L’Oréal and the business of networked beauty


(Published in The Produktkulturmagazin issue 2 2017)

Global cosmetics giant L’Oréal invests more in its digital business. To CEO and Chairman Jean-Paul Agon, eCommerce can be considered as more than just an additional income source for the company. Instead, it is the new engine for growth.

During an analysis offered as part of an update for investors in the past, Agon and CFO Christian Mulliez mentioned several times that the company’s future digital strategy was to invest in employees, R&D and companies in order to get in touch with a generation of the cosmetics customers who are looking for inspiration in the online area. Agon said: “Across all brands in functions we continue also to drive our digital transformation at full speed. Digital now amounts to 30 percent of our media.” The confidence that this requires, he pointed out, is rooted above all in the digital advantage that L’Oréal enjoys. “Our confidence is also routed in our digital edge, with our strategically centralised, yet operationally de-centralised agile approach, we are moving forward fast. We now have more than 1,400 digital experts on board, driving our transformation with up-skill teams. More than ever, we can build empathy with consumers and do what we do best, invent the beauty products of tomorrow.”*1 In his speech introducing the financial statements for 2016, he elaborated on the developments in the digital field: “It was also another year that strengthened L’Oréal’s leadership in connected beauty. Our eCommerce sales rose by +33 percent, and the digital dynamism of our brands – in both communications and services – means they can develop increasingly strong and personalised interactions with consumers.”*2

In recent years,  L’Oréal has not only hired more than 1,400 digital experts, but it has also appointed Lubomira Rochet to its Executive Committee as Chief Digital Officer. Since early January this year, there is also an exclusive partnership with Founders Factory, a London-based, worldwide accelerator and incubator for the digital sector. The goal they share: strategic investment by global start-ups in beauty technologies. For L’Oréal, this could open the door to a global ecosystem of innovative companies and businesses by bringing digitalisation and cosmetics closer together. At last year’s announcement, Chief Digital Officer Rochet noted: “This strategic investment will give L’Oréal direct access to a powerful global ecosystem of exciting start-ups and innovative technologies at their earliest stage, allowing us to invest in and nurture innovative business models based on digital platforms to better serve consumers’ aspirations.”*1

By making the Founders Factory ecosystem and the experience of the in-house entrepreneurs its own, L’Oréal will make a decisive contribution to the development of incubated companies in the beauty sector. During a conference call with investors, CFO Mulliez described how the company boosted its spending on digital media from 25 percent in the first half of 2015 to 30 percent in the first half of last year. eCommerce, he reported, was developing considerably across all areas. Indeed, it is now a very important part of our business. Mulliez added: “As I keep explaining to our teams, eCommerce is not the cherry on the cake. It becomes the new cake.”*1

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Picture credit © Getty Images/Rob Dowsley Photography

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