This year, the Estée Lauder Cos., and its namesake flagship brand, turn 75. While the beauty industry is rife with brands that have been unable to maintain their appeal across generations, Lauder is the rare exception, adeptly evolving to meet the changing times, while also harnessing the power of its history. The year ahead looks to be another pivotal time of change, for Lauder and the industry overall: Distribution channels are increasingly blurring as e-commerce explodes; social media platforms are proliferating, and consumers are looking for much more than a jar filled with promises. Here, Stéphane de la Faverie, global brand president of Lauder and group president of the company, talks about creating cross-generational, cross-geographical appeal for today — and beyond.
What is the role of a heritage brand today? What does it take to maintain relevance with successive generations of consumers?
When I look at the Estée Lauder brand today, it is stronger than ever. Last year, we had double digit growth in fiscal 2020 and we see continued strong growth in the first quarter of this fiscal year. We have gained a lot of share, but what I’m most excited about is we have been able to gain a lot of diverse consumers around the world.
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The legacy of the brand is creativity, innovation, fearlessness, quality in everything we do. Today, these values are reinforced by what the consumer wants — more quality in research, in service, in product, more authentic consumer interactions. When you read Leonard Lauder’s book, that is what Mrs. Estée Lauder gave us 75 years ago. We took this model and accelerated it during the pandemic, taking what we were known for in-store and building it online. As a heritage brand, you can use your strength and legacy and the famous roots of the brand and move them to where the consumer has shifted. This is how we go from strength to strength.
Secondly — we are a brand founded by a woman for a woman — we use that a lot. Mrs. Estée Lauder taught us as about creating connections. In the pandemic, when people were stressed, we were focused on creating deeper connections. Yes, we need to sell products, but the most important thing is to create connections.
The final thing is heritage. We have an incredible legacy in the Lauder family and of keeping the quality, the equity and the consumer at the center of everything we do. People are gravitating now more than ever to products they trust. It is the time of big brands and when they do the right thing — and know how to listen to consumers and connect with them, the sky is the limit and this is what is happening with the Lauder brand.
How are you recruiting younger consumer?
We are committed to being the most relevant brand for everyone, from Gen Z to the ageless consumer, and giving them the right experience and right products and to speak to them in the right language. You need to speak to them in different channels and with the right tone of voice. Geographically, we are much younger in the east than in the west. In China, we are recruiting very young and aspiring to capture the ageless consumer. In North America and Europe, you have the core consumer that has been ageless, but we know with Doublewear and Advanced Night Repair, we are recruiting a younger consumer.
So much has changed in the last year. How did you pivot? What long-term learnings will you take away?
Last year felt much longer than 12 months. We have achieved so much that is just unbelievable — the size of the shift required to respond to the new normal. We had to do it — because inaction outweighed the risk of change. Early on, we changed our communication from a digital standpoint. We pivoted our communication to be about self-care and experience. The shift was quick. We would not have been able to do it 10 years ago. Within a month, we had changed our communications, creating new content. This agility is one of the things that will stay — what we did quickly was try to establish one-to-one communication with the consumer and not top down. It was Estée herself speaking to Mrs. XYZ and us understanding what she wanted. The brand became a confidant, someone you wanted to interact with because she had the right tone of voice. It was all about listening to the consumer. Estée herself gave us that — she was always listening.
What did you hear from her that surprised you?
People wanted to know how to take care of skin. This is where we saw a massive acceleration of skin care. Think about it — all day long, you’re looking at yourself and your peers. There is a self-consciousness — people were more careful about their health and wellbeing. Consumers were talking to us through ratings and reviews, comments on social media. Our beauty advisors moved from in store to virtual selling.
We accelerated virtual try on. We really shifted from e-commerce experience to e-experience. We took experience from point of sale and brought it online. That has been the biggest unlock of being able to connect with the consumer and the most important thing we are going to carry on in the post-COVID-19 moment. This will change forever the way we communicate with consumer. Stores will come back; we will continue to interact with them. But we can now connect with consumers wherever they are whenever they want, because we have beauty advisers online. That gave us ability to connect with a more diverse consumer and broader age. We have done it through Facebook, Instagram, YouTube, TikTok — everywhere. When you are in the store you have the limitation of the people working in the store. We retrained our beauty advisers and developed an entire curriculum about how to interact online versus in store.
The distinctions between mass and prestige are increasingly blurring. Historically, distribution defines a brand — is that still true today when consumers can get anything anywhere?
Brand building and distribution are core to our central strength. We need to think about where the consumer is. Where is she/he going and interacting? What I believe strongly is that the brand, wherever it operates, needs to be focused on delivering high-quality products and services regardless of the channel. That is what the pandemic is reinforcing. We have constantly reevaluated the distribution and evolved it, but we remain strategic and we will always distribute our product where we have control of the equity and the positioning of the brand. That is important — that is why people buy luxury — prestige, equity and service.
Distribution remains important. But more important is the type of service and equity that you build and the positioning of the brand. In the mind of the consumer, this is what differentiates mass and prestige and luxury.
Would you consider going into Ulta at Target?
We are evaluating the new concept and looking at it. We will make decisions around the brand to make sure that the consumer has access to the brands they love, with the experience they want in the channel where they shop.
That doesn’t sound like a no?
We are evaluating it.
What are your thoughts on partnerships between Ulta/Target and Sephora/Kohl’s? Do you envision a time when that is the right choice for Lauder?
We are in the midst of evaluating both. Both Sephora and Ulta are two partners that we work with and have very strong relationships with.
Overall — how do you view the role of retail after the acceleration in e-commerce? What does the post-pandemic experience looks like?
Brick-and-mortar will come back, but not exactly the same. Experience is at the center of everything. I see brick-and-mortar becoming much more of an experience center, fully connected with online. We are social animals. People crave human connection, but they want to do it in a way that will bring them an experience. If it’s no different than online, what’s the purpose?
We think always about how to put consumers at the center and remove pain points to create a richer and more personalized experience — in-store or online. Sometimes it will be powered by better technology and sometimes simply better service. Every consumer is going to get a much richer experience. The retailers that can bring this experience will be the absolute winner.
Are retailers moving quickly enough to change?
Some are moving faster than others and others. Brick-and-mortar will come back, but differently and every retailer has the opportunity to make that connection happen and we have the opportunity to make it happen everywhere in the world.
How has the recovery in China been for the brand? Are you anticipating a similar trajectory here?
China has been absolutely amazing. Lauder has shown a tremendous level of growth — for 11/11, the brand finished number one across the Tmall channel. The recovery in brick-and-mortar is a bit slower, impacted by microeconomic conditions and it looks like a second winter of COVID-19. But we are seeing some optimization of sales in key doors around the country. Some of the big doors in city centers are suffering, but because people are moving around the country, there is a lot more local distribution that is seeing good growth — people are neighborhood shopping versus long-distance shopping. So we are seeing a shift in where the recovery is. We are trying to help identify where the movement is and where the growth is.
How does it feel to be a steward of this brand?
I’m extremely proud. The thing I’m most proud of is our team and the way they came together and supported each other. Thy are spread out everywhere, around the world and country, and the way we’ve been able to connect with the consumer and help with the transformation of the brand and to be more authentic without mortgaging anything makes me extremely proud. I feel extremely confident about the recovery because of that. The Lauder brand is strong and has demonstrated more agility and relevance than ever before. We have reinforced our ability to connect with authenticity around the world.
Do younger consumers know she was a person?
A lot do, but more importantly, when we tell them the story of Estée, this is where we connect. The idea of a female, never giving up on your dream and having such an impact on society — this is more relevant today than ever before.
Over the last 75 years, the core values of the brand have stayed the same, but what’s one of the most difficult changes you’ve had to make?
When we had such strong loyalty with the ageless consumer and we realized it was important to talk to a younger consumer, it was a moment where we had to ask ourselves how to make it happen without losing the appeal to our beloved ageless consumer. Estée said every woman can be beautiful — she didn’t say what age, ethnicity and background. When we realized that, the hardest thing we had to do was go from a traditional model — in terms of distribution and communication — to a new model to give us an ability to tailor the communication for every single consumer by channel. We went from creating two to three assets — print and TV and maybe a banner — to more than 400 pieces per launch. And we have 50 launches. We are creating more assets in one year than we have created in the past decade. That is really adapting to the consumer shift and the ability. It was the hardest thing, but the most rewarding and we have done it in a record amount of time.