Hundreds of members of the beauty industry gathered at the New York Hilton Wednesday evening to hear Procter & Gamble Co.’s Susan Arnold, president, Global Business Units, discuss the company’s beauty business, the state of the industry and some personal thoughts on what really matters to her.
This story first appeared in the May 23, 2008 issue of WWD. Subscribe Today.
In a Q&A format, led by Jill Scalamandre, chief marketing officer of Chrysallis, Arnold opened up the discussion by outlining P&G’s vast businesses: The company consists of 300 brands generating more than $76 billion. More than 80 percent of P&G’s annual sales and profits come from 41 brands that each generate in excess of $500 million. Twenty-three of them have sales exceeding $1 billion.
P&G’s beauty business has doubled in the past five years, Scalamandre said, asking why P&G’s recent focus has been on beauty. Arnold attributed the interest to the natural direction of P&G, a consumer packaged goods company, explaining that as branding and innovation serve as the company’s core competencies, the two are also key to succeeding in beauty. What sets P&G’s beauty business apart from competitors, she said, is its breadth of offerings, as well as the company’s constant interactions with consumers. For instance, the company has witnessed firsthand women’s beauty regimens, ranging from a woman’s coveted Camay bar soap in Egypt to a woman’s plethora of SK-II products in Japan.
Acquisitions also have been key to P&G’s growth in beauty, a strategy Arnold has been a part of for 20 years. She noted that Frédéric Fekkai, P&G’s most recent acquisition, was “admired from afar” as it is aspirational, has a great image and brand equity, has big repeats sales and has at its helm a man who’s an icon in hair care. “We love icons,” she said.
While P&G “plays to win, not to lose,” a launch or an acquisition is not always financially motivated. As an example, Arnold cited Reflect.com, a Web site the company purchased in 1999 that was touted as the first to offer customized beauty products online.
“What we learned from Reflect.com…can be seen in olayforyou.com,” a recently launched site that offers a personalized skin care routine tailored to a customer’s specific needs.
The company’s — and industry’s — success in skin care was simply put as “it’s in a success cycle.” P&G, she said, “invested in innovation and consumer understanding. We saw the aging boomer trend come.” With that came the launch of Definity two years ago, building off the success of Total Effects and Regenerist. “Olay was at the forefront of eliminating wrinkles. It was one of many dialogues with consumers.”
The company’s fragrance strategy, she said, “follows a unique business model,” one she would not elaborate on despite Scalamandre’s playful chiding. Simply put, Arnold said the division saw a slew of fragrances hit the market last year (there were about 300 launches in 2007) and, instead of joining in the crowd, the company chose to focus on fewer launches in a bigger way.
An advantage P&G currently has in beauty despite the economic downturn is its presence of masstige items in the mass market of distribution. “[The economy] is a little squishier today. Masstige is a nice place to be because you can deliver more in rough economic times. Beauty and masstige items can become affordable luxuries. If it can delight them in a way they can afford and where they are already shopping anyway, you are positioned for growth.” Arnold named Regenerist Eye Derma-Pod and Cover Girl LashBlast as prime masstige examples, which carry a $23 and $9 price point, respectively.
Operating in a sustainable, eco-minded fashion is close to Arnold, who cited the company’s donation of 250,000 ponytails last year with its Pantene Beautiful Lengths campaign to help make wigs for cancer patients. And, P&G is working with “Cradle to Cradle” authors William McDonough and Michael Braungart, whose book is about the need for ecologically intelligent design, for the construction of an eco-conscious beauty plant in Poland.
In her closing question, Scalamandre asked Arnold what her moment of truth was, a question P&G routinely asks customers of their first impression of a product. Arnold changed it up a bit and explained instead her “true moment of insight,” recalling how soon after her first son was born, her father died. The proximity of such a splendid event to an immeasurable loss taught her that despite having a great career, “people, life’s journey, family and friends are what matter most.
“I was always turned just a little bit tight . [After that], I got better,” she said.