By  on June 25, 2010

Joe Campinell, president of L’Oréal USA’s estimated $3 billion Consumer Products Division, recently sat down with WWD to discuss the $11 billion-plus mass beauty market, most notably the company’s L’Oréal Paris and Maybelline-Garnier brands. Campinell, who has been with the firm for 24 years, said while the beauty industry has been challenged by the economy, L’Oréal’s recent tactics, such as its new corporate promotional strategy eliminating buy-one-get-one-free, or BOGO, deals, has helped it realize sales gains in cosmetics for the first half despite many retailers’ concerns to the contrary. Repeating history and doing what has worked in the past appears as a theme in Campinell’s management strategy. “As a larger firm that can afford to, we advertise during a recession because when we get to the other side of it, if we have built our share, we will be in so much better shape. This is something we have been doing my entire career here.” The executive, who admitted to having a Facebook page, “but I don’t know how to hide things,” and who does not tweet, also talked about putting more of L’Oréal’s resources behind pure media, the challenges facing Garnier and future growth plans for nail, currently beauty’s most explosive category.


WWD: What market shifts have you seen this year versus last year?
Joe Campinell:
There is kind of a mixed consumer mentality now. One is that things aren’t that great yet. Unemployment is still high. Mortgages, foreclosures, house prices are challenged. There is always a nervousness about keeping your job. On the other hand, maybe because it’s warm out now, she’s thinking that she has all the phones she’s ever going to need so maybe she’ll pick up a lipstick. There’s a general attitude that feeling good about yourself is OK. There’s nothing like beauty products to make her feel a little better. One of the big shifts we are seeing, at least in our brands, is a huge growth in cosmetics. Our cosmetics business on L’Oréal and Maybelline is phenomenal. (Industry sources estimate cosmetics sales at L’Oréal are up in the high-single digits.) The second thing is that hair color is becoming a little more of a cosmetic — it’s more than just coloring gray. So, despite some of the discounting that’s going on in hair color by our competition, you are starting to see more of an interest in hair color that has more life to it. That’s what happened with us with Féria. It showed a real resurgence because it’s more of a fashion brand, and we started to see that toward the end of last year. In hair care, well, it’s straightforward. You have to give them something that is good in performance, but also has good cosmetics aspects, whether it is the lather, the fragrance, the feeling that, in the end, their hair feels better. The challenge is skin care and I think it is really just a recognition by women of the necessity of taking better care of their skin. When we compare ourselves to Europe, we have been catching up for X number of years to the involvement that European women have in skin care. There are some good signs coming out of the salon and department store world, too. That’s probably the real proof that things are changing. The mass market can grow because people trade into it. When you start to see better performance out of the salon world and the department store world, it’s even better news. I think we will see a continued improvement in the economy. It won’t be as fast as has been in the past.

WWD: Have you adjusted your ad or promotional spending at all?
J.C.:
We increased substantially our advertising in the second half of 2009. We played it a little more cautiously in the first half because I knew the economy was going to be tough. We needed to husband our resources and manage costs. And in the second half, we increased spending and had an incredible second half. Advertising for 2009 in the U.S. for the Consumer Products Division was plus-14 percent, and for the back half, it was plus-31 percent. We had the right innovation and the right products and we had to drive our share, which we did. Now it’s 2010 and it’s the same strategy. In the first half, it was increasing our business drivers behind the brand in CPD and we’ll continue to do that throughout the rest of the year. Of course, we are up against very heavy spending in the back half of 2009, so you won’t get the 30 percent increase, but there will be an increase for the back half and an increase for the year. But, we are reducing our promotional expense and putting more of our funds into pure media, whether it is TV or print or radio or digital. So a lot more money is being spent on going to the consumer and saying, “We have innovation — you should look at what’s there, see it and buy it.”

WWD: Some retailers said L’Oréal’s new corporate promotional strategy, which is to stop BOGOs, for example, may put your share at risk.
J.C.:
Let me put it this way: There were many skeptics about the decision to adjust our promotional spending and to eliminate some of the very healthy promotional tactics that we use. And I understand that. But we have done this before. I did it way back with the hair color war days. We called them sizzle events. But we do other things. The area where we have been most disciplined and rigorous in cutting out the giveaways has been in cosmetics and the business that [was] the most successful the first half of this year is cosmetics.

WWD: Some retailers have mentioned that L’Oréal’s just-in-time shipping method is leading to out-of-stocks. Can you address this?
J.C.:
No, it hasn’t affected us. I think what affects retailers is many of them are adjusting to the upward [sales trend] of the categories. You’re trying to manage your costs, your inventory, your categories, and not produce as much inventory so that when business is good, you have to scramble to recover. The retailers are trying not to hold as much inventory, the manufacturers are trying not to hold as much inventory, so when something sells, you can’t stock it fast enough. That hasn’t affected us. Yes, we have had issues with products selling well, like Lasting Drama, that we couldn’t keep in stock, but no more us than others. And we have a better performance this year than we have had in past years.




WWD: What has been the impact, if any, on CPD’s brands as retailers continue to shine the spotlight on their new merchandising concepts, such as Duane Reade’s Look Boutique and CVS’ Beauty 360?
J.C.:
Something like Beauty 360 is a separate entrance. It’s a separate idea. It’s carrying different products. And clearly, anyone who goes into a store where there’s upscale products could buy the upscale product, which costs more than the typical mass market product. So in theory, it could hurt us. There are 309 million Americans and somehow the idea that upscale offerings are taking consumers away, well, it’s having very little impact on our business. We have dealt with Bath & Body Works and Victoria’s Secret selling lip glosses, and Avon trying to get more mass and, frankly, it’s just part of the total equation. It could represent a longer-term strategy where consumers find mass market products that are equal in performance or aesthetics to more expensive products they’d find at specialty stores. There’s an awful lot in the luxury world that is about service and explanation and education that, frankly, will not be replaced because something is $40 instead of $20 in the mass market. That’s a huge impact on the differences of buying one versus the other. It’s part of the equation of how people decide what to buy or not to buy. I don’t think it’s going to have a big impact. I like the idea that we might in the future see more “service” in the mass market, and I like that because we have a brand in L’Oréal Paris, which is going to continue to be elevated up, so some amount of education would always be of value. Some retailers will look at some level of service for the future. But we are talking three, five or 10 years out.

WWD: There appears to be the most opportunity in hair color and nail for L’Oréal and Maybelline. What can you share about any future plans in these two categories?
J.C.:
Hair care continues to be an important strategy for CPD. It’s a long-term strategy and it’s a very challenging category, but one in which we have competed in and will continue to. It’s just the beginning for EverPure and EverStrong and we will talk soon about new items in the Ever franchise. Nail is a big business. We have been in and around it. But only one has done it that is succeeding. We have some very serious plans in both L’Oréal and Maybelline for nail enamel over the next few years. We happened to just pick up a little gem called Essie. And not being a user myself, I was not quite aware of how important it was to the women of America. It’s unbelievable. I’ve learned so much. And so we have presented to our retailing community and have talked about our plans and we are working on how we might take it to the mass market — by the way, it is not decided how we will do it, and legally we have not acquired it yet, so these plans are forward looking. We have a great professional business [team], who I think will double or triple the business because we have the professional division that is going to manage that. The professional part is the equity, the endorsement, of what eventually we will find the right way to take it to retail.

WWD: What is making L’Oréal Paris stand out from the crowd these days?
J.C.:
Well, I had been thinking about that, and in regard to skin care, the first thing I wrote down was Go 360 Clean. But there’s also RevitaLift Double Lifting, HydraNutrition, which targets 55-plus, the Men’s Eye Roller. The True Match Roller: That’s sort of typical of an innovation that’s much more expensive than the typical foundation. Much better application. Very special. It takes a little bit of talent to figure out how to…use it. Skin care was repacked because I would probably interpret the pack was too cluttered. We wanted to have more visibility at shelf. We don’t need to put everybody’s copy on the front of the package, which is what [we tend] to do as a company.

WWD: What challenges does David Greenberg face at Maybelline-Garnier?
J.C.:
He has a different point of view about things and what’s important. He’s very different from Karen, who was there from the beginning. That was her baby and she helped create that world of Maybelline and she was there for almost the creation of Garnier. She was in the boom years when the thing was flying. So David comes in and it’s this huge business. [Sources said Maybelline-Garnier is north of $1 billion in sales.] He is a very skilled and very motivating leader. But he has his issues: How to grow the Garnier business and take it to the next level? It’s already in skin care and hair color and there is Fructis in hair care. The growth of the brand has been nothing short of phenomenal. We presented this chart at the NACDS Annual that shows its growth since the launch. [Sources said Garnier’s market share is 10 percent year-to-date.] But, if you take each category, like hair color, there is a very successful brand in Nutrisse. But to continue to succeed, you need to build alternatives for people who don’t want a very straight, permanent hair color. So we launched this year Herbashine, which is on the lighter side and more of a tone-on-tone than a permanent hair color. Fructis is a big success. It’s the biggest, most successful hair care launch of the last 10 years. But in this economy, people start discounting and giving something away, so you are in a fight for share. So we have done some things that are pretty important, like launch Triple Nutrition and Color Shield. But the category is a bit in turmoil. The big guys in Cincinnati are relaunching again. And there’s Dove trying to do something. So while Fructis has a good share and a huge business, we want it to be a 10 or 12 share. We have plans over the next three to four years. Garnier skin care is very successful in Europe, but it’s a big challenge in the U.S. You’re up against the big guys, including one of them in this building. Nutritioniste has done quite well, but again, to take it up to six share is taking some time. Some of the things, frankly, haven’t worked all that well. That’s kind of the givings and the gettings of skin care.

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