L'Oréal CEO says the beauty giant is a ‘Unicornus Rex’ set for the Metaverse
L'Oréal released a solid set of results that saw like-for-like revenue growth of 10.9%. But CEO Nicolas Hieronimus sees even more opportunity in the Metaverse.
It’s been a strong year for beauty giant L'Oréal, as its strategy of targeting the upper segment of the middle classes with innovative and desirable products, whilst being ‘strategically centralized and operationally decentralized’, continues to pay off. The business as a whole reported €38.26 billion in sales, which was up 10.9% to on a like-for-like basis.
However, it was CEO Nicolas Hieronimus’ statements about the company’s future direction of the organization that were particularly interesting - where L'Oréal will lean into tech, data, beauty personalization and even venture further into the Metaverse.
On the latter endeavor, whilst the future direction of the Metaverse is uncertain, and use cases are unclear, there is an argument that organizations should be experimenting with the new digital engagement channel, in order to avoid falling behind competitors. A number of other companies have said they will too be investing in virtual worlds, including Accenture and Disney.
But before we enter L'Oréal’s version of the Metaverse, Hieronimus commented on the company’s current digital successes and said:
2022 was another grand slam year. We outperformed across all geographic zones, divisions, and categories for the second year in a row. All the L'Oréal cylinders are firing L'Oréal 's engine.
From a distribution channel standpoint, 2022 saw the return of our brick and mortar, which is up 11.7% versus last year. In parallel, our e-commerce continues to grow faster than the market at plus 8.9% and therefore stays above 28% of our total sales.
Throughout the crisis, we have continuously also invested in maintaining our digital leadership. In 2022, L'Oréal has the number one position in terms of paid media share of voice and in beauty and the number one share of influence.
L'Oréal is the number one group in Gartner's 2022 Digital IQ ranking for the personal care category in the U.S. with seven of our brands in the top genius ones, including the number one and the number two.
Yet, we are never complacent, ever seizing what is starting, being first movers on TikTok, for example, or exploring the metaverse with NYX Professional Makeup and its first of a kind digital creators community. Finally, we have deepened and increased our team's engagement into the L'Oréal - unique L'Oréal culture, continuously adapting to the new ways of working, emerging over the last three words.
In addition, L'Oréal spent over €1 billion in R&I in the past year and said that it has filed 561 patents, which is “laying the groundwork for future successes”.
Looking to the future
During the recent earnings call, CEO Hieronimus had some interesting and…creative words to say about L'Oréal’s future, saying that the coming years will be a “multi-polar era” that is more fragmented than the previous one. It will be an era that is AI and tech led, with the highest expectations in terms of sustainability, purpose and cultural diversity.
Commenting on L'Oréal’s potential, Hieronimus said:
In this increasingly complex and fragmented world, having solid roots and structural agility will be essential to a company's success - and we have that. Transformation is part of our DNA. Like a ‘Unicornus Rex’, we are a truly unique creature that combines the strength and scale of a 114-year-old leader, the dinosaur, together with the unmatched speed, agility, and innovation capabilities of a unicorn, always ready to seize what is starting. That's why L'Oréal is uniquely positioned to win in this new era.
Speaking to the advancements in beauty and digital technologies, Hieronimus added:
In an AI and data powered world, we will extend our digital leadership to own the possibilities that Beauty Tech has to offer and explore new horizons like the metaverse. We have over 2,000 dedicated experts working in Beauty Tech and IT, together with 800 data analysts.
Our entire R&I organization is being augmented with powerful AI and data, including strategic partnership with the experts such as Verily, an Alphabet subsidiary, where we will combine very large scale consumer data with our own, to better understand skin and our aging. Data and AI will allow us to develop next level diagnosis services for personalized recommendation to drive loyalty and satisfaction.
Beauty Tech will also help us to create a range of augmented beauty solutions, such as HAPTA, specially developed for those with limited hand and arm mobility, which was showcased at this year's CES.
Finally, the world of beauty has expanded into the Metaverse. To address this need, we have developed the first dedicated incubator in partnership with STATION F and Meta and the first multi-brand Avatar partnership with Ready Player Me.
On the partnership with Meta, L'Oréal announced that incubator will support at least five startups that specialize in 3D production, augmented reality, virtual reality, mixed reality, avatar creation, portability in user experience, token economy or Rotherham topics related to the metaverse and Web3. Interestingly, it added that these startups don’t specifically have to be related to the beauty industry.
It will be housed in the Meta space within Station F, which describes itself as the world’s largest startup campus, based in Paris.
In addition to this, last month L'Oréal’s corporate venture capital fund, BOLD, announced an investment in US-based startup, Digital Village, a ‘Metaverse-as-a-service’ platform and NFT marketplace for brands, creators and communities.
Led by an international team spanning the US, Europe, and Asia, Digital Village, L'Oréal said, offers new, scalable technologies for the creation and interaction of digital identities and assets in virtual worlds.
And then L'Oréal’s partnership with Ready Play Me, a cross-game avatar platform for the metaverse, is already in full swing, as two of the Group’s leading brands - Maybelline New York and L'Oréal Professional - have launched makeup and hairstyles for avatar creation that can be used on more than 4,000 platforms and apps worldwide.
When taken as a whole, it’s clear that L'Oréal is taking the Metaverse very seriously. Summing up the company’s plans for the upcoming year, and beyond, Hieronimus concluded:
While we know that 2023 may continue to be another bumpy year, we strongly believe that the beauty market will grow yet further and L'Oréal is ready and confident to deliver solid growth in both sales and profits. And as we look beyond 2023 and towards a new era, our multipolar modal, coupled with our proven capacity to harness the power of data and AI, and drive sustainable change, will place L'Oréal in a unique position to strengthen our leadership and deliver strong value for our shareholders.
A Unicorus Rex in the Metaverse sums up corporate digital strategy in 2023 quite nicely, I think.