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Analysis and Insight from Savvycom Team.

As a digital-first company, L’Oréal put digital at the service of consumers but also of its teams to meet today’s challenges, arouse interest in a world of hyper-connectivity, and build relationships based on trust. Putting such philosophy at the core of its business, L’Oréal has indeed left magnificent marks on the digital playground, which can be explained by the corporate’s futuristic vision, strategic planning, and seamless go-to-market execution. 

From bricks to clicks

The L’Oréal Group is the world’s largest cosmetics and beauty company, leading with 10% share of the skincare market (ahead of Estee Lauder and Beiersdorf’s 5%), 21% make-up share (higher than the 2nd guy Estee Lauder’s with 11%) and haircare with 16% share, more than 15% share of Procter & Gamble. Since 1925, the group built a strong portfolio of brands, including La Roche Posay, Lancôme, L’Oréal Paris, Vichy, Garnier, Maybelline,…and positioned them through traditional magazine covers and TV ads, pushing consumers to walk-in retail stores, try and buy their products.

Since then, L’Oreal has become arguably the most digitally innovative beauty company in the world. Armed with the mission to integrate digital into the heart of its business model to reinforce its edge in the beauty market, L’Oreal has undergone a major transformation over the past few years. 

Beauty and digital media – A perfect match 

In 2012, foreseeing their future challenges, the company launched its “Connected Beauty Incubator” based in the US, a division within the company’s research division dedicated entirely to technological innovation and industry disruption.

L’Oréal carefully studied their consumers and learned early on that their target market was constantly connected, underwent a research process including many touchpoints, and was turning to video content to search for beauty solutions and see products come to life.

It is hard to change the nature of beauty products, but reaching and engaging consumers became a great opportunity for innovation. In 2019, digital spending grew by 6.3% to $614.7 billion, while E-commerce sales worldwide amounted to more than $3.5 trillion, taking up more than 20% of total global retail sales. 

How is L’Oreal transforming beauty?

1. Structure

As most consumer packaged goods companies, marketing, sales, and product development divisions had been largely distinct silos within the company. The first step towards integrating digital in the business model was redesigning the organization to align objectives. Also, approximately 1,000 employees with digital capabilities were recruited in the past 4 years.

Perhaps the major step towards their commitment to digital was appointing their first Chief Digital Officer in 2014 as a member of the company’s executive committee. This role aimed to lead digital strategy and innovation across divisions and brands, ranging from content marketing, personalization and data, and E-commerce. 

2. E-Commerce

L’Oréal has developed a set of E-commerce solutions. In the last few years, the company’s websites have been transformed to create new experiences. Today, this move to online purchasing is accelerating. Therefore, L’Oréal is rolling out E-commerce for their brands with different strategies depending on the target market, whose major purpose is “to go even further in terms of availability, and to help customers find the right products on their favorite platforms”.

The right digital strategy has led L’Oréal E-commerce to a strong boost | Source: Financial Times

In digitally developed countries, L’Oréal has created partnerships with some major names in E-commerce, a.k.a local market leaders, from America’s Amazon to China’s Alibaba. In other markets, e-commerce is being developed using distributor partners and brand sites. 

Furthermore, in several such countries, like China, more than one in every two products is now sold online, a pattern that is increasingly being driven by social media networks. This is L’Oréal’s effort in leading the digital tomorrow, as they slowly turn part of their business to “social commerce” – the so-called future of beauty. 

L’Oréal is also using frontier technologies such as AI and AR into their E-commerce solutions. One of its well-known brands, Vichy, has launched an AI-based solution called Vichy SkinConsult AI, leveling up its E-commerce game. Vichy teamed up with 12 dermatologists to create a science-based, skin-care-focused algorithm powered by artificial intelligence to diagnose the skin and accurately recommend suitable skin solutions. With just a single selfie, SkinConsult AI compares customers’ skin against a database, identifies anti-aging concerns, and provides them with a customized, anti-aging routine – in minutes.

Finding the right skin type is the first step in the shopping journey, and SkinConsult AI has really taken a step further in simplifying it. It not only tells customers which skin of skin they have but also generates a personalized skin-care routine, for morning and night, based on the results. Plus, everything is shoppable right there on the site, making the purchasing journey linear and convenient. By digitalizing the solutions, Vichy – or L’Oréal has won customers from the very first touchpoint.

3. Data & Product development

L’Oréal realizes that for most of the customers, the purchase journey starts online as they search for reviews and recommendations. Such a finding then brings beauty brands a thrilling mission: pay attention to what customers search for and watch to serve customers right at their first touchpoints. What content do consumers search and watch? What are they more interested in? What interactions trigger other actions and/or sales? As such, L’Oréal started to create robust mechanisms to extract and analyze consumer data as they expand their digital capabilities. 

For example, in 2014, L’Oréal analyzed Google search trends and discovered that in the middle of the “ombre” hair color trend, consumers were trying to find ways to do this at home with hair color products – instead of going to hair salons, and lacked a specialized application tool. L’Oréal was quick to respond and take this new technique to consumer’s homes, launching a L’Oréal Paris Féria Wild Ombré, an at-home hair-dyeing kit, made specifically for Ombre enthusiasts who pursue economy. It was available in 5 different tones to match all kinds of hair colors from light to dark. Each kit is equipped with a plastic brush to help customers get the shift in shade just right. 

L’Oréal Paris custom solution for DIY Ombre hair, ideated from Google Trend data

This product launch was a great success, contributing up to 50% of the hair color category’s revenue.

Another best practice is Garnier Shade Finder. Based on consumer research that identifies the ability to find the right shade as the number one product-related barrier to the category, in 2019, Garnier has teamed up with ModiFace, an AR beauty company L’Oréal acquired, to develop the Shade Selector Tool – a hair color try-on app. The app allows users to find the right Garnier shade based on her current hair condition and desired end look and allows her to try shades prior to purchasing, eliminating a lot of the hesitations associated with the at-home hair coloring experience as consumers can now get a realistic idea of the end result.

Garnier Shade Finder Tool for hair color try-on

The Shade Selector Tool begins with a one-minute diagnostic test, during which people answer questions about the current status of their hair and its health, such as whether their hair is already colored or they’ve had other treatments. The tool takes into account the natural color, the percentage of gray coverage, previous hair color, and what the customer wants the result to be. 

Once the consumer answers the questions in the virtual Shade Selector tool, it calculates all of the brands under the Garnier umbrella that meet the customer’s criteria. The tool only recommends shades that the customer will qualify for, so it takes the guesswork out and simplifies the shopping process. When the user decides which shade they would like to virtually try on, the camera will capture him/her and calibrate the shade for the current look. It makes the selection process easier and allows the consumer to see the results through the tool before committing to the shade live.

4. Personalization

Because of mobile, consumers now have a personal stylist, hairdresser, and makeup artist right at their fingertips, 24/7. To make sure L’Oréal is available whenever customers need, the company offers more than just customized products. It commits to deliver personalized digital experience, to attract, engage, and retain the customers.

In 2015, L’Oréal launched Makeup Genius, a mobile app that allows consumers to virtually try on makeup. The app scans a customer’s face, analyzes more than 60 characteristics, then virtually displays how various products and shade mixes can be used to achieve different looks, in real-time. Consumers can select a look they like and directly order the right products with just the press of a button. As the app tracks how the customer uses it and what they buy, it learns their preferences, makes inferences based on similar customers’ choices and tailors its responses. 

Makeup Genius emerged as a groundbreaking digital solution in 2015

The important takeaway is that the company didn’t build Makeup Genius to mirror its mobile commerce experience. The app is a unique asset both as a branded channel for engaging with customers and as a “fire hose” of incoming information about how customers engage. It allows stakeholders to understand the needs of loyal users and tailor meaningful, assistive experiences for them. 

Due to the high level of technology integration as well as personalization, the app was even compared to a revolution in the beauty industry at that moment. Up till 2017, the brand has more than 20 million customers they can provide a customized experience for, and the number could have multiplied a lot more aggressively after that. 

5. Purchasing convenience

Let’s recall those examples. The intelligence of L’Oréal is that they can “think things through” and enable several functionalities within one application to turn the solution holistic and the shopping experience of customers fulfilled. As in Makeup Genius, apart from the “scan the face” part, the app also allows consumers to scan products in-store, see the details in the app, experience how they would look on themselves, and finally complete the purchase through the app at any time, avoiding lines in congested stores and improving the overall shopping experience.

Or, in the case of Garnier Shade Finder Tool, the technology is not only used online but also in the hair color aisle at the store, where Beauty Advisors are available to offer assistance and feedback in stores. All of these digital products and strategies are designated to turn the purchasing experience into a seamless and comfortable journey. 

Digital Transformation Recap

Beauty is poised to transform, driven by technology and digitalization. While many remain confused about how such a traditional industry can be digitalized, L’Oréal was bold enough to take the lead, bringing shopping experience to a whole new level and secure its place as the #1 beauty solution provider. Its success, to this moment, can be explained thanks to some key strategies:

  • Changing company structure: adding more digital-specialized positions and focus on promoting employees with excellent digital capabilities.
  • Leveraging E-commerce: from website to applications, from simple algorithms to frontier technology.
  • Utilization of data: being active in designing data-extraction systems and proactively analyzing collected data to develop products that are relevant, innovative, and convenient.
  • Personalized experience: providing customers with like-no-other customs, targeting each customer with a distinctive approach and offering.
  • Making purchasing effortless: designing creative ways for customers to learn about the products (such as scanning QR codes), combining online and offline consultation to turn the buying “process” into a journey.

Still, on top of everything, the core competency of L’Oréal lies in its ability to think digital-first. Its relentless concentration on digital allows all of its brands to come up with holistic, groundbreaking technology-based solutions that speak to the customers’ needs and revolutionize the beauty industry. There are lots of ways to acquire such a mindset, such as recruiting and promoting a team of professionals as what L’Oréal did, or outsourcing consultants and engineers from a third-party. The former might be sustainable, but the latter gives the edge of cost. Carefully assessing your budget and available resources to determine the strategy and digitally transform bit by bit would eventually lead a beauty business to success. 

Read more: The anatomy of technology outsourcing

We are Savvycom, a technology service provider that has helped more than 100 businesses earn outstanding financial acceleration. We help clients with profound expertise, rich experience, and widespread network with global leaders such as Apple, Amazon Web Services, and IBM. If you are wishing to amour your beauty business with digital solutions while keeping the budget low, feel free to contact us for consultation – we are always happy to give you a hand.

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