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June 25, 2022

JIM L E C I N S K I AND H E L EN A B O U C H E Z

Thank God It’s Natural:

A Distribution Dilemma

On a frosty Monday afternoon in January 2019, Chris-Tia Donaldson, the CEO and founder
of specialty hair care brand Thank God It’s Natural, felt a sense of accomplishment wash over her
as she stood in her company’s warehouse amid cases of products stacked neatly on pallets. “Wow,
we’ve come a long way from selling shea butter at farmers’ markets,” she thought. At the same
time, Donaldson felt the gravity of a critical distribution decision she faced, in the form of a new
deal she would have to accept or reject in just a few days.
Over the past decade, Donaldson had guided Thank God It’s Natural—branded tgin and
pronounced tee-gee-eye-en—into a national brand widely available across the United States at
major retailers, such as Amazon, Target, Walmart, Walgreens, CVS, Rite-Aid, and Sally Beauty.
But one important beauty retailer still did not yet carry tgin: Ulta Beauty, a US chain of 1,196
brick-and-mortar beauty stores located predominantly in high-traffic shopping centers.1 Ulta also
had a robust online storefront in Ulta.com and had cultivated a vibrant social media presence.2
On Donaldson’s desk was an ofer from Ulta Beauty to stock tgin for the first time. On the
surface, signing a distribution agreement with Ulta seemed like the right thing to do. However,
Donaldson was concerned about Ulta’s requirement that tgin develop a new product line that
would be sold exclusively through the beauty retailer’s channels for one year. Ulta not only wanted
roughly a dozen products to fill up to eight feet of shelf space but also wanted at least six of those
products to reflect a fresh new concept that would initially be available only at Ulta. The creation of
this new product line would involve everything from concept development to naming to packaging
© 2022 by the Kellogg School of Management at Northwestern University. This case was prepared by Professor Jim
Lecinski and Helena Bouchez. Cases are developed solely as the basis for class discussion and are not intended to serve
as endorsements, sources of primary data, or illustrations of efective or inefective management. This case was based
on publicly available information and interviews with Chris-Tia Donaldson, Carly Cobbold ’18, and Ella Weems
’20, to whom the authors are grateful. For pedagogical purposes, the authors might have fictionalized individuals,
conversations, strategies, assessments, or other details. To order copies or to request permission to reproduce materials,
call 800-545-7685 (or 617-783-7600 outside the United States or Canada) or email custserv@hbsp.harvard.edu. No
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Kellogg Case Publishing.
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design, as well as the additional cost of research and development for the new formulations—a
huge investment of time, money, and resources. Donaldson would need to trust that the new line
would sell well enough at Ulta to recoup her upfront costs.
As a CEO who also was acting as head of sales, Donaldson was grappling with some difficult
questions. Was this distribution agreement with Ulta really the best path forward for tgin? More
broadly, what distribution channel decisions should she make to unlock the next stage of growth
for her company? Ulta wanted her decision by Friday, which meant she had four days to decide.

Company Background
Thank God It’s Natural was a line of natural hair care products designed to address the specific
needs of African American, Latinx, and other consumers with naturally wavy, curly, or kinky hair.
(See Exhibit 1.)

Inception
The company was founded in 2009 in Chicago by Chris-Tia Donaldson while she was
working full time as senior corporate counsel at US–based multinational computer technology
corporation Oracle. Thank God It’s Natural grew out of Donaldson’s personal need to have and to
share products that would allow her and other Black women to more efectively style their specific
hair types.
Initially, the tgin brand was propelled forward in part by the impact of the 2009 American
documentary film Good Hair. Starring and narrated by comedian Chris Rock, the movie explored
the importance and implications of hair types and styles in Black culture. Good Hair accelerated
the trend away from treating Black hair with harsh chemicals and toward more natural looks and
the use of more natural products. (For more detail on the impact of the natural hair movement on
the African American beauty industry, see the below section titled “The Natural Hair Movement.”)
The popularity of Good Hair meant that Donaldson, who was already a recognized expert on
natural hair as a result of her 2009 book, Tank God I’m Natural: Te Ultimate Guide to Caring for
and Maintaining Natural Hair,3 garnered significant media attention, raising her profile within the
beauty industry. Although the book provided a plethora of useful information about natural hair
care and included many DIY hair product recipes, readers increasingly expressed to Donaldson
their desire to purchase products that were ready to use. This consistent feedback and unwavering
demand were instrumental in her decision to create a company that could do just that.

Early Growth
Like a true entrepreneur, Donaldson began by selling T-shirts, books, and skin care products
on weekends at festivals and farmers’ markets across the Chicago area.4 She was also a frequent
speaker at natural hair-focused expos and conferences. These entrepreneurial eforts continued
until 2013, when she made the decision to launch tgin’s inaugural line of hair care products.

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Donaldson’s first move was to hire a chemist to help her create the formulations for tgin’s first
four products: Butter Cream Daily Moisturizer, Twist & Define Cream, Sulfate Free Shampoo for
Natural Hair, and Replenishing Conditioner for Natural Hair. To save money, she developed the
fifth product, Honey Miracle Hair Mask, on her own.
Later in 2013, Donaldson expanded exposure to her products by making them available for
purchase online, first from the company website, ThankGodItsNatural.com, then expanding to
Amazon.com. Products also were available at a few local health food stores.5
As tgin grew, Donaldson began slowly building her team. She also cultivated a vibrant brand
presence on tgin’s Facebook page, which gained 25,000 followers.

First Major Retail Store Distribution

At a minority business opportunity fair in 2014, Donaldson met Bob Mariano, owner of
Mariano’s, a Chicago-based upscale grocery store chain. Recognizing the product line’s uniqueness,
he ofered Donaldson the opportunity to stock tgin products in several of his stores. Although a
pivotal moment for the brand, stocking a big store such as Mariano’s came with a completely new
layer of challenges, which Donaldson described in her 2019 book, Tis is Only a Test:
Tis new opportunity was anything but easy. We had to drive to the store, drop of products, and
put them on the shelves because we were not considered big enough to use the services of their
warehouse. It was grueling but worth it because it taught me the importance of keeping your
shelf merchandised and having solid relationships with store employees. It may have seemed like
I was taking the long road, but I was being prepared. I was getting the training wheels I needed
to handle larger opportunities, and I didn’t even know it.6

National Distribution Begins

Later in 2014, Donaldson received two important calls. The first one was from a broker who
worked with US general merchandise retailer Target and who had been hearing about the tgin
line and was interested in representing the brand. The second one was from a Target distributor
looking for not just the next wave of ethnic specialty brands but also those capable of doing
business successfully with a large retailer such as Target.
“I talked to a lot of people, and they confirmed that we had to work with this distributor,
especially at the size that we were at that time—no way around it,” Donaldson said. “The natural
hair space was still new, but it was growing so fast that I knew it was now or never.”7
On March 1, 2015, tgin products launched in approximately 10% of Target stores nationwide.
Starting with just 250 doors gave the retailer the opportunity to make sure tgin was financially
and operationally capable of meeting Target’s metrics and delivering on time. Donaldson was
determined to make sure tgin delivered on that promise flawlessly. She and her team produced
thousands of units in-house to ship to Target. Everything—containers, labeling, packaging—had

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to be perfect. Donaldson knew that if tgin did not deliver perfectly on this initial shipment, all her
team’s eforts up to this point would be for naught.
A presence in Target put tgin on the map as a brand, but it was up to Donaldson and her
team to make sure it stayed there. On March 15, 2016, Donaldson met with Target buyers at the
retailer’s Minneapolis headquarters to discuss tgin’s Year 1 financial performance. The news was
good: In just 12 months, not only had tgin’s revenue doubled but its door count also had grown
to more than 1,000 Target stores.8

Expansion to Major National Retailers

Although Donaldson was grateful for the opportunity to have tgin products in Target, she
was not fond of the fee she was paying the distributor (25% of the wholesale price). She set about
looking for more direct (and less costly) relationships and found a direct route into Sally Beauty,
a US-based international specialty retailer and distributor of professional beauty supplies. Soon
afterward, she also found a way into Walmart through a relationship with another gatekeeper, who
charged her a much smaller percentage.9
The brand also added Rite Aid and Walgreens to its channels in 2016. Pharmacies Rite
Aid, Walgreens, and CVS were all controlled by a single distributor whose fee also was 25% of
wholesale.10 “Target and drugstores were the ones that I gave up the money for—but for the
drugstores, I could justify it,” Donaldson said. “I said, ‘Let the distributors fulfill’ because I knew I
didn’t have time to manage all these smaller accounts.”11 During this time, “after years of emailing
and doing paperwork,”12 as Donaldson put it, Whole Foods also began carrying the brand.
Donaldson also had approached Ulta Beauty in 2016, but the retailer told her the existing line was
too similar to another brand already on the shelf.
Given tgin’s growing success and her desire to focus all her energy on her own company,
Donaldson decided in March of 2017 to leave Oracle and go all in.13

Critical Next Steps

For the next year and a half, Donaldson and her team worked tirelessly to build the tgin
business. Donaldson believed tgin was capable of becoming a multimillion-dollar brand by
continuing to expand and meet the hair care needs of women with wavy, curly, and kinky hair
types—and she was determined to do whatever she needed to do to make that a reality.
The tgin playbook had clearly delivered a winning growth strategy. The company’s products
were available for purchase in more brick-and-mortar retail outlets than ever before. Consumers
also had the option to purchase direct from tgin online, either through its website or via its Amazon
storefront. Recognition of the brand by industry and consumers was also increasing, thanks to
Donaldson’s expansive network of critical relationships and the brand’s social media outlets.
A number of additional initiatives that Donaldson could focus on in 2019 might propel the
brand forward, from beefing up the company website’s e-commerce capabilities to doubling down

4 Third, a remarkable feature of the

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crisis in ‘subprime’ mortgages that triggered the global financial crisis in the summer of 2007 was
that it appeared to take the world by surprise. While subprime markets featured on the radar screens
of the Bank of England, the International Monetary Fund (IMF) and the Bank for International
Settlements, no alarm bells were sounded. This is itself somewhat alarming since, following similar
surprise at the Asian financial crisis of barely a decade ago, there has been a substantial amount of
research on ‘surveillance’ and ‘early warning indicators’ of financial crises, both at policy
institutions such as the IMF and the Financial Stability Forum and in academia. Perhaps this is
because of an inherent nonlinearity in the world. If the world is unpredictable we need to learn to
expect the unexpected. If it is not, then we need to develop more refined early warning systems.K E L
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on product development. The problem was that anything she pursued would take additional time
and resources, which already were scarce.

The Hair Care Market in the United States

Market Composition and Trends

The US hair care market comprised all products used for the care and styling of hair. This
included shampoo, conditioner, hair masks, styling products, and hair color. Market value for
these segments was estimated to reach $47.5 billion in 2019, with shampoo representing $15.7
billion; conditioner, $10.9 billion; hair styling products, $9.2 billion; hair color, $6.5 billion; and
hair oil, $5.2 billion.14 (See Exhibit 2.)
According to the market research firm Technavio, the general hair care market size in the
US had the potential to expand by $1.15 billion between 2020 and 2024, with steady, increased
growth year over year.15
At the same time, natural and organic hair care and skin care products were experiencing
explosive growth in North America. The natural and organic health and beauty care (HBC)
market reached $5.6 billion in 2018 and was projected to increase to $7.7 billion by 2025 (hair
care having the highest market share, at 9.5%).16

The US Ethnic Hair Care Market

The ethnic hair care market represented products specifically formulated for or targeted
to consumers with curly or coily hair types. The primary consumers in this category were
African Americans.

The US Black Hair care Market

The market for products specifically formulated for or targeted to Black consumers was divided
into three segments: big global brands, established specialty brands, and smaller startup brands.
The market was highly fragmented. Big brands such as Sundial Brands (Unilever), Cantu
(PDC Brands), Carol’s Daughter (L’Oreal), Namaste Labs (Dabur International), and Revlon held
a 49% dollar share, but the biggest player in this group (Sundial) controlled less than 20% of
the market. Established specialty brands, such as Strength of Nature, Luster Products, House of
Cheatham, Ecoco, and Universal Beauty Products, represented a 16.2% dollar share. More than a
third of the market (34.7%) was made up of a plethora of small startup brands such as tgin, Adwoa
Beauty, and Girl + Hair.17 (See Exhibit 3.)
As these smaller players continued to siphon of sales from major brands, distribution of up-
and-coming ethnic specialty brands was expected to steadily increase in mainstream retail outlets,

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advertising, and event participation, making products more available to Black consumers and
leading to significant additional sales.18

Consumer Behavior
The trend toward natural hairstyles led Black consumers to seek out a suite of hair care products
they could use as part of a hair care “regimen,” or routine, that would allow them to care for their
natural hair efectively.
Hair care regimen refers to the many diferent steps and products required to take proper care,
in this case, of wavy, curly, and coily hair types. A typical regimen requires the use of cleansing,
conditioning, moisturizing, detangling, and styling products.19
Black consumers were estimated in 2018 to have spent more than $1.7 billion on shampoo,
conditioner, and styling products. This includes general market purchases from brands such as
Pantene, for example. (See Exhibit 4.)
Further, Black consumers spent more on hair care than other consumer segments; their
spending on shampoo, conditioner, and styling products represented nearly 20% of general market
spend on total regimen hair care sales despite representing just 13.4% of the US population. 20 The
US Black hair care market was expected to grow 11.2% to $2 billion by 2024.21

The Natural Hair Movement

The natural hair movement referred to the trend among (primarily) Black women to embrace
and style their hair with products devoid of harsh chemicals such as those typically used in
texturizers or chemical relaxers.22 Consumers of such products primarily were Black women, but
natural hair products also could be relevant to other groups, for example, Latinx, multiracial,
Middle Eastern, and even some Caucasian women.

Hair Types and Styling Options

Renowned hair expert (and Oprah Winfrey’s personal stylist) Andre Walker developed a hair
classification system composed of four main hair types:23
• Type 1: Straight Hair—straight with no curl or wave pattern. More common among
Caucasians and Asians than those of African descent.
• Type 2: Wavy Hair—Noticeable wave pattern but little or no curl.
• Type 3: Curly Hair—Well-defined S-pattern.
• Type 4: Kinky Hair—Kinky and tightly coiled; looks coarse but actually extremely fine.

More than half of Black female consumers (52%) self-described their hair as type 4.24 (See
Exhibit 5.)

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A Vogue article that examined the complicated relationship Black women have with their hair
stated the following:
Te Black and mixed-race experience with Afro hair is a complicated one. Tough each
individual has their own personal journey with their natural hair, most share similar
experiences with regards to overcoming deep-rooted hair discrimination, as well as developing a
true sense of self in the face of Western beauty ideals.

Te natural hair movement has seen many Black and mixed-race people growing out their
hair, chopping of relaxer-thinned strands, using kinkier hair extensions, or wearing traditional
braided styles, in order to embrace—or begin the journey towards truly loving—their
natural hair.

Armed with knowledge and a deep sense of self-love, Black and mixed-race people are owning
their natural hair, reclaiming their identity, and celebrating Black beauty.25

In the same article, a Vogue assistant shared her journey to choosing natural hair:

After years of relaxing my hair and wearing weaves to fit in with Eurocentric beauty ideals, I
decided to take the path of transitioning my hair back to its natural state. Tis was a journey
of self-discovery, and of learning not only about my hair but my culture. With Afro hair being
so versatile and diverse, I had to really learn what was good for my hair. It feels empowering to
have this knowledge. I now see my haircare as more of a wellness routine.26

The main styling options for natural hair included braids, locs (dreadlocks), Afro, and press
(a process that temporarily straightened hair using heat rather than chemicals).27 The natural hair
movement led Black women to seek out and buy specialty products, such as tgin’s, that allowed
them not only to achieve these natural hair looks but also to develop additional styles, such as flat
twists, braid-outs, two-strand twist, and flex-rod sets, among others.

Hair Care Distribution Channels

Overview
Hair care distribution channels in 2018 took a variety of forms and configurations. Channels
could be direct, meaning the brands sold directly to the consumer, or indirect, meaning products
passed through one or more intermediaries before reaching the consumer. Brands also often
engaged distributors to store products in their warehouses, delivering them to retailers as needed.
For example, in its relationship with Target, tgin shipped its product to a distributor, who then
delivered it to Target’s warehouses.
Some brands ofered products via a single channel (e.g., in-store), but it was more typical for
them to make products available for purchase in multiple channels (e.g., online and in-store).

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Increasingly, brands were adopting an omnichannel approach to marketing. The trend toward
omnichannel was catalyzed in 2013 as a way to defend against “showrooming,” a practice in which
a consumer looked at a product in-store and then went home and ordered the item online at a
better price.28 An omnichannel system fully integrated the functions that allowed consumers to
shop—that is, to research, purchase, communicate, engage with, and consume the brand—across
online, mobile, social, and of-line physical channels.29
Consumers could purchase hair care products in a variety of in-store and online channels, as
defined by Nielsen and IRI:30
• Retail, i.e., mass merchandisers, drugstores, and specialty beauty stores
• Club stores
• Professional (beauty supply and hair salons)
• Military Exchanges (PX, BX, NEX, etc.)*
• Convenience stores, grocery stores, and dollar stores

Additionally, consumers could purchase products directly from a brand’s website or through
social media platforms such as Instagram, Facebook, and Pinterest.

Consumer Shopping Behavior

Two-thirds (67%) of consumers surveyed by IRI in 2019 indicated that Walmart was by
far their retailer of choice for hair care purchases. About one-third of participants said they also
shopped for hair care products at local beauty supply stores such as Sally Beauty, dollar/discount
stores, and drugstores, as well as at mass-retail Target stores.
Other retail outlets shopped included online 28%; grocery store 24%; salons 5%; and social
media 3%. Just 20% of consumers shopped at beauty specialty stores (e.g., Sephora/Ulta) for their
hair care products.31 (See Exhibit 6.)
A 2018 Lightspeed/Mintel survey of Black internet users (n=911) indicated that Black
consumers increasingly were purchasing hair care products from local beauty supply stores, dollar
stores, discount stores, and online-only websites. The survey also showed that although they
shopped at mass merchandise stores most frequently, the number of Black consumers shopping at
those stores (53%) had decreased by more than 9% from 2016.32 (See Exhibit 7.)

* PX is the abbreviation for Postal Exchange, a department-style store similar to a Walmart, found in Army military
installations. The name of the exchange varies based on the branch of service, i.e., Base Exchange (BX) on Air
Force bases; Navy Exchange (NEX) on Navy installations; Marine Corps Exchange (MCX) on Marine Corps
installations; and Coast Guard Exchange (CGX) on Coast Guard installations.

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Shelf Space and Slotting Fees

Mainstream CPG (consumer packaged goods) manufacturers often were required to pay
retailers certain lump-sum fees, called slotting fees or slotting allowances, for the privilege of being
stocked on their shelves or online. Slotting fees could “vary wildly based on the product, CPG
category, or how many locations will shelve a product, with one-time charges ranging from $250
to $1,000 per item per store,” according to industry tracker Bedrock Analytics.33 Other potential
fees included “pay-to-stay,” in which the manufacturer ofered discounts or free cases of products
to the retailer as an incentive to keep poorly selling SKUs* on the shelf. 34 Retailers also often
charged brands for “display placement,” that is, seasonal features and promotional displays that
appeared at the end of aisles.35
Many major chain stores in the US waived slotting allowances for minority or ethnic suppliers,
particularly if the buyer believed the products would help them meet the demands of their ethnic
consumers.36 Not having to pay slotting fees was especially important to start-up beauty brands, as
it allowed them to focus resources on developing additional products to fill all the shelf space the
retailer was willing to give them, boosting profits. The ability to fill shelf space also could reduce
the amount of space that might be allotted instead to a competing ethnic brand.37

The Opportunity with Ulta Beauty

On a brisk fall day in November 2018, Donaldson received an unexpected e-mail from an
Ulta buyer inviting her to their offices to discuss carrying tgin. They met in December at Ulta’s
sleek new headquarters in the Chicago suburb of Bolingbrook.
In the meeting, the buyer assured Donaldson Ulta would impose no slotting fee, but Donaldson
could already see plenty of other Ulta requirements that would impact the business. The buyer said
she would send Donaldson a set of formal terms in a few weeks, emphasizing that Ulta wanted to
complete the process by the end of January 2019.

The Decision at Hand

On that January day in Chicago, it was still dark at 7 a.m. when Donaldson got to her office.
She flipped on the lights, made a cup of cofee, and sat down to review the Ulta distribution terms
one more time, making some notes on a yellow legal pad.
This deal with Ulta was an important strategic move—one Donaldson didn’t want to make
without input from her team. With Ulta wanting her decision by Friday, she didn’t have much
more time.
She called key staf members together in the tgin conference room to take part in a roundtable
lunchtime discussion. In addition to her marketing, creative, and e-commerce leads, Donaldson

* Each SKU, or stock keeping unit, is a unique product type with its own alphanumeric code used for easily tracking
store inventory.

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also had invited tgin’s social media and accounting leaders to join, thinking a few folks less close to
the potential Ulta deal might keep the discussion more objective.
As the team members ate their lunch, Donaldson’s assistant connected a laptop to the projector
and pulled up the presentation slides that contained the summary of the Ulta distribution deal.
Donaldson began, “As you know, Ulta Beauty is interested in adding tgin to its growing slate
of natural hair care products. It’s an exciting opportunity for our brand and an important decision
that not only will impact our business today but also what it can become in the next few years.
“Here’s what you need to know about Ulta Beauty,” Donaldson continued. “The company
currently has 1,196 doors in 50 states and did $5.88 billion in sales in 2018,38 with a three-year
CAGR (compound annual growth rate) of 14.1 percent.
“Ulta is also aggressively looking for ways to better connect with Black consumers, and that’s
good for those of us creating natural hair products specifically for this segment,” Donaldson said.
“They already carry brands such as Shea Moisture, Carol’s Daughter, Tracee Ellis’s brand Pattern
Beauty, and Mixed Chicks—and that’s pretty good company.”39 Donaldson flipped to the next
slide: “And there is plenty of opportunity for Ulta to attract Black consumers, as you can see from
this brand snapshot from Numerator.40 (See Exhibit 8.)
“Be that as it may, I’ve gathered us together for some debate around whether we should sign
the distribution deal with Ulta. That’s number one,” Donaldson said. “But I also thought this
would also be a good time to revisit our existing distribution strategy and whether this deal fits in.
I also want to explore whether it makes sense to continue with what we’ve already laid out or if
there are other channels we should be focusing more resources on that might be more impactful to
our success longer term.”

Terms of the Deal

Donaldson then distributed a printed copy of the terms (see Table 1). “Let’s walk through this
together, and then we’ll unpack it. I’ll read it out loud and provide some additional context based
on my meeting with the buyer while you make some notes,” she said.

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Table 1: Summary of Proposed Terms as of January 201941

Products and Exclusivity Sales Terms

Brand will provide Retailer with a full line of products, Retailer will sell Brand in all of its 1,196 stores and on
six of which must be unique only to Ulta nationally for its website.
a period of 12 months.Those SKUs may not be sold by
Retailer agrees to sell tgin products only to its retail
anyone else—including the Brand directly—during customers and agrees not to resell any of the tgin
this period. products to any third parties, wholesalers, liquidators,
other businesses, and the like.

Pricing and Payment Terms Exit Terms (Retailer)

Retailer shall pay 40% of MSRP for tgin products. The term of the deal is one year, but Retailer may
delist (discontinue) the Brand at any time if, in its sole
Net 60 days with a 2% discount if paid in full within
judgment, the Brand is not meeting sales expectations
30 days.
and targets.
Retailer shall be subject to a 1% penalty per month for
any late payment. Retailer may terminate this agreement at any time at its
sole discretion with 30 days’ notice.

Ordering Shipping
All purchase orders and invoices will be transacted only Brand incurs the entire cost of shipping to Brand’s four
via Retailer’s Electronic Data Interface (EDI) ordering US distribution centers.
system, at Brand’s expense.
Shipping windows are the first two business days of each
Orders will be placed by end of business every Friday. month.
No minimum orders and no guaranteed volumes. 2% of entire order value will be deducted for every day
a shipment is incomplete or late.
Incorrect labeling, e.g., labels in the wrong place or labels
missing PO#, will result in rejected shipment and Brand
incurring a chargeback.

Markdowns Buybacks and Returns

Retailer may mark down price as low as 80% of MSRP Brand will have the option to buy back overstock
but not lower. merchandise at cost + 20% and is responsible for cost of
return shipping.
Brand pays for all returned merchandise (estimated
2%–3% of sales).
Brand can opt to have unsold or returned product
destroyed by Retailer rather than returned or resold.

Merchandising—Retailer Marketing—Retailer
There will be no cost to the Brand for either physical or Retailer agrees to use commercially reasonable efforts
online shelf space. to promote the distribution and sale of
Brand agrees to be displayed as Retailer sees fit per its Brand’s products.
current physical and online plan-o-gram shelf sets.
Brand must cover all costs for any custom displays,
including labor and installation.

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Marketing—Brand Marketing—Brand
Brand must provide digital assets for use in Retailer’s Brand will provide 100 cases of samples for Retailer’s
online store, catalogs, flyers, and the like. staff at no cost.
Brand will contribute $30,000 co-op dollars per year for Brand will fund four major promotions per year (e.g.,
print/radio/TV/flyers/online. buy 1, get 1 at 50% off).

Note: This summary is a fictional account created by the authors specifically for the purposes of understanding the issues around
distribution decisions. Although it contains all the elements typically found in a distribution agreement, the actual terms of the
distribution agreement between Ulta and tgin remain confidential.

Donaldson waited a beat for the information to sink in. “Naturally, we’ll need to consider
what all of this means in terms of costs and revenues. But now that we’ve level set, and you have a
sense of all the moving parts, I want to hear what you think.”
Donaldson got up and walked to the whiteboard. On it, she wrote the words “pros” and
“cons” with a line down the middle. What followed was a spirited discussion that surfaced strong
arguments both for and against moving forward with distribution at Ulta. After an hour, her
assistant pointed to her watch, a signal to Donaldson to wrap things up. As the group drifted out
of the conference room back to their desks, Donaldson pondered for a moment the arguments
that had been raised during the meeting, then went back to her desk to clear her mind and
make a call.

Key Points Raised

Later that afternoon, Donaldson opened the e-mail containing the whiteboard picture her
assistant had taken and considered some of the pros and cons her team had raised:
• “As Chris-Tia mentioned, many of our competitors are already in Ulta. It gives us
instant access to almost 1,200 additional outlets across the US, and we already know
Ulta is committed to stocking and promoting natural hair care products. They’ve walked
their talk.”
• “The thing I like about this is that our deal would be directly with them—no intermediary
skimming of 25% of sales. Isn’t that our goal?”
• “Ulta wants six new SKUs we don’t have yet, and they want them to be Ulta-only for a
year. What does that do to our relationship with Target, who asked for an exclusive, if we
told them no? Is this a Pandora’s box?”
• “We could also treat Ulta as our test market so that we know what other types of products
to develop for the other channels. Is there any way we could get the exclusivity down to
six months?”
• “We know most of our customers shop at Walmart, Target, and drugstores. What’s stopping
us from investing more in our existing relationships, which we know are profitable, and
where the overhead is a known quantity, and we don’t have to create six new custom
products on such a short timeline?”

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• “I hate to kill the buzz on this thing, but what about all the signs pointing to the fact
that brick-and-mortar is dying? What happens when all the other not-so-savvy retailers in
power center locations go out of business—or move their businesses online—and Ulta is
basically a 10,000-square-foot lonely outpost in a dead mall with no foot traffic?”
• “Think about the shelf space! That’s crazy good, and we know from experience maximizing
shelf space is where the profit is.”
• “We need to develop our direct-to-consumer channel beyond just having products
available for purchase on our website, but we’re already overloaded with the existing direct-
to-retailer packaging and shipping stuf. If we take on Ulta, that’s going to increase all of
that exponentially. We can’t do everything.”
• “I know we’re against taking outside money, but it seems like our longer-term goals keep
getting pushed back. I’m worried we’ll get to the point where we can’t catch up. What
about investor-backed loans? Or maybe we could crowdfund a new product.”
• “Our customers already are shopping at dollar stores, where everything is $1, $2, or $5.
That’s where we should be rather than specialty beauty.”
• “I feel like we need to apply some resources to experiment on new social shopping
platforms just so that we’re not caught flat-footed if a new channel takes of. Like the new
in-chat shopping features on WhatsApp.”
• “My cousin is in the Army, and she says they have very few products at the PX for natural
hair and what they do have is mostly from big companies.”

The Distribution Dilemma

The Ulta deal would introduce tgin to a broader set of consumers, and Donaldson believed
it could be profitable. It would mean doubling down on her existing distribution strategy and
continuing her quest for a larger and larger share of shelf. Who knew how long the waiver of
slotting allowances for ethnic brands would continue? Perhaps the time to capitalize on that
particular advantage was now.
While she was spinning up additional SKUs for Ulta, Donaldson also could work with existing
partners to acquire additional shelf space and additional doors. It was a familiar path that had been
successful for tgin up until now. But was it the right thing for tgin in the long term—especially
given the uncertainty surrounding the future of brick-and-mortar stores, trends toward customers
shopping online, and new distribution channels emerging all the time?
Donaldson’s phone buzzed with a meeting alert. The buyer at Target wanted to talk inventory
for the trio of tgin products the retailer would be featuring in its Valentine’s Day circular, a
promotion that never failed to show her bottom line some love. Donaldson put the conference
notes and proposal aside for now. She’d have just the evening to mull things over before she made
the phone call to Ulta’s buyer with her answer the next day.

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Exhibit 1: tgin Homepage, July 2018

Source: http://thankgodimnatural.com, July 25, 2018, Internet Archive, https://web.archive.org/web/20180725063657/

https://thankgodimnatural.com/.

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Exhibit 2: Estimated Market Value of Hair Care in the United States,

2014–2025 (US$ in Billions)

Source: Statista, “Estimated Market Value of Hair Care in the United States from 2014 to 2025, by Product,” April 13, 2018,
www.statista.com/statistics/824454/us-market-value-hair-care-by-product/.

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Exhibit 3: Multi-Outlet Sales of Black Hair Care Products, 2018–2019

Source: Black Haircare, US, August 2019, industry report by Mintel,“Figure 23: Multi-Outlet Sales of Black Haircare Products, by Leading
Black Haircare Companies, Rolling 52 Weeks 2018 and 2019,” 31.

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Exhibit 4: Black Consumer Spending on Hair Care Products, 2014–

2024

Source: Black Haircare, US, August 2019, Mintel,“Estimated Total Expenditures and Forecast, by Black Consumers, by Regimen Segment,
at Current Prices 2014-2024,” 11.

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Exhibit 5: Hair Texture—Women, June 2019

Source: Black Haircare, US, August 2019, Mintel,“Figure 51: Hair Texture—Females, June 2019,” 57.

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Exhibit 6: Where Consumers Buy Hair Care Products

Source: Strategic Solutions International,“Multicultural Hair Care Market Overview,” 2020, 12.

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Exhibit 7: Hair Care Shopping Locations, April 2016 vs. July 2018

Source: Black Haircare, US, September 2018, Mintel,“Figure 4: Haircare Shopping Locations,April 2016 vs. July 2018,” 62.

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Exhibit 8: Ulta Brand Snapshot

Source: https://snapshot.numerator.com/brand/ulta, October 27, 2018.

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Endnotes
1 “Company Overview,” Ulta Beauty, accessed September 23, 2020, http://ir.ultabeauty.com/company-
information/company-overview/default.aspx.
2 Ibid.
3 Chris-Tia E. Donaldson, Tank God I’m Natural: Te Ultimate Guide to Caring for and Maintaining Natural
Hair (United States: TgiNesis Press, 2008).
4 Chris-Tia Donaldson, Tis Is Only a Test: What Breast Cancer Taught Me About Faith, Love, Hair, and Business
(Chicago: Miracle Press, 2019), 86.
5 Donaldson, Tis is Only a Test, 109.
6 Ibid.
7 Chris-Tia Donaldson, in an interview with the authors, September 15, 2020.
8 Donaldson, Tis Is Only a Test, 153.
9 Donaldson, interview.
10 Ibid.
11 Ibid.
12 Ibid.
13 Ibid.
14 “Estimated Market Value of Hair Care in the United States from 2014 to 2025, by Product,” Statista, April 13,
2018, https://www.statista.com/statistics/824454/us-market-value-hair-care-by-product/.
15 “Hair Care Market in US by Product and Distribution Channel—Forecast and Analysis 2020-2024,”
TechNavio, March 2020, https://www.technavio.com/report/hair-care-market-in-us-industry-analysis.
16 Debby Garbato, “Natural, Organic Beauty Exploding at Mass Retailers,” Drug Store News, October 28, 2019,
https://drugstorenews.com/natural-organic-beauty-exploding-mass-retailers.
17 Black Haircare, US, August 2019, an industry report by Mintel, 31.
18 Black Haircare, US, September 2018, Mintel, 25, 39.
19 Black Haircare, US, August 2019, 9.
20 “Quick Facts,” US Census Bureau, accessed November 2, 2020, https://www.census.gov/quickfacts/fact/table/
US/PST045219.
21 Black Haircare, US, August 2019, 11.
22 Donaldson, Tank God I’m Natural, 20.
23 Ibid., 49.
24 Black Haircare, US, August 2019, “Figure 51: Hair Texture—Females, June 2019,” 57.
25 Twiggy Jalloh, “Six Vogue Stafers Reflect On Their Changing Relationship with Their Natural Hair,” Vogue,
September 15, 2020, https://www.vogue.co.uk/beauty/article/afro-hair.
26 Ibid.
27 Black Haircare, US, September 2019, Mintel, “Figure 53: Hairstyles Worn Within the Last Three Years, June
2019,” 59.
28 Savannah Louis, “A Brief History of Omnichannel Marketing,” NectarOm, January 5, 2015,
https://nectarom.com/2015/01/05/brief-history-omnichannel-marketing/.
29 Oliver Emrich, Michael Paul, and Thomas Rudolph, “Shopping Benefits of Multichannel Assortment Integration
and the Moderating Role of Retailer Type,” Journal of Retailing 91, no. 2 (2015): 326–42.
30 Sally Martin, “CPG Syndicated Data Markets: Part 2—The Nitty-Gritty,” CPG Data Insights, May 29, 2018,
https://www.cpgdatainsights.com/understand-your-database/markets-part-2-the-nitty-gritty.

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31 Strategic Solutions International, “Multicultural Hair Care Market Overview,” 2020, 12.
32 Black Haircare, US, September 2018, 62.
33 “What Goes Into A Slotting Fee?” Bedrock Analytics, August 14, 2019, https://www.bedrockanalytics.com/
blog/what-goes-into-a-slotting-fee/.
34 “The Use of Slotting Allowances in the Retail Grocery Industry: Selected Case Studies in Five Product
Categories,” Federal Trade Commission, November 14, 2003, p. vii, http://www.ftc.gov/os/2003/11/
slottingallowancerpt031114.pdf.
35 Ibid.
36 Ibid.
37 Donaldson, interview.
38 “Ulta Beauty, Inc., Annual Financials,” Marketwatch, accessed October 23, 2020,
https://www.marketwatch.com/investing/stock/ulta/financials.
39 Jacqueline Laurean Yates and Aimee Simeon, “Eight Black-Owned Brands at Ulta Beauty You Should Know,”
Refinery29, June 1, 2020, https://www.refinery29.com/en-us/ulta-black-makeup-brands.
40 “Ulta, Numerator Brand Snapshot,” Numerator, October 27, 2018, https://snapshot.numerator.com/brand/ulta.
41 CoralSage Walker-Dale, “Key Takeaways From Indie BeautyX Retail Summit—Dallas,” Essential Wholesales
& Labs, May 15, 2018, https://library.essentialwholesale.com/key-takeaways-from-indie-beautyx-retail;
Val Sanford, “Negotiating Successful Retail Contracts,” Essential Wholesales & Labs, June 5, 2018,
https://library.essentialwholesale.com/negotiating-successful-retail-contracts.

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