In tumultuous times it’s easy for companies to be reactive. But beauty’s senior leaders know that the key to survival lies in being proactive, and as 2020 continued to unfold, the industry’s top executives harnessed the sociocultural forces to drive meaningful change in their organizations.
For the WWD Beauty Inc Virtual Summit, we asked five chief executive officers — Mary Dillon of Ulta Beauty; Fabrizio Freda of the Estée Lauder Cos. Inc.; Alex Keith of P&G Beauty; Stéphane Rinderknech of L’Oréal USA, and Masahiko Uotani of Shiseido — to share key elements of how they pivoted this year to better position their organizations for the future. They presented their ideas in short segments called CEO Talks.
While each executive tackled a different topic, from technology to sustainability to agility, a common thread wove throughout: the sheer speed of change this year and the impact of that on every area of the business.
“In the U.S., there are four factors that have historically been responsible for shifting our retail landscape from one phase to the next — infrastructure, culture, economy and media,” said Rinderknech. “Right now we are in an exceptional moment, in which all four are in flux at the same time.
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“The shift that we have been anticipating, which we predicted would take five years,” he continued, “has instead taken five months because of the COVID-19 crisis.”
Rinderknech drilled down on the dramatic acceleration that L’Oréal — and indeed all businesses –– saw in ecommerce. He said L’Oréal is actively working toward a model in which half of its global business is e-commerce, and said in the early stages of the pandemic, web traffic in North America increased by 60 percent.
“This presented us with great opportunity, but also a significant change, as the shift in channels meant quickly changing the way we do business to meet the demand,” said Rinderknech, noting technology like AI chatbots, augmented reality and data analysis are driving “connection, community conversations and conversion.”
Such changes aren’t temporary fluctuations in consumer behavior.
Dillon noted that while the retailer expects brick-and-mortar sales to recover, how consumers shop is forever changed. “COVID-19 has not changed the importance of beauty, but it has changed how guests engage with it,” she said, noting that Ulta became an online-only retailer “virtually overnight.”
She expects ecommerce penetration will continue to increase, but that consumers still want a high-touch, personalized experience. “Our teams operate at the intersection of digital, physical and emotional,” she said. “Guests still want to try new products — discovery and play are critical to beauty.”
For its part, Ulta has been developing technology like the GlamLab, but this is only the beginning. “I firmly believe retail was in the midst of a creative evolution and COVID-19 accelerated that,” said Dillon. “We must be agile to serve our guests and the backbone of that is technology.”
Imbuing his organization with agility is an attribute Freda has been focused on during his decade at Lauder, and he elaborated on how — and why— he’s done that during his remarks.
“A crisis presents a strategic opportunity to implement rapid change. I believe the risk of inaction outweighs the risk of change,” Freda said. The ability to pivot quickly, he continued, rests on “making agility a true organizational priority.”
To that end, Lauder created a Transformation Office to anticipate and act on change. During the pandemic, the group focused on technology and rethinking e-commerce. “We’ve evolved from ecommerce to e-experience,” Freda said, citing as an example how the company pivoted in the travel retail channel. “With global travel curtailed, we quickly flexed our focus on domestic travel, particularly in China, as well as online pre-tailing which allows consumers to purchase before they travel versus shopping in a crowded store.”
At the same time, approaching internal matters with agility was also critical to the company’s success this year, particularly as it acknowledged issues brought to the fore by the social justice movement.
“Our vision has always been to be the most inclusive and diverse beauty company in the world,” said Freda. “But in recognizing that we must do more to make equity a reality at our company, we made a comprehensive set of commitments and have taken several actions to continue to cultivate a community of trust and transparency, which will accelerate our progress.”
For Shiseido, focusing internally on insuring the safety of its workforce was also key to its success this year. “From the start, we took measures to fight the spread of the pandemic. We acted immediately using our knowledge, technology and facilities to protect our employees and everyone they meet,” said Uotani, noting that the company developed a new hand sanitizer formula in three weeks and distributed 200,000 units to medical professionals.
“Now more than ever, we have to consider the true purpose of our company,” he said. “We are committed to taking every action for consumers to realize our mission, beauty innovations for a better world.”
That sense of purpose is more important now than ever. P&G Beauty had commenced work on a sustainability platform before the pandemic, work that was accelerated this year.
As the company dug into developing its approach, Keith and her team quickly came to understand that any solutions would have to impact all aspects of the business. “Anything that our brands do in the area of sustainability must encompass all other values and vice versa,” said Keith, noting that P&G’s approach, called Responsible Beauty, is built on five interconnected pillars: sustainability, quality and performance, safety, transparency, and equality and inclusivity.
The company created an external advisory board to help inform its choices, and has made meaningful progress in the areas of ingredients, manufacturing and packaging. Thus far, the approach has been embraced by P&G’s teams, helping to provide the business with structure for navigating through the year’s challenges.
“Responsible Beauty is our blueprint for navigating today’s challenges and enabling tomorrow’s growth,” said Keith. “We don’t view this as something we do on the side — it’s how we are doing business every day, across our brands.”
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