At the 2020/2021 L'ORÉAL China Development Strategy Annual Communication Conference, Fabrice Megarbane, President of The North Asia Zone and CEO of L'ORÉAL China, said "The biggest danger in turbulent times is not the turbulence itself, but still using the logic of the past to do things.".
In 2020 the Covid-19 outbreak cause dregional shutdowns and offline retail store closures resulting in offline sales losses of at least quarter for cosmetics companies around the world. However, among the cosmetics conglomerates inregional markets, L'OREAL China has become the one that is rapidly bucking the trend.President of The North Asia Zone and CEO of L'ORÉAL China Fabrice Megarbane revealed "In 2020 the total sales of L'ORÉAL China increased by 27%." This figure has fallen back from the 35% increase in 2019. In the midst of the Covid pandemic we must admit that this achievement is eye-catching.Fabrice Megarbane also claimed that within ten years, by 2030, China will become the largest market globally for L'OREAL Group.So in Fabrice's view what is the driving force of L'OREAL China?
01
China becomes the No. 1 market for seven major brands
First of all L'OREAL has a strong brand portfolio.According to Fabrice, in 2020 China turned into the No. 1 market for seven major brands, including L'OREAL Paris, SkinCeuticals, Lancome, Helena Rubinstein, Kiehl's, YSL Beauty, and KERASTASE.Among the four major departments of L'ORÉAL China the Active Cosmetics Division (ACD) performed the best.Within the four main brands of the Active Cosmetics Division: SkinCeuticals, LAROCHE-POSAY, CeraVe, and VICHY, the acne clearing series and B5 repair series of LA ROCHE-POSAY exploded in sales because of the mask wearing trend. SkinCeuticals consistently holds number one position on TMALL under the high-end professional skin care category. VICHY, a functional skin care brand, revitalized the pharmacy channel by achieving 3.5 times their growth in 2020, the largest growth in the past ten years. CeraVe was also growing rapidly, achieving almost a threefold increase.Additionally, the new brands launched by L'ORÉAL Group in the Chinese market have also achieved good results: Urban Decay became the second largest international high-end cosmetics brand on Tmall, and Maison Margiela perfume became the number one brand of the Tmall perfume trend.
02
E-Commerce contributes 60%, an increase of 56%on year-over-year basisIn 2020 L'OREAL China's online sales accounted for 60%, and sales increased by 56% compared to that in 2019, which is more than double the overall growth.Specifically, these increases mainly come from the three areas of online services, livestreaming channel and sociale-commerce.It is learned that in 2020 more than 6,000 L'ORÉAL China's online cosmetics consultants provided online services through group chats and livestreaming; its thirteen subordinate brands adopted online cosmetics trial services, and more than 3,500 products were accessible to virtual cosmetics trial online, and 20 million consumers were reached."Livestreaming has become a new traffic maker.". Fabrice revealed that L'ORÉAL China had more than 100 full-time streamers online every day. During the Double Eleven 2020 festivala total of seventeen brands were livestreamed.Social e-commerce has also become a brand new platform. L'OREAL China social e-commerce turnover tripled from 2019 to 2020, with a total 19 mini-program stores launched. Wechat sales have become the main source of VICHY's performance.While greatly extending online contacts, L'ORÉAL China focused on the functions of a new generation of online stores on experience services: in 2020 L'OREAL China opened YSL Beauty Global Perfume Flagship Store, L'OREAL PARISHAIR SALON flagship store, Lancome Beijing (Lancome's first flagship store in Asia-Pacific region), 3CE STYLENANDA, and many other stores. Fabrice stressed that this was precisely to interact with consumers and give them omni-channel experience services.
03
Driven by digitalization and AI to avoid 20% inventory shortageAnother invisible driving force is digitalization."L'ORÉAL Group has had a history of digital transformation for 10 years." The North Asia Zone Chief Digital & Marketing Officer Hagen Wülferth said, in fluent Chinese. Today, digitalization has been used by L'ORÉAL China in product experience innovation, smart supply chain, individualized marketing, cross-platform new retail and other scenarios.Taking supply chain as an example, L'ORÉAL China is using digital algorithms to predict sales. In a recent major promotion event this AI data model estimated the sales of Lancome TONIQUE COMFORT, which was 20% more accurate than traditional man-made estimates.Taking consumer demands as another example, L'ORÉAL China cooperated with platforms such as Alibaba Group, Tencent, ByteDance, and JD.COM to create a full-ecological experience touchpoint network. In this way, L'ORÉAL China can immediately understand what consumers want, what ingredients and colour numbers they need, listen to public opinions, and can even see in real time which colour numbers are most suitable for certain consumers.In terms of team learning, digitalized cloud management platforms, site selection maps, online learning systems and other tools have also enabled L'ORÉAL China's team to improve efficiency and continue to evolve itself.
