{"id":17380,"date":"2016-11-18T02:52:38","date_gmt":"2016-11-18T07:52:38","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/loreal-transforming-beauty-with-technology\/"},"modified":"2016-11-18T02:53:31","modified_gmt":"2016-11-18T07:53:31","slug":"loreal-transforming-beauty-with-technology","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/loreal-transforming-beauty-with-technology\/","title":{"rendered":"L\u2019Oreal: Transforming beauty with technology"},"content":{"rendered":"

From bricks to clicks<\/strong><\/p>\n

The L\u2019Or\u00e9al Group is the world\u2019s largest cosmetics and beauty company. Since 1925, the group built a strong portfolio of brands and positioned them through traditional magazine covers and TV ads, pushing consumers to walk in retail stores, try and buy their products.<\/p>\n

Since then, L\u2019Oreal has become arguably the most digitally innovative beauty company in the world. Armed with the mission to integrate digital into the heart of its business model to reinforce its edge in the beauty market, L\u2019Oreal has undergone a major transformation over the past few years. [1]<\/p>\n

 <\/p>\n

Beauty and digital media: a perfect match<\/strong>\u00a0<\/strong><\/p>\n

In 2012, foreseeing their future challenges, the company launched its \u201cConnected Beauty Incubator\u201d based in the US, a division within the company’s research division dedicated entirely to technological innovation and industry disruption.<\/p>\n

L\u2019Oreal carefully studied their consumers and learned early on that that their target market was constantly connected, underwent a research process including many touchpoints, and was turning to video content to search for beauty solutions and see products come to life. [3]<\/p>\n

It is hard to change the nature of beauty products, but reaching and engaging consumers became a great opportunity for innovation. In 2015, digital rose to over 25% of media spending, while e-commerce sales worldwide grew 37.8%, becoming 5% of sales worldwide and as high as 20% in markets like China. [4]<\/p>\n

 <\/p>\n

How is L\u2019Oreal transforming beauty?<\/strong><\/p>\n

Structure<\/u><\/p>\n

As most consumer packaged goods companies, marketing, sales and product development divisions had been largely distinct silos within the company. The first step towards integrating digital in the business model was redesigning the organization to align objectives. Also, approximately 1,000 employees with digital capabilities were recruited in the past 4 years.<\/p>\n

Perhaps the major step towards their commitment to digital was appointing their first Chief Digital Officer in 2014 as a member of the company\u2019s executive committee. This role aimed to lead digital strategy and innovation across divisions and brands, ranging from content marketing, personalization and data, and e-commerce. [1]<\/p>\n

E-Commerce<\/u><\/p>\n

\u00a0<\/u>L\u2019Oreal is rolling out e-commerce for their brands with different strategies depending on the target market. In countries where digital is more developed, they team up with local e-commerce leaders, for example with Alibaba and Tmall in China. In other markets, e-commerce is being developed using distributor partners and brand sites. [5]<\/p>\n

Data and product development<\/u><\/p>\n

As they expand their digital capabilities, L\u2019Oreal has created robust mechanisms to extract and analyze consumer data. What content do consumers search and watch? What are they more interested in? What interactions trigger other actions and\/or sales? In 2014 for example, the company analyzed Google search trends and discovered that in the middle of the \u201combre\u201d hair color trend (where women colored their hair lighter from the mid-shaft to ends), consumers were trying to find ways to do this at home with hair color products, and lacked an application tool. L\u2019Oreal was quick to respond and take this new technique to consumer\u2019s homes, launching a L\u2019Oreal Paris \u201cOmbre Kit\u201d which was a great success. 50% of purchases came from consumers new to the hair color category! [6]<\/p>\n

Enhancing the purchasing experience<\/u><\/p>\n

In 2014, an outcome of L\u2019Oreal\u2019s \u201cConnected Beauty Incubator\u201d was a beauty app called Makeup Genius. The app transforms the front facing camera of iPhones and iPads into a virtual mirror where users can virtually try on different beauty products. This development implied using very complex technology to map facial expressions and be able to overlay products like lipstick or eyeliner onto user\u2019s faces, and was very disruptive in the industry! It became a great success with over 11 million downloads worldwide.<\/p>\n

In addition, the app allows consumers to scan products in-store, see the details in the app, experience how they would look on themselves, and finally complete the purchase through the app at any time, avoiding lines in congested stores and improving the overall shopping experience.<\/p>\n

—<\/p>\n

Overall, we can say that L\u2019Oreal has been very successful adopting digital as a core element of its business model, mainly by transforming their organizational structure, renovating their product development process and enhancing interactions with customers through e-commerce and in-store experience. Furthermore, it is constantly recognized as a leader and disruptive innovator in the industry. It is expected that in the future much of L\u2019Oreal\u2019s growth will rely on digital initiatives, and they are certainly already working in their many next big ideas!<\/p>\n

 <\/p>\n

(Word count: 738)<\/p>\n

 <\/p>\n

[1] Telegraph UK, How Technology is transforming beauty http:\/\/www.telegraph.co.uk\/technology\/news\/11744292\/LOreal-How-technology-is-transforming-beauty.html<\/a><\/p>\n

[2] GCI Magazine, \u201cL’Or\u00e9al Ups Commitment to Digital with New Chief Digital Officer\u201d<\/p>\n

http:\/\/www.gcimagazine.com\/business\/marketers\/announcements\/LOreacuteal-Ups-Commitment-to-Digital-with-New-Chief-Digital-Officer-250987131.html<\/a><\/p>\n

[3] Think with Google, \u201cFive truths about beauty shoppers\u201d https:\/\/ssl.gstatic.com\/think\/docs\/five-truths-beauty-shoppers_infographics.pdf<\/a><\/p>\n

[4] Key Figures, Digital \u2013 L\u2019Oreal 2015 Annual Report https:\/\/ssl.gstatic.com\/think\/docs\/five-truths-beauty-shoppers_infographics.pdf<\/a><\/p>\n

[5] L\u2019Oreal Website, \u201cThe potential of e-commerce\u201d http:\/\/www.loreal-finance.com\/en\/annual-report-2015\/e-commerce#article-digital-tooltip-1<\/a><\/p>\n

[6] Think with Google, \u201cL\u2019Oreal Paris uses search to build brand love\u201d https:\/\/www.thinkwithgoogle.com\/case-studies\/loreal-paris-builds-brand-love-with-search.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

L'Oreal integrates digital into the heart of its business model to reinforce its edge in the beauty market.<\/p>\n","protected":false},"author":2160,"featured_media":17383,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-17380","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"\nL\u2019Oreal: Transforming beauty with technology - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/loreal-transforming-beauty-with-technology\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"L\u2019Oreal: Transforming beauty with technology - 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