a toe into international markets to see where opportunities lie.

As part of a partnership with Borderfree, Adore products are now available for order in over 200 countries. Morris says this will hopefully reveal opportunities in eager markets without the business needing to put all its eggs in one basket with an expansion plan.

“We see that opportunity is very much about doing testing on a small scale in a whole number of different markets. We’ve been doing what we’re doing here for 17 years, we’ve got some pretty good online marketing recipes here,” she says.

The beauty shopper is a very different beast to when Morris started her business 17 years ago, and she says her team is also working on making more content to start a “many-way conversation” among a more discerning shopper base.

“We have very different customers—it’s important to not treat them homogeneously,” Morris says.

“I think it varies wildly. We have your very heavy beauty user who spends all her wage and more on makeup. You might also have a busy working mum in her late 30s who doesn’t.

“What we consider we’re really building towards is a healthy and vibrant beauty democracy.”

The business might have pivoted away from big corporate partnerships with the likes of Woolworths for now, but Morris says the thing that excites her most about continuing to manage the business has stayed the same no matter what: seeing her staff succeed.

“Seeing the people in my team step up and take on new opportunities and challenges is so exciting to me,” she says.

“It’s such a thrill for me to have a really exciting team of people who engage opportunities with both hands.”

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Emma Koehn

Emma Koehn is SmartCompany's senior journalist.

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