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John Demsey Connects the Digital Dots

The Esteé Lauder Cos. Inc. executive group president spoke at the 21 Club Thursday morning.

Retail isn’t dead — at least not if beauty has anything to do with it.

Speaking at a Fashion Group International breakfast Thursday morning at Manhattan’s 21 Club, Esteé Lauder Cos. Inc. executive group president John Demsey addressed the economic slowdown hurting the malls and brick-and-mortar department stores where many Lauder brands are sold.

“It’s been particularly bad for the apparel business,” said Demsey, in a conversation moderated by his close friend, Ballantine Bantam Dell editor-at-large Alina Cho. “One of the major retailers made a point that [apparel] in its more selective, [high-end] distribution is 50 percent of the size that it was 10 years ago. And the beauty business is much bigger.”

The byproducts of the digital era — influencers, social media, e-commerce platforms — that the industry  blames on the downfall of brick and mortar are actually good for business, according to Demsey. “All of this promiscuity of content and experiences and showing off [with selfies and how-to videos] and talking about everyone is an accelerator in the beauty business.”

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Beauty will always have a place in brick-and-mortar retail because it offers and experience, he argued — and experiences are what consumers want out of brick and mortar right now. “They’re going in-store when they can have experiences and services,” said Demsey. “The companies that are winning are able to establish an omnichannel relationship between what goes on in the cloud and what goes on in the store.”

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Speaking of the cloud, Demsey predicted that technology will continue to be further ingrained in the shopping experience. “Artificial intelligence and learning by the machine, understanding big data and knowing how to translate that into creative solutions and applied marketing techniques — we’re looking at everything,” he said. “Anything [linked] to retail and omnichannel, virtual experience or communication or shoppability is superimportant.”

Switching gears back to simpler times, Demsey recalled his early years working on the  Tom Ford Beauty launch. “We felt there was tremendous aspirational value in an American designer with a movie-star persona,” said Demsey. He noted the brand began in fragrance and grew to include lipstick, but didn’t really hit its stride until Fabrizio Freda, president and chief executive officer of the Estée Lauder Cos. Inc., joined the company in 2009. “He unlocked the barriers to allow us to really add dimension the business — being Italian, knowing Domenico De Sole [chairman of Tom Ford International], the lineup of all those things has proven to be very successful.”