L’Oréal spotlights inflation, energy and COVID-19 impacts on industry, expands digital tech
13 Sep 2022 --- Nicolas Hieronimus, CEO at L’Oréal, gives insight into how international economic hurdles such as inflation, energy prices and COVID-19 are impacting the beauty and personal care industry. He highlights that such issues affect regions on various scales which need to be considered to pass through a recession.
L’Oréal’s short-term growth relies on digital beauty. Hieronimus shares how the company utilizes the digital space well and continues to lead and how they incorporate beauty tech as a competitive advantage.
“Making L’Oréal a digital-first company has been a tremendous advantage, particularly during the COVID-19 pandemic when people could not go out to shop. Consumers could virtually try on our products through AI and AR tech,” says Hieronimus.
He explains that although the company is progressing within the digital space, it is adapting as the online area continues to shift.
“The digital landscape itself is always changing. For example, there have been shifts from some social networks to others – the explosion of TikTok. These are new ways to sell our products. We are already experimenting with new possibilities.”
According to Hieronimus, L’Oréal is beginning to explore areas like the metaverse. “We recently appointed a chief metaverse officer at L’Oréal.”
Short-term performance: China, US and Europe
L’Oréal had an unexpected outcome in China over the last few months.
“The summer did not exactly turn out as we hoped in China with further lockdowns and including the full lockdown of Hainan in August,” says Hieronimus. “Therefore, the Chinese market growth for the full year will not be what we expected.”
L’Oréal is beginning to explore areas like the metaverse.“The US was very competitive but overall positive in the summer. In Europe, we had seen no signs of anything in July as the markets remained positive and our shares have been good. We wish we had more fragrances to sell because our fragrances have been very dynamic and we have been unable to ship everything.”
Hieronimus says he can’t predict what will happen in the coming months with the energy price increases going into the winter and the company is preparing for any event.
Economic crisis: Different demographics explored
The differences between the current economic conditions and energy crisis will be regional, or country by country, explains Hieronimus.
“We see that in Europe, the impact of the energy crisis is not the same, whether in France, Germany or Italy. We see today that emerging markets are dynamic. If we look at China, the issue in China has got nothing to do with the energy crisis and inflation. It’s linked to the zero COVID policy and the congress that will happen in October, after which we hope some lightening of the constraints weighing on the Chinese consumers.”
“In the US, inflation is not driven much by the energy prices but by the overheating of the economy, which is driven by increasing interest rates. Therefore, our capacity to adapt and respond differently in this situation is vital in each country.”
According to L’Oréal, beauty tech has many aspects and the company uses data to analyze the efficacy and accuracy of its products.“That is where I believe the L’Oreal organization fits these circumstances as we are strategically centralized and each country manager can react and adapt to the situation. What we saw in Q2 regarding our performance in China was a testimony to our capacity on a specific local issue.”
“I am confident that the beauty market will continue to be in good shape and grow even during a recession. Thanks to our organization’s innovation power, we can continue to deliver growth even in tough conditions.”
Analyzing skin and emotion-driven scents
Regarding L’Oréal outperforming the market in the past 18 months and how environmentally sustainable the categories like actives are, Hieronimus explains that it is uncertain as the performance does not depend solely on the company but also depends on the market competitiveness.
“What depends on us is our capacity to innovate and bring new superior products to our consumers – that’s why our investment in R&D is so important. Our capacity to activate and operate our brands in every market is better than the competition.”
Beauty tech has many aspects, “we use data to analyze the efficacy, the accuracy and the power of our products. It goes from analyzing the skin and leveraging data to link the impact of the effects of your lifestyle on environmental factors with the impact of your skin to creating either tailor-made products or curating tailor-made solutions for the consumer.”
“We also designed a scent station with start-up Emotiv, where you analyze people’s emotions when they smell different scents, and you know what triggers positive reactions for their well-being. You can therefore make the right recommendation to the person on which fragrance they would be happier with.”
PersonalCareInsights previously reported that this alliance could benefit the cosmetics sector as consumers can access a cutting-edge in-store experience that uses neuroscience to provide individualized, accurate fragrance advice ‘for the first time.’
L'Oréal previously partnered with Verily to advance precision skin technology.
By Nicole Kerr
