The foundation of L'Oreal's digital makeover

Profile picture for user slauchlan By Stuart Lauchlan February 18, 2015
Summary:
Digital transformation is at the heart of L'Oreal's strategic make-over.

L'Oreal
L'Oreal

We want at L’Oreal to be a leader but with the spirit of a challenger and a large company with the spirit of a start-up.

That’s the stated ambition of Jean-Paul Agon, CEO of global cosmetic giant L’Oreal and it’s one that’s being fuelled by its commitment to digital platforms across its entire portfolio of offerings and the recent appointment of Lubomira Rochet as Chief Digital Officer with a seat at the executive committee top table.

Agon explains:

I am a strong believer that digital will transform completely and further better the whole relationship between our brands and our consumers. It is therefore a major opportunity for our company that we want to maximize.

We have strong intentions to be the pioneers and the leaders of digital beauty. We are already pretty advanced with more than 700 digital people recruited in four years, 16% of our media dedicated to digital, and €800 million achieved in e-commerce, and also for example, five of our brands in the top ten digital IQ in the USA and in China.

We are very confident and very convenient that digital will have a strong positive leverage on the success of the group also because our decentralized organization, our entrepreneurial spirit, and our multi-brand, multi-channel approach is extremely compatible with the digital world.

E-commerce is a major plank of the strategy moving forward:

That’s a big and good move, because everywhere the profitability of our part of the business on e-commerce is good and most of the time better than what we have with the traditional channels. Definitely e-commerce will impact, there will be a shift to e-commerce for almost all our brands.

Marc Menesguen, L’Oreal President Consumer Products Division, adds:

[Digital] represents a real growth opportunity for division. First, with the e-commerce acceleration, according to our figures, e-commerce beauty has grown more than 20% in 2014. Our strategy is not to go direct, but to take advantage of the development of our of retailers e-commerce sites and to also expand our business with e-commerce pure players.

China is proving to be an interesting and useful testbed:

To inspire us, we have a best practice in China. E-commerce for our division in China already represents more than 10% of our sales. Our e-commerce presence in China is very qualitative with online brand boutiques, proposing a seamless online shopping experience results. We’re number one in B2C in both skincare with L’Oréal Paris and make-up with Maybeline.

Following the example of China, we had the clear ambition to keep growing rapidly our e-commerce business worldwide.

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A second impact of digital is its ability to allow L’Oreal to reach and recruit new connected consumers at affordable costs. Menesguen explains:

As an example, our Maybeline [indiscernible] campaign in order to make the most of the make-up brow phenomenon, we launched this powerful online campaign results, a great sales success and the creation of a new make-up category in masks.

Digital allows us to bring service to our consumers. In May 2014, L’Oréal Paris launched an amazing app, the first mobile augmented reality make-up simulator, allowing consumers to try and live thousands of looks and products.

Makeup Genius is a real beauty advisor in our consumers’ pockets, bringing a level of service never seen before in our channel. The results [are] more than 6.3 million downloads, delivering a personalized service at mass-scale.

Another multi-channel example Menesguen cites is NYX:

It is a fast developing brand in the US and it’s a multi-channel brand. It’s growing very fast in target [markets] but also in e-commerce. So first of all, our priority is to accelerate the brand in the US and from this very strong base launch it worldwide. We’re planning to start the worldwide launch midyear and mainly in Europe, Western Europe, also South Asia, and Latin America.

We’re now studying the best possible way to launch the brand country-by-country, and really depend on the country. E-commerce will be very important, considering the brand is 100% digital. So we are really working on that and there is a fantastic commitment of all the zones to take this brand.

All told, digital is at the heart of L’Oreal’s expansion strategy, concludes Brigitte Liberman, President, Active Cosmetics Division:

The digital environment is an historic opportunity to emphasize the impact of our business model, which is based on personalized advise, recommendation and above all advocacy.

My take

L'Oreal is a great example of a long-established firm that's identified and accepted the threats and opportunities of digital transformation and as such is riding the wave successfully.