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ModelCo founder Shelley Barrett on how the ‘hard times’ have made her stronger

ModelCo founder Shelley Barrett on how the ‘hard times’ have made her stronger

Many teenage girls dream of being a model, but for Shelley Barrett a stint working as a receptionist in a modelling agency at age 17 inspired quite a different dream.

“It’s always been a passion of mine to own my own business,” Barrett says. “I could see how the agents were working with the models and I knew I could create more customised service and just being in the world of modelling was very fashionable and glamorous.”

At 18 she started a production company running fashion shows and model search shows. At 21 she founded a modelling agency. Eight years later she founded beauty brand ModelCo, selling the agency two years later to fund growth in the new business.

“I was 30 at the time and I wanted something different,” Barrett says. “The agency was a good, profitable business but it was never going to be huge. I knew the beauty business would be a lot more lucrative long term.”

The cosmetics, perfume and toiletries wholesale industry in Australia is worth $6.6 billion in revenue and $449.8 million in profit, according to IBIS World.

Today Barrett says ModelCo has turnover of about $15 million, but she nearly lost it all in the aftermath of the global financial crisis. In fact, ModelCo went into liquidation in 2011 and started again, with a renewed focus on the Australian market.

“Everyone in business has hard times, it’s not just about the good times and all the glossy parts,” Barrett says. “I actually thank God for the issues I’ve had in my life because I wouldn’t be where I am today without that. I’m happy to talk about the bad times and how I almost lost the business and had to rebuild it.”

How ModelCo got started


ModelCo is best known for its “tan in a can” product in hot pink packaging, though it has a wide range of colour cosmetics and recently launched a natural skincare range. The very first product, back in 2002, was a heated eyelash curler.

“I met a makeup artist who had a big old-fashioned heated eyelash curler that she’d found somewhere in Asia many years ago and I thought ‘wow, every woman would love this implement’,” recalls Barrett. “I knew it wasn’t on the market so I worked with a manufacturer out of Korea to create the tooling. I knew if I could start with something that was innovative and unique, the beauty press would write about it and the power of editorial versus advertising would mean that everyone would want to buy it and that’s what happened.”

Over the next decade the business grew to a turnover of $15 million but then she started to have trouble with foreign distributors in the wake of the global financial crisis. At that time 80 per cent of ModelCo’s business was overseas, and only 20 per cent within Australia.

“We were owed a lot of money from international distributors – 80 per cent of our sales were coming in from overseas and all of a sudden within a short period of time, a lot of the money that was owed to us basically never came in,” says Barrett. “That was how the business ended up in a situation and I just basically refinanced and changed the structure of how we did business.”

When ModelCo went into liquidation, it had outstanding debt of about $1 million. But Barrett claims the business ended up paying its creditors over time “100 per cent” and still deals with the same suppliers and manufacturers.

The ModelCo brand was strong but the business had to be re-engineered behind the scenes to survive. Barrett made the decision to focus on and grow the profitable, stable Australian business. Today Barrett says ModelCo once again has $15 million turnover but 80 per cent of that is from Australia and only 20 per cent is overseas. She owns 65 per cent of the business and investors own the rest, employing 30 staff at head office plus a field force across Australia.


Changing buying habits


The global financial crisis also had an impact on the Australian beauty industry, because it triggered a shift in the beauty purchasing habits of women. When ModelCo started, the perception was that quality beauty products could only be obtained in a high-end department store like Myer or David Jones. The entry of players like Priceline has changed that.

“Women who were my customers for many years still wanted glamour but they didn’t necessarily want to shop in an expensive environment,” Barrett says. “Being an Australian brand, we stayed in touch with our customers and they wanted affordability and accessibility.”

David Jones ceased stocking ModelCo in 2013 – both companies maintain they made the decision – and the ModelCo range is now sold through Priceline, online and a diffusion range through Coles and Woolworths. ModelCo cut prices by 30 per cent to stay competitive and Barrett says the brand competes with the likes of Revlon and L’Oreal.

This mirrors trends in the wider beauty industry. IBIS World reports high-end department stores have “gradually faded in relative importance” for high-end beauty products, while consumers have moved to lower end stores such as Target, Big W and Kmart, big-box pharmacies, and discount online retailers. IBIS World also notes that many brands including L’Oreal have dropped prices.

Barrett tries to stay ahead of trends and think about ways to do variations on a product but her main method for innovation is to listen to her customers.

“We listen to what our customers want, we do a lot of surveys and we constantly have women writing to us telling us what they want in their beauty regime that other brands aren’t providing,” Barrett says. “I had a customer write to us who had hardly any eyebrows. There are eyebrow pencils out there but she wanted real brows, hair brows. We researched and manufactured in Japan and created More Brows, a little hair-like fibre in gel that you apply. That was inspiration from a customer.”

The natural beauty range that ModelCo launched last year – a skincare range using ingredients such as pomegranate and acai extract and essential – was also the result of customer feedback. This is on trend with IBIS World identifying “green consumerism” as a big influence on the beauty industry, with a rise in products that are free from additives such as parabens, sulphates, genetically modified organisms and artificial preservatives. A number of Australian cosmetic brands in the natural beauty space are making a name for themselves on the international market, including Napoleon Perdis, Bloom, Aesop and BECCA Cosmetics.

Celebrity connections

Model Rosie Huntington-Whiteley is a brand ambassador for ModelCo and was in Australia for the launch of the natural beauty range. Barrett says her experience running the modelling agency is an advantage when it comes to convincing models to work with the brand.

“I know how to negotiate, I know what they want and how to manage them and look after them. I definitely deliver when it comes to managing talent of that calibre and it’s definitely because of my background,” she says. “The outlay for someone like a Rosie has a halo effect over your brand, it’s not about the lipstick she’s wearing or the nail polish, it gives a perception about the brand that if you’ve got a celebrity of that level, you must be a nice brand for her to want to associate herself with it. It has a halo effect over many different areas – sales, marketing, branding.”

In November 2014 ModelCo hosted its inaugural “Women of Influence” event at Hayman Island, inviting a few dozen business partners, journalists including Kate Waterhouse and myself, celebrities such as former winners of The Bachelor, and people with big Instagram followings. ModelCo uses social media extensively in its marketing – another trend for the beauty industry identified in IBIS World reports.

Christine Anu performed at the opening night party at the Women of Influence event. Barrett is a loyal visitor to Hayman Island – she has come just about every year for 20 years, seeing it as a stylish destination that is only a “hop, skip and a jump” from Sydney.

But for all she enjoys the parties and the glamour, Barrett is clear-eyed about the downsides of being an entrepreneur. She works 12-hour days, is always connected via her smartphone, and finds it hard to balance it with spending time with her two daughters, aged seven and nine.

“I manage to spend time with them and I don’t tend to work a lot on weekends but I’m always on email,” she says. “When you’re running your own business, you’re constantly running it even when you’re not. I might be out having a great time with the family or with friends but there’s always an email to answer.”

When asked about Tim Ferriss’ four-hour work week, Barrett just laughs and says “I don’t think so”.

Barrett has talked about an initial public offering in the past, but she says now that a trade sale is more likely.

“I’m not actively looking to sell the business but I think the right time will come when someone will knock on the door and say either merge or trade sale,” she says. “What I’d do next, I don’t know – I love what I do now, so it could be helping the next group that take the business on, it could be mentoring women, a whole host of different things.”