L’Oréal looks to capitalise on ‘golden age of beauty’ with ecommerce push
L’Oréal is looking to push heavily into ecommerce and build more direct consumer relationships, but admits it could sell off The Body Shop as sales struggle.
L’Oréal says it wants to take a “pragmatic” approach to its online selling, as it looks to become “a leader in digital beauty” and have more personalised interactions with consumers.
The beauty giant revealed its full year results this morning (10 February), showing that like-for-like sales grew 4.7% to €25.8bn (£22bn), with sales increasing 10% in the UK. Its operating profit was €4.5bn (£3.84bn), representing 17.6% of sales.
The company’s CEO Jean-Paul Agon said it is eager to capitalise on “the golden age of beauty” by taking a more digital approach. L’Oréal’s ecommerce sales rose by 33% year on year in 2016, and it now has more than 1,600 “digital experts” and has upskilled 14,000 of its workers. Over 30% of its media spend is now digital, which Agon says has optimised its media efficiency.
“We are pragmatic and will adapt to the evolution of the market. What we are seeing now is that more consumers want to shop online, so for us it’s a new channel and we go online. We are following the evolution of consumer aspirations,” he said, speaking at an analyst meeting.
L’Oréal admitted that the overall skincare market has seen slower growth than sectors such as make-up been, but that social media can make a real difference to its sales performance.
“It’s a market that is changing and reinventing itself, a bit like what make-up has gone through, with consumers looking at social networks and wanting more instant benefits. We are now adjusting to this new landscape,” said Nicolas Hieronimus, president of selective divisions at the company.
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The future of The Body Shop
The Body Shop brand is also struggling. It saw 0.6% like-for-like sales growth, but sales were down 4.8% based on reported figures. While sales were strong in the UK, its performance in Saudi Arabia and Hong Kong had a negative impact on the brand.
L’Oréal said it is now “exploring all strategic options regarding The Body Shop’s ownership”, hinting it might sell the British brand. However, the company was keen to emphasise that no decision has been taken so far. When questioned on whether L’Oréal was going to turn The Body Shop stores into L’Oréal boutiques, Agon was quick to dismiss this idea.
He concluded: “The Body Shop is a business, it’s a company and its own entity. It has its network of stores that we increased nicely over the past 10 years from 2,000 to 3,000. This is an entity; we are not going to touch it at all.”
I really appreciate the steps that L’Oréal is taking in order to adapt to the evolution of the market. Giving those who may not have beauty products accessible to them an opportunity to purchase items shows how far they are willing to stretch to reach their customers. Unfortunately I do think that it may mislead some customers; specifically with the colors of their various makeups. For instance, if a woman was looking for a foundation from Loréal, which she has never bought anything from, how is she to be sure what the right color would be for her skin? The shade for one color may look brighter on one computer but may appear to be darker on another. This also goes for different colored blushes, lipsticks, glosses, eyeshadows, etc. I am eager to see exactly what they can do to further a customer’s online shopping experience. Maybe suggesting tips for what customers can compare certain shades and colors to may be beneficial to the buyers as well as the sellers. I also really think that the online option for purchasing Loréal’s items is so great for frequent buyers. Rather than going out to a certain store, customers now get the chance to purchase a beauty product at the click of a button and have it directly delivered to their doorstep.