The closure of the store and the decline of the tourism retail industry have caused the sales of Estee Lauder Group to encounter "Waterloo" for many years in a row. As of March 3 1 day, the Group's quarterly sales decreased by 1 1% to US$ 3.35 billion, and its profit decreased by 14%. Rival L 'Oré al performed better in the same period, with sales falling by only 4.8%.
The American group also faces demands from more than 5,000 employees to fire its successor and board member Ronald Lauder by writing an open letter. The reason behind it is that Ronald Lauder has been donating money to Trump's campaign, which is considered to run counter to the diversity of black life and life initiatives.
In early July this year, Jane Herzmark Mark Hudis was promoted as the first female CEO of the group. She focused on the mission of reforming Estee Lauder and officially introduced this 74-year-old group into the digital age. She saw opportunities in the current challenges and said that her ultimate goal was to turn the group into a "digital beauty giant". To this end, she is developing a strategy to readjust the product blueprint and expand the company's online marketing and services to better attract today's consumers.
In recent years, large beauty groups, such as Estee Lauder, have tried their best to catch up with more flexible independent brands. Whether the COVID-19 epidemic and store closures will promote faster change needs to be confirmed.
Analysts are optimistic about Estee Lauder's prospects. In a recent report by Piper Sandler, an institutional securities company, Erinn Murphy, a senior research analyst, pointed out that the company's digital and skin care market share may still be high.
"In the past 100 years, women have always liked to buy beauty products, and this will not change in 16 weeks," Murphy said in a telephone interview from his apartment in new york. "What changes is how you meet their needs and exceed their expectations."
Since the establishment of Estee Lauder 1946, the way consumers buy beauty products has changed a lot. They mix and match products with different prices and brands in their daily lives and show them on social media. Hudis said: "People buy these brands not because of a brand name, but because of their star products." She further pointed out that the group's star products include Estee Lauder Advanced Night Repair Products, Blue Ocean Mystery Cream, Yuemuyuan Ganoderma Lucidum Water and Bumble and Bumble Invisible Hair Care Oils-all of which can attract new customers and the repeat purchase rate is as high as 50%-60%.
Star products are also the core of the company's acquisition strategy. Last year, when it acquired the Korean cosmeceutical brand Dr.Jart+, its popular Cicapair recycled series products were an eye-catching selling point. Estee Lauder Group also wants to ensure that any new acquisition has smart and creative founders and shows the potential for global expansion, which means that their products will attract international women. Hudis said that Asian skin care brands are still the main target of the acquisition.
Dr. Jart's Cicapair Regenerist series, Estee Lauder's advanced night repair cream and other star products have all been included in Hudis's strategic planning.
In the past ten years, due to the digitalization of the market and the rise of chain middlemen such as Ulta, the distance between luxury goods and mass beauty products has narrowed, which makes enterprises have to satisfy consumers with various prices and contact points. Although Hudis and her colleagues admit that the reputation of the brand has always been related to the proximity of the price, they still have some criteria to distinguish Estee Lauder's products from those expensive beauty brands next to painkillers and sanitary napkins.
"Whether online or offline, products must be sold through prestigious channels, and customers must be cultivated through high-quality experiences." Hudis mentioned that although the price range of Dr.Jart+ products is large, it adheres to this principle: it chooses Sephora, which can provide a better customer service experience than pharmacy shelves.
Diversification is still the primary goal of price point, brand strategy and product category. This is a change that cannot be ignored in today's multinational groups. She said: "Our goal is to become the most diversified and single enterprise in the world." In the next few years, the company expects that more than half of its business will be driven by online sales. According to a recent report by Morgan Stanley, China consumers are expected to drive the growth of 66% of the world's high-end beauty products. Therefore, Estee Lauder also plans to further explore the China market.
Data and personalization are the core of the company's overall strategy, which brings a lot of inspiration to the company, including the difference in the number of products commonly used by American women and China women, and which product can attract the most global attention. Taking Hudis as an example, referring to the results of consumer surveys, Estee Lauder's DW makeup liquid foundation takes persistence as its publicity point in the American market; However, in Japan, the marketing focus of the product caters to the preference of consumers in that country: the flawless feeling can stand the test of close observation.
The COVID-19 epidemic has become an important setback, leading to the closure of shops and the reduction of consumer spending.
In the United States, a recent report by McKinsey & Company predicts that the beauty industry will decline by 30% to 35% this year. But executives of beauty companies are counting on the industry to prove its resilience again, just as it did during the 2008 economic crisis. According to McKinsey's data, in China, at the peak of the epidemic in February, the sales of the beauty industry dropped by 70% year-on-year, but rebounded rapidly in the following month, only dropping by 20%. In order to achieve similar results in the United States and Europe, beauty companies must change their marketing and product strategies to better serve the new lifestyle brought about by the epidemic.
Estee Lauder pays more and more attention to skin care products, because it is the fastest growing category in the field of beauty. "People care more and more about their time," Hudis explained. During this period, the sales performance of Estee Lauder, Mystery of Sea Blue and Yuemu Zhiyuan was really strong.
But Huddis is not prepared to ignore cosmetics. On the contrary, she believes that the downturn in the cosmetics industry (the sales of cosmetics fell by 22% in the third quarter of this fiscal year) is an appeal for more innovation in the industry. Hudis said that the company is now focusing on makeup, eye makeup and long-lasting cosmetics that are increasingly important to people wearing masks. "There is always business to do, you just have to find it."
McKinsey's research found that during the epidemic, the online income of many beauty industry participants increased by 20% to 30%. In order to keep up with the trend, Estee Lauder quickly changed its consumer-oriented marketing and service methods. Hudis said: "The online sales method has gradually matured. Once all our stores are closed, this is the only place where consumers around the world can buy our products. " .
Bobbi brown is committed to what Huddis calls "always-on artistic skills", offering makeup courses on its website and social media. The beauty consultants of Estee Lauder Group's brand stores also turned to social sales and continued to promote products at home. For example, employees of Blue Ocean Mystery Brand in China can call and email all the most loyal consumers and ask them if they want to replenish their products at home. The beauty consultant of Estee Lauder's eponymous brand has also become an influencer, relying on Instagram live broadcast and one-on-one video chat to complete in-store guidance.
"We regard websites as media channels, and properly managing them is an investment in the brand's future," Hudis explained. "What does this brand's online channel mean and what kind of digital products or services it can provide remain to be explored."