Use technology to go beyond predictable products, creating new beauty solutions and reinventing the market. This is not only the everyday challenge of the French cosmetics and wellness manufacturer L’Oréal, but also the recipe for success of this beauty market giant.
Released a week ago, results for the third quarter of 2019 show that the company had 11% growth in sales, raising $ 7.98 billion worldwide – numbers that exceeded market expectations. L’Oréal also surpassed the forecast of 6.3% in revenue growth to 7.8%, according to Reuters. It was the company’s best result for the third quarter in over a decade.
While the Lancôme brand continues to be largely responsible for keeping the company’s earnings up, Asia remains its main market in the world. But that does not mean that L’Oréal is not looking for new opportunities in different regions, such as Latin America.
If before fashion was the category that dominated everyday purchases in e-commerce among Latin Americans, now the game has turned, especially in Brazil. According to the latest Webshoppers report, perfumery and cosmetics is already the category that dominates the volume of online sales in the country, accounting for 16.4% of transactions–a 4.4% growth in 2018 compared to the previous year.
With this, the French brand has already conquered its space among the main beauty brands in the Brazilian market. The challenge now is to make this performance scale, especially in the digital environment and among younger audiences.
LABS interviewed L’Oréal’s e-commerce and consumer relations director in Brazil, Marcio Minuzzi, to understand what are the brand’s next steps in the country and how the beauty giant plans to gain even more space in the Latin American market.
LABS – According to L’Oréal’s latest annual report, e-commerce represents 11% of the company’s global results. Is this e-commerce growth in overall results also part of the strategy in Brazil?
Marcio Minuzzi – Worldwide, first half results were even better. Global beauty e-commerce grew 25%, and our e-commerce (Brazil) 48.5%, reaching 13.2% of the global figure (this data was released in the Half Year 2019 Results report).
But e-commerce is a top priority here, the channel is the most dynamic and we know that multichannel consumers consume more. Besides that, there is no better channel today to receive immediate feedback and constantly improve the customer experience, so we will continue to invest in this path here (in Brazil) as well.
It will be a slightly longer journey (in Latin America than in other regions), as e-commerce’s share of total retail sales in Brazil is still small, according to data from the Brazilian Association of Electronic Commerce (ABComm), something close to 4% and for beauty, even less. But we and other big players are betting a lot to build this channel.
LABS – Since 2018, the beauty products segment has been among the highlights in terms of volume of purchases in the Brazilian e-commerce market. Do you believe 2019 will be as promising for the segment as the previous year?
Marcio Minuzzi – For us it was a very favorable year. We grew well above the market average and, additionally, we also see other players investing in e-commerce. Amazon has expanded the (beauty) category this year along with several others.
Recently, the Brazilian group Boticario acquired a specialized e-commerce called Beleza na Web (Beauty on the Web)–this says a lot about the attractiveness of the e-commerce for the beauty market. Magalu (the Brazilian retailer Magazine Luiza), in its turn, bought Zattini (which is part of Netshoes) and had previously acquired Época Cosméticos. And all this just to mention B2C operations; there is still a large volume of B2B operations to come.
LABS – And what about 2020, is it a promising year too?
Marcio Minuzzi – Apparently yes. As the country regains confidence and the population consumes again, we are one of the first categories to benefit. Black Friday and Cyber Monday [e-commerce promotional dates] will show more clearly what consumption will look like next year.
We are very confident that local consumption will continue to improve. Especially in luxury segments, as people are choosing to shop locally for ease of payment, product experimentation and quick access to launches.
We just launched Idôle, a youthful Lancôme fragrance. This line is having an exceptional result, mainly because many people have shopped locally instead of shopping at free shops during international travel, not only because of the high dollar price but also because of the rush to use the product as soon as it is launched.
LABS – What is the brand growth projection for Brazil in 2020?
Marcio Minuzzi – We do not disclose local numbers, but globally we expect to maintain this growth pace of about 25%, further increasing the share of the company’s total business.
LABS – What are the main trends you could point to the beauty products market in Brazil next year?
Marcio Minuzzi – Personalization and customization. Who doesn’t like something tailored to you, or with your name engraved? We did it for the same perfume Idôle and the consumers loved it.
In the United States, we launched a custom professional coloring brand called Color & Co with which you create your own color with the help of experts.
Experience is also a big trend–we bought a virtual and augmented reality company (Modiface) to improve the website experience, virtual try-ons, smart mirrors, skin diagnostics, etc.
In addition, we also have the phenomenon of the delivery services, such as Rappi, etc. People are running out of time and looking for convenience, and the industry needs to deliver it quickly and cheaply.
LABS – And what is the current relevance of male beauty lines for the brand? What are the next trends in this segment for the Latin American market?
Marcio Minuzzi – The masculine lines are very promising, because they grow very dynamically, although they are still much smaller than the feminine lines. This is why some companies still do not invest heavily in this segment.
However, the categories of hair care, skin cleansing and sun protection are very democratic, and probably the subsegments to be attacked.
Finally, men have assumed their vanity more openly and therefore will be a well targeted target to accelerate market growth.
LABS – With the economy of more developed countries growing at a slower pace, will Latin America play a more prominent role in L’Oréal’s strategies?
Marcio Minuzzi – L’Oréall has a serious commitment to Brazil, despite the economic and political crises in which the country plunges from time to time. We have been in Brazil for 60 years, with local production, commercial operation, and more specifically one of the company’s most high-tech research centers in the world.
We have super demanding consumers with characteristics that reflect the universality of world beauty when it comes to hair, for example. This makes the country an epicenter of innovation and experimentation.
Translated by Fabiane Ziolla Menezes