L’Oreal Reports 62% Digital Growth for 2020

Need to Know 

• L’Oreal revealed its fourth-quarter sales, boasting 62% digital sales growth for all of 2020 and almost $10 billion in total revenue.
• The cosmetics brand credits the boost to the rise of online shopping as well as the easing of some lockdown restrictions.
• L’Oreal now has “two e-billionaire brands,” as L’Oréal Paris and Lancôme each surpassed one billion Euros in e-commerce sales.
• L’Oreal has invested heavily, and quickly, in digital adaptation this past year, catapulting the brand into the future and now operating digital-first.

Analysis

Cosmetics giant L’Oreal is boasting impressive fourth-quarter sales, last week posting higher-than-expected revenue growth, totaling $9.56 billion. 

In 2020, L’Oreal’s online revenue jumped 62%, accounting for over a quarter of total sales. And in China, 60% of total sales were online. 

L’Oreal’s chairman and chief executive Jean-Paul Agon noted that China has been a “reservoir” of growth for the company, where opportunities are wide open.

But the France-based brand, which also owns Maybelline and Lancome, credits the boost in sales to the post-pandemic rise in online shopping, as well as the easing of some lockdown restrictions which has helped hair salons sell more professional products. 

For L’Oreal, the pandemic has “drastically accelerated” the rise of digital trends, such as the “digitalization of salons, e-commerce and the rise of independent stylists,” said Agon, in an earnings call. “We were able to accomplish in just a few months what would have normally taken years.”

Agon explained that the digital teams at L’Oreal were able to quickly adapt, by going full-blast into e-commerce and investing in direct-to-consumer.

“Direct-to-consumer is the most strategic channel of all because we control the full customer experience, the full data,” said Agon. 

E-commerce now accounts for 37% of L’Oreal Luxe sales, and Agon expects that number to grow to 50%. 

“We are now a digital-first company that is making beauty more connected, more social and more conversational than ever,” said Agon. “Our leadership in e-commerce, as you’ve seen, is more powerful than ever. Online sales were an absolute game-changer, increasing by plus 62%, growing 1.5x the market and reaching 27% of our total sales. This impressive surge was seen across all categories, all divisions, and all regions. E-commerce is now the first for L’Oréal and we have, for the first time ever, 2 e-billionaire brands as L’Oréal Paris and Lancôme each surpassed EUR 1 billion in e-commerce sales.”

“The COVID crisis allowed us to leverage our digital leadership. We reallocated resources everywhere to further strengthen our e-commerce firepower,” added Alexis Perakis-Valat, president, consumer products. “Thanks to ModiFace, we rolled out digital services around the world in a few weeks. And our brands strengthened their digital connection with consumers. In the U.S., for example, NYX Professional Makeup was recognized by Gartner as the country’s most digital-savvy brand across all channels and categories.”

Partnerships have been a key to the beauty brands’ digital strategy in the past year. To advance its presence online, L’Oreal has teamed up with tech and e-commerce juggernauts like Google, Pinterest, and Walmart.

What comes next, now that L’Oreal has “volted 10 years into the future” (as deputy CEO Nicolas Hieronimus described it)? 

“Today, digital is embedded at all levels of the company. Tomorrow, we will take digital to the next level, thanks to the power of real-time data and fast-evolving technology,” said Hieronimus. “Data would allow us more personalization in terms of engagement and of product creation. We’ll invest in new services in a world where online and off-line will be seamlessly intertwined.”

Agon predicts we may be in for a new sort of “roaring 20s”, when restrictions are lifted and people will want to get dressed up and go out again. Success in China, where life is returning to normal, has been a preview of what to expect. 

“After years of anxiety, there will be a feeling of freedom, of wanting to party and go out and socialise again, and to wear make-up and perfume.”