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Personalised products and bespoke services: The new luxury according to L’Oréal

In a context where the growth of the luxury market, while still robust, has cooled, L’Oréal has achieved excellent performance. In 2016, the group’s Luxury division reported growth of 7% - two percentage points better than the global market - and notched up a number of international successes, including for Lancôme, which became the first selective market brand in China, and Yves Saint Laurent, which ended 2016 on growth of 29%. Today, the French cosmetics giant is building its strategy on two pillars: digitalisation and diversification, with the goal of maximizing the customer experience, especially through customization and customization.

Nicolas Hieronimus, Deputy Chief Executive Officer of L’Oréal

Nicolas Hieronimus, Deputy Chief Executive Officer of L’Oréal

While the luxury cosmetics market is growing fast, it is also undergoing deepseated changes. “Boosted by digital, the arrival of new generations of customers and Chinese consumption, the luxury market is growing faster than ever. At the same time, it is forcing brands to reinvent themselves constantly”, says Nicolas Hieronimus, Deputy Chief Executive Officer of L’Oréal.

According to Hieronimus, two new luxury markets are in the process of emerging. First, a market for affordable, accessible luxury whose swift growth is being driven by Gen Yers and Gen Zers around the world. The second market offers a high-premium, more experiential form of luxury reserved for connoisseurs, which crystallizes especially around ultra-premium skincare and niche perfumery.

Digitalisation and diversification

In this setting, L’Oréal Luxury has two priorities: “We’ve got to digitalise and diversify to meet consumers’ new expectations.

For L’Oréal Luxury, digital is both a great way to know consumers better and a fast-growing distribution channel. “By harnessing data, social media, CRM and precision marketing, we can reach out to consumers in a pretty targeted way,” explains Nicolas Hieronimus. Through these precision marketing efforts, the Luxury Division gathers key data on consumers, which it uses to identify specific expectations.

Diversification-wise, L’Oréal Luxury is broadening and strengthening its brand portfolio to meet the many and varied needs of new consumer populations with perennial brands such as Lancôme, designer brands such as YSL and Giorgio Armani, and alternative brands like Kiehl’s and Atelier Cologne, or Urban Decay and It Cosmetics in the makeup category.

Customization and bespoke services

As Nicolas Hieronimus sees it, the critical challenge for high-end brands is to offer consumers unforgettable experiences.

To achieve this goal, the Luxury Division is counting on personalisation. A growing number of L’Oréal Luxury brands are now offering bespoke products, such as Yves Saint Laurent, which lets clients customise their lipstick by picking a colour, cap or by having a message engraved, to make it a unique object that can be offered as a gift or kept. Lancôme, meanwhile, recently began offering Le Teint Particulier, a new custom-made foundation that can be tailored to any skin type. “In store, a beauty advisor scans and analyses the customer’s skin. The customer can then watch as a unique formula is prepared specifically for her.

A technological innovation designed to forge strong ties to the brand, but also “a huge operational challenge for the Group”, explains Thierry Cheval, head of Retail at L’Oréal. “We’re talking about setting up micro-factories in public places, where they will be in contact with thousands of consumers. We can’t leave anything to chance.

Accordingly, two rounds of testing are conducted, comprising a first set of laboratory tests to verify the machines’ accuracy, performance and safety, and a second set at the sales outlets themselves to see whether the systems work properly in real-life conditions and over the long run.

Thus, for the launch of Lancôme’s Teint Particulier in the USA, L’Oréal trialled the system at two stores on the West Coast before rolling it out at nine other US sales locations in the space of a year. “Encouraged by our US success, we just launched this new service in France and now have 24 stores selling Le Teint Particulier on both sides of the Atlantic,” adds Thierry Cheval.

The next step will be to roll out these services worldwide while developing new ones to make the customer experience even more special and memorable.

In the luxury market, it is crucial to give customers experiences. That is how we will continue to grow our online and in-store presence,” concludes Nicolas Hieronimus.

V.G.

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