Few industries have benefited more from the digital era than the beauty industry. In addition to the explosion of online shopping and direct-to-consumer (D2C) brands expanding the cosmetic market across the digital sphere, a new constellation of beauty influencers have significantly changed the way we as culture talk about cosmetics. While beauty advertising throughout the second half of the twentieth century was mainly centered around attracting or maintaining the male gaze, cosmetic brands are now espousing more socially-minded messaging promoting inclusivity, self care and wellness.

This embrace of both digital innovation and a more ”woke,” “beauty as health” messaging strategy has paid off handsomely for the beauty industry as a whole. In fact, according to Statistica, the U.S. beauty and personal care market ballooned to over $93 billion in 2020, an all time high. As a recent New York Times Magazine article on beauty influencer and TikTok star Addison Rae explains, “global [cosmetic and personal care] consumers have close to doubled their spending in the past 15 years, as prices of products have risen and beauty has entered a phase of total pop-culture domination, on par with hip-hop and gaming.”

However, new, up & comers such as Addition Rae and Kylie Jenner aren’t the only ones capitalizing off this new digital landscape. Legacy players such as L-Oreal are not only diving into this new world, they’re dominating it. 

L’Oreal’s Digital Transformation

According to the Harvard Business Review, L’Oreal’s digital transformation began in earnest in 2012 with the launch of its “Connected Beauty Incubator.” Now known as the “L’Oréal’s Technology Incubator,” the center of expertise COE is devoted towards developing new, technology-enabled beauty products and experiences. 

For example, they developed an augmented reality (AR) powered mirror app that allows people to try on makeup virtually using their smartphone. They also developed a new makeup device that uses artificial intelligence (AI) to customize makeup on demand, Perso. Set to be released this year, Perso collects and leverages real-time data to create its formulations. According to the L’Oreal website, the 4 key areas it looks at are:

• Personal skin analysis: The user opens the Perso mobile app and takes a photo with their smartphone camera. Utilizing L'Oréal-owned ModiFace technology, the app uses AI to analyze the user’s overall skin condition—including deep wrinkles, fine lines, the appearance of dark spots, and pore visibility.
• Environmental assessment: Using Breezometer geo-location data, Perso assesses local environmental conditions that can influence the state of the user’s skin, including weather, temperature, pollen, UV index, and humidity.
• Product preference: The user then enters their personal skincare concerns into the Perso app, including fine lines, dark spots, pigmentation, pore size, radiance, and dullness. The user can also input preferred texture and hydration-level to further customize their unique formula of moisturizer, serum, and under-eye cream.
• Custom formulation and dispensing: This collective data informs the creation of a personalized blend of high-performance skincare, dispensed in a perfectly portioned, single dose at the top of the device for easy, clean application. The technology adjusts for morning and evening application, and the device features a detachable mirrored top so consumers have the option of taking a single or larger dose with them on-the-go.

Numbers-Driven Beauty

In 2013, L’Oreal established some key goals for its digital transformation: for ecommerce to reach a fifth of group sales by 2020, and for half of its marketing dollars to be spent online. In order to achieve these goal, L’Oreal started to shift from a legacy consumer package goods manufacturer to a D2C company. 

Key to launching a successful D2C brand is customer data. Using advanced data and analytics techniques, L’Oreal is able to mine its website and social media accounts to better understand and deliver what its customers truly desire from a beauty brand. In addition, using enterprise analytics tools like Talend, L’Oreal can integrate its full catalog of data ranging from scientific, IoT, and marketing data - to power cutting-edge analysis and new product innovation. 

As Philippe Benivay, IS Experimental Data Intelligence at L'Oréal explained in an article promoting the partnership, "In the globalized beauty industry, L'Oréal must innovate ever faster to meet the desires and needs of customers looking for new products and services that respect their bodies and the environment. Our vision is to deliver services to our businesses that they have not yet considered. Talend, in our private cloud environment on Microsoft Azure, helps us transform R&I into a value-added service that can leverage all research data to deliver the best in cosmetic innovation in terms of quality, efficiency, and safety."

The Culture Behind the Transformation

Successful transformation requires more than just IT purchases, it requires a complete reimagining of corporate culture.

In addition to investing in new, digital solutions and hiring 1,000+ software engineers, data scientists and other digital workers, L’Oreal has also spent years cultivating its unique culture. As a recent Financial Times article put it, “L’Oréal is known for having a tough workplace culture. In the company’s internal jargon, managers should cultivate saine inquietude, or ‘healthy disquiet’, among their teams, so as to see who rises to the occasion — and who sinks.”

Similar to other high performance workplaces such as Amazon and Google, this culture may not be for everyone, but, for those who thrive in competitive environments, this culture can inspire loyalty and innovation. 

In Summary……

It’s no accident that L’Oreal is the #1 beauty and personal care brand in the world. Unlike many of their competitors, they saw the writing on the digital wall early and pounced on it, disrupting the disruptors before too much damage was done. 

At over 100 years old, it’s safe to assume that L’Oreal had its fair share of silos and legacy systems they had to contend with back in 2012. However, they did not let the old ways of doing things stand in the way of innovation. Instead, L’Oreal serves as a shining example of how speed and agility in the face of change can lead to incredible success down the line. 

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