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3 ways L'Oréal is building for an 'AI and tech-led' era

Executives outline the company's beauty tech and ecommerce expansion.

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Photo by Helio Vega on Unsplash

Looking out on the future, L'Oréal sees a different and more tech-enabled world emerging for brands and retailers after the shifts caused by pandemic, supply chain shocks and inflation.

“It is increasingly clear that these past few years of crisis and constant change will mark the dawn of a new era,” said Nicolas Hieronimus, CEO of the beauty company, told investors on a recent call to recap the full year results. “It will be an increasingly multipolar era, more fragmented than the previous one, an AI and tech-led era with the highest expectations in terms of sustainability, purpose and cultural diversity."

Multipolar strategy

The seeds for this shift were planted in 2022. There was a return to brick-and-mortar stores, which saw sales rise 12% year-over-year. At the same time, L'Oréal is continuing to expand in ecommerce channels, with 8.9% growth for the year. Ecommerce now accounts for 28% of sales for the company.

From this, L'Oréal sees a “multipolar” distribution strategy emerging, with stores that are owned-and-operated by the company working in tandem with ecommerce that moves beyond the traditional channels to both DTC and B2B platforms, Hieronimus said.

Beauty tech

The company wants to innovate in the products it makes, the way it sells them and its impact on the world. It has built a large team to do so, with over 2,000 people working in beauty tech and IT, along with 800 data analysts.

It all comes together under the banner of beauty tech, and L'Oréal is partnering with others to augment the work.

“Our entire RNI 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 our very large scale consumer data with our own to better understand skin and our aging,” Hieronimus said. “Data and AI will allow us to develop next level diagnosis services for personalized recommendation to drive loyalty and satisfaction.”

Beauty tech is bringing new tools for cosmetics and skincare. It developed a makeup applicator for people with limited arm movement called HAPTA, and a Skin Genius diagnosis to provide beauty adviser-like service.

It is also exploring digital spaces. It brought together 3D artists and beauty makers in the web community GORJS, and saw NYX Professional Services launch a new metaverse experience in Roblox. To work with startups exploring the metaverse, it developed an incubator in partnership with Station F and Meta.

Ecommerce goes Professional

The company’s professional products business has a particular focus on expanding ecommerce, said division president Omar Hajeri.

“Digital now drives our relationship with salons and stylists,” said Hajeri. “…“We continuously adapt to an ever evolving market, characterized by the rise of independent stylists. To reach them all, we are building the most powerful data driven digital ecosystem.”

In ecommerce, it has a platform called L'Oréal Partnership. In education, it has an online academy called L'Oréal Access.

In active cosmetics, the company is also reaching more doctors through digital tools. L'Oréal recorded 48% of the share of views of brand videos posted by doctors. The division also sees 20% of revenue generated through ecommerce.

“Digital allows us to amplify our medical strategy,” said division president Myriam Cohen-Welgryn. “We can now reach many more consumers than before.”

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