In an exclusive interview, Vogue US spoke with Estée Lauder executive group president Jane Hertzmark Hudis on her goals to build a ‘digitally empowered beauty powerhouse’ and the challenges in the current climate.
2020 has been a turbulent time for the US Estée Lauder division, with the COVID-19 pandemic disrupting sale growth – profits declined by 14%, largely due to store closures and decline in travel retail. The US conglomerate also faced calls by over 5,000 employees to remove heir and board member Ronald Lauder due to his ongoing donations to the Trump campaign, seen as counterproductive to the companies diversity initiatives which were launched in response to the Black Lives Matter movement.
In early July, Jane Hertzmark Hudis was promoted as the company’s first female executive group president. Her main goal is to bring Estée Lauder into the digital age, with an end mission to remake the company into a ”digitally empowered beauty powerhouse”.
Implementing a strategy to expand the company’s online marketing and services and reconfigure its products to better appeal to today’s consumers.
Prioritising hero products
Consumer spending habits have changed dramatically since 1946 when Estée Lauder was founded.
“People aren’t shopping these brands because of a brand name, they’re shopping them for the famous hero products they’re known for,” says Hudis.
Hero products, such as Estée Lauder’s Advanced Night Repair, Creme de La Mer, Origins Mega-Mushroom Treatment Lotion, and Bumble and Bumble’s Hairdresser’s Invisible Oil, recruit new customers and have high rates of repeat purchases – up to 50-60%. This is largely due to social media with the impact ‘shelfies’ have on consumers.
Hero products are also key in new brand acquisition strategy. When Estée Lauder acquired South Koran skincare brand Dr. Jart in 2019, the key focus was the skincare brand’s cult Cicapair line.
Diversifying its offering
The lines between prestige and mass beauty have become blurred over the last decade, thanks to the digitisation of the market and the rise of middle-of-the-road chains such as Ulta.
Though Hudis accepts that the term ‘prestige’ has expanded to include more accessibly priced brands, she also still has a few guidelines on how to differentiate between their brands and those being sold next to Advil.
“The products still have to be sold in a prestige channel, whether that’s in-store or online, and they have to deliver on a high-touch experience that really nurtures the customer,” she says, noting that while Dr. Jart prices range widely, the prestige tenets remain. So it’s sold at Sephora, which Hudis considers a high-touch channel offering better customer service than the drugstore aisle.
Diversification remains a top goal across price points, brand strategies, and product categories. It’s a shift conglomerates today can’t afford not to make. “Our goal is to be the best diversified pure-play in the world,” she says.
The company also aims for over half of its business to be driven by online sales, with Chinese consumers expected to drive 66% of the prestige growth globally.
Data and personalisation are at the core of the overall strategy. As a global company, they need to ensure that they are tapping into different consumer needs in every territory. For example, in Japan, the product marketing focus of Estée Lauder Double Wear foundation is looking flawless up close. Whilst, in the US, the marketing focus for that same product is around longevity and the ability to last from morning to night.
Selling in a Post-COVID World
In the US, a recent McKinsey report predicts that the beauty industry will decline by 30-35% in 2020, due to the effects of the pandemic – store closures and decrease consumer spending.
But executives are hoping that the beauty industry will stay resilient, much as it did in the 2008 recession.
In China, sales fell from 70% YoY during the pandemic’s peak in February but according to McKinsey, they rebounded quickly the following month to a 20% decline.
To ensure similar results to China, the US and European company’s must adapt their marketing strategies to better serve the ‘new norm’. This includes more emphasis on skincare products, which remains the fastest-growing beauty category.
“People are caring for themselves more and there’s more me-time,” explains Hudis, who says that skincare products from Estée Lauder, La Mer, and Origins have shown strong sales during this period.
However, Hudis isn’t ready to completely ready to write off cosmetics. Instead, she says that Estée Lauder is ready to adapt, focusing more on long-wear products, primers, and eye products. As-well as shifting a focusing online.
The pivot to online was already happening but it went big time once all of our stores closed down and it was the only place people could shop for our products around the world,” says Hudis.
Social media has also played a large role in Estée Lauder’s shift, with beauty advisors turning into influencers, hosting Instagram LIVES, and one-to-one video chats with customers.
“We see our dot-coms as media channels and we know that when we entertain her and teach her, she’ll become further invested in the brand,” explains Hudis. “The idea of what online can mean and what brands can offer digitally has expanded.”
Source: Vogue US