L’Oreal’s Q4 performance exceeded all expectations — ending 2020 with an impressive full-year operating margin of 18.6 percent and a growth rate of 4.8 percent across their global brands. All four divisions — Consumer Products Division, L’Oreal Luxe, Active Cosmetics Division, and the Professional Products Division — defied the odds. Even during a global pandemic and millions of consumers facing harsh economic challenges the company not only held its own but grew its market share.
How Did L’Oreal Leadership Achieve These Enviable Goals?
Some might say they kept their focus. The company has always claimed its success is the ability to read its customer-base, developing each line through a Beauty Lens that respects customer preferences and expectations. Company leadership knows that feeling good about the way you look and feel does not stop because something happens. In fact, when major life disruptions such as COVID-19 arrive, it is easy to feel overwhelmed. So, while other retail organizations battled against lockdowns and social distancing guidelines for in-store buying, L’Oreal leveraged regional changes, while enhancing the online experience, making it easier for their home-bound customers to get their products and use them daily.
One case in point is L’Oreal’s sales in the Asia Pacific region. The Asia Pacific region experienced a 16.6 percent (constant basis) growth in 2020 Q4 compared to 2020 Q3 reporting. While, the Consumer Products division saw a 0.4 percent dip in like-for-like terms, the L’Oreal Luxe Division outperformed competitors, gaining 4.4 percent.
As expected, China’s stimulus and return to normal travel policies resulted in a positive gain of 6.2 percent in Q4 2020, up from Q3 gains o 20.8 percent to 27 percent in the final quarter of 2020.
Progress & Focus Continue Through the Storm
Even, as Jean-Paul Agon stepped down as CEO in May 2020, handing off the reins to the company, priorities remain the same, keep the focus on customer needs. Agon credited digital and eCommerce strength for the company’s success. He said L’Oreal’s ability to stay connected to customers and maintain relationships compensated for the point-of-sale closures, resulting in a like-for-like 62 percent gain across all regions and all divisions, resulting in a record level total group sales for the full year.
This long-term strategy — offering a wide array of products and price points that resonate with cultural and regional expectations — remains a unique focal point and differentiates them from their peers. The brand constantly reinvents its product lines, perfectly shaping each to customer preferences. Even during the pandemic, the company remained responsive to changing customer demands. The L’Oreal flotilla offers fragrances, skincare, hair care and color options, hygiene products, and other items that consumers want and need. And, they recognize that those preferences and needs vary greatly between European, Chinese, Brazilian, Indian, American, Japanese, and African consumers.
In early 2020, the brand powerhouse announced a new gadget due out in 2021 called Perso. Perso is lauded as a Bluetooth-connected app that mixes skincare regimens, foundation, and lipstick based on an individual’s preferences and cosmetic needs. The app is promoted as an option to customize color in smaller portions that complement and match skin tone and condition on any given day to create the look you want when you want it without investing in larger-size products to test a new blend of color. It is truly consumer-inspired cosmetic products that are unique to the user.
Leaning Into Sustainability: Focusing on the Future
Even during the harshest challenges, L’Oreal continues to look to the future, weaving sustainability into its vast global network. Former Executive Nicolas Krafft (2014-2019) created a five-point vision that all industries and organizations can embrace to ensure they keep an eye on the future while responding to evolving consumer demands.
Among other initiatives his plan includes tying yearly bonuses to sustainability goals and holding regular stakeholder meetings to make sure that all employees are aware of the barriers to sustainability and the actions required to overcome these challenges.
The current leadership, including the Executive VP, Chief Financial Officer of L’Oreal, keeps stakeholders informed through regular letters that ensure everyone is aware of sustainability efforts and success. In a November 2020 letter, he said, “It is our ambition to ensure that L’Oreal is not only the beauty leader but also a leader in terms of sustainable development . . . Getting results in this area is a source of pride for all Group employees, and a key motivating factor on a day-to-day basis.”
He explained the brand has created a new position, Director of Sustainable Finance, to coordinate financial activities surrounding investment with a lens on carbon costs that informs decisions with an emphasis on achieving 2030 sustainability target goals.
L’Oreal is Creating A Vision: Yesterday, Tomorrow & Today
While staying true to their legacy and leaning into the future are integral parts of the L’Oreal success story, embracing today’s culture is also very important for the brand’s reputation. The decision to provide budget-friendly drug store products as part of their lineup continues to drive sales. Sometimes the impetus driving sales is a pleasant surprise.
Social media platform TikTok demonstrates this perfectly. It has been said that if a product shows up on TikTok, you’ve made it big time. Recently a TikTok user posted a video of herself applying the L’Oreal Paris Infallible Fresh Wear Foundation-in-a-Powder. Her video went viral to the tune of 5.1 viewers, resulting in the product flying off local drug store shelves in unprecedented numbers.
The Future Looks Beautiful for L’Oreal
L’Oreal has a vision to become the perfect choice for every consumer, meeting their needs and helping them make all their beauty dreams come true.
Because L’Oreal understands that consumers are individuals with various needs, budgets, skin types, and preferences, they’ve created a diverse, complementary brand offering someone for everyone, no matter where they live, work, relax or play. As long as they stay true to this mission, we can probably expect the company to evolve and grow across the globe — one consumer, one sale, one connection at a time.