RIO DE JANEIRO — The sign outside this modest hair salon in the Rio das Pedras favela, or shantytown, of Rio de Janeiro reads "Belos Fios" ("beautiful hair"). Inside, customers can find Matrix hair color products stacked behind the salon's two only chairs. This is just one of some 30 small salons, most of them undeclared, that Carlos Renato visits regularly. A former driver, he's now one of the 60 micro distributors L'Oréal supports to sell its most affordable professional hair care products in the poor neighborhoods of Rio and São Paulo.
Launched in 2012, this program is part of L'Oréal's corporate social responsibility strategy, and it has received support from Santander bank and Sebrae, the Brazilian micro and small business support service.
"The project is there to help those who want to get by while at the same time giving the population access to quality products," explains Tatiana Peczan, head of the program for L'Oréal. In total, almost 2,000 hairdressers are supplied this way.
Candidates are selected by the company, which prefers people with trade experience and who are well-integrated in their communities. L'Oréal then teaches them all they need to know about the products. Sebrae offers them management classes, while the bank provides them with microcredits to get their businesses started.
Giving management classes in a Rio favela — Photo: L'Oréal Matrix
In the beginning, Renato received a stock of 100 products, an investment worth 2,000 reais ($750). "Now I earn three times more than I did with my former job," the young entrepreneur says. Some haven't been as lucky, and the project has had about 10 failures, mostly caused by shops that ultimately didn't pay for the products.
"It doesn't happen a lot, though, because the whole system is based on trust," Renato explains. "And with word of mouth, everybody knows everything in favelas."
Hairdressers can order products by the unit. Prices are 10% to 20% cheaper than usual Matrix products, because micro distributors have fewer costs than traditional channels. Eduardo, who has a much bigger salon on the main street plus an employee, believes he has managed to keep his customers because of the high-quality products. And because there is fierce competition, he has capped his prices.
For now, L'Oréal has limited this strategy to Brazil's "pacified" favelas. But if the popular distribution method, which is still being evaluated, turns out to be viable, L’Oréal says it could easily export it to other developing countries.