Menu Close

L’Oreal Sees Strong Growth in Q4

Nicolas Krafft L'Oreal

Cosmetic company L’Oreal saw sales growth towards the end of 2020 in part due to the brand’s e-commerce strategy, innovative product lines, and engagement on video social media channels like Tik Tok.

As e-commerce grew in importance during the COVID-19 pandemic, brands that engage influencers and consumers on social media benefited. People turn to platforms like Tik Tok to learn helpful tips and see product demonstrations. L’Oreal attracted the attention of beauty and style influencers, most notably their L’Oreal Paris Infallible Fresh Wear Foundation-in-a-Powder.

This powder foundation product went viral on Tik Tok after cosmetic influencer @rocio.roses posted a video of herself comparing the drugstore cosmetic with a more expensive brand. Over 5.1 million Tik Tok viewers watched the video and 71.6K shared the video. Not only did the video perform well, but product sales also increased, according to the “New York Post.”

Reuters reported that L’Oreal posted a 5 percent drop in overall annual net profit during 2020. However, during the fourth quarter of 2020 L’Oréal’s sales accelerated. The Asian Pacific market is one area where L’Oréal saw a growth in sales, the sales grew 16.6 percent or 14 points in the fourth quarter compared to the third quarter.

Reuters indicated some factors hindering upscale, high-end product sales include closures of luxury department stores and airport duty-free shops. As one of the world’s largest cosmetic companies, L’Oreal experienced this pinch.

Towards the end of 2020, restrictions on salons, spas, and retail relaxed in many parts of the world resulting in an uptick in sales for the industry. However, L’Oreal outperformed the industry during the fourth quarter. A surge in online sales further helped L’Oreal in part fueled by the brand’s online presence and attention from influencers. The company maintains a diversified mix of high-end brands and more affordable brands and products like the L’Oreal Paris Infallible Fresh Wear Foundation-in-a-Powder that recently went viral on social media.

Jeffies analyst Stephanie Wissink credits L’Oreal’s success to a combination of factors like key shopping events, improved retail spending, strong e-commerce strategy, and how L’Oréal is building on its already-strong reputation as one of the largest personal care companies. While cosmetics are not usually seen as leaders in technology, the brand has leveraged technological innovation in adapting to the changing market.

CNBC reported that although the cosmetic industry saw an overall decline in 2020, some companies including L’Oréal made innovative use of “virtual try-on” systems that enabled consumers to visualize how a product may look on them. As fewer consumers are able to shop in person or feel safe using in-store product samples, virtual try ons remove a safety barrier and also leads to a more dynamic online retail experience.

Another component to L’Oréal’s resilience is the attention paid to consumer needs and sentiment. They announced the launch of a small business grant program to support Black-owned brands. The “The Inclusive Beauty Fund” is in partnership with the NAACP and provides grants worth $10,000 for beauty sector services and brands and services owned by people of color.

Promoting diversity and embracing technology are not the only areas where L’Oréal continues to innovate. While traditionally seen as a cosmetics and personal care product company, L’Oréal is also entering the beauty technology and sustainable solutions market.

One example is their new water-saving hair care system for beauty salons and spas. Gizmondo reports that each station in a popular hair salon typically uses 270 gallons of water each day. L’Oréal is collaborating with Swiss sustainable tech start-up Gjosa to help make the industry more sustainable by improving efficiency in water use. L’Oréal claims their system makes salon hair washing more efficient resulting in using 80 percent less water. In a press release, L’Oreal claimed if a few thousand salons used their system that could result in a savings of one billion gallons of water annually.

Sustainability has been part of L’Oreal’s business model for years. Former L’Oreal executive Nicolas Krafft advocated the importance of key stakeholders promoting sustainability initiatives in all aspects of the business. Sometimes a company may set goals for sustainability that are not directly connected with profit incentives and key performance metrics. Krafft recommends that sustainability milestones are prioritized among other key performance indicators.

Under Krafft’s leadership, the cosmetic company sought objective certification, support, an outside perspective, and approval from nongovernmental bodies like Green Circle Salons. This helps guide L’Oreal in developing best practices and building on their existing consumer trust.

Krafft is a veteran of the cosmetics industry with over a decade of experience with some of the industry’s biggest brands. He worked on growing markets, launching new product lines, and expanding into new international markets for brands like Matrix, Kérastase, and Biolage. He most recently served as International General Manager for the Pulp Riot brand.

Theme by iFunny Video Downloader