The Star Online: Business
The Star Online: Business |
| Posted: 16 Sep 2011 08:29 PM PDT L'Oreal believes in providing affordable innovation for all A Hundred and two years of building a vibrant empire and L'Oreal group is still charging ahead full steam to strenghen its grip. With global sales hitting 20 billion euros, operations in 130 countries and one billion consumers, L'Oreal has set a target to capture a bigger market. "What's really exciting now is our mission to double our customers by another billion by 2020," says L'Oreal Malaysia managing director Andrew Stanleick tells StarBizWeek. It has taken L'Oreal over a century to garner a strong following. No doubt, doubling the figure in 10 years would be a feat. However, Stanleick's aspirations are unfettered. "We really feel that the potential customers will come from markets in Asia, Latin America, Russia and eastern Europe. Asia alone is a reservoir of growth for us," he says. Asia currently represents 15% of the group's total consumers. The group has adopted the "universalisation" concept to achieve its goal. The core idea is to "make beauty available to everyone in the world, wherever you live, whatever your ethnic group, income level or buying power," says Stanleick. "We have something called accessible innovation and this is our secret to how well we reach consumers. It's about removing the financial barrier to be in every market by tailor-making products so that they are affordable for everyone," he elaborates. L'Oreal has 23 international brands under its stable. In Malaysia, it carries 16 brands that cater to various groups of consumers with products selling from a few ringgit to RM600 each. "That's the strength of L'Oreal. We have very accessible brands like Garnier, Mabelline New York and L'Oral Paris but moving up through the income levels, we also have premium brands such as Lancme and Krastase which are catered to consumers who can afford to spend more money on themselves," Stanleick says. Quantitative research Consumer research is a strategy not lost in L'Oreal which spends 3% of its group annual turnover on research and development. Besides quantitative research, it holds focus groups and home visits to better understand consumer needs. "We're not just taking European formulas like many companies did in the past as we have innovation centres in Asia creating products tailored to the specific needs of Asians. There is a lot of ongoing research in Malaysia to create formulas for the skin types and needs of the local consumers. "Malaysia is interesting for the group because we can share formulas with Indonesia, China and also India because of the unique ethnic backgrounds here. The consumer insights we obtain from working in Malaysia showed us the different needs and approaches to beauty. "For example, the Malay approach to beauty is somewhat different from the Chinese or Indian," he says. Stanleick and his team of senior managers make monthly home visits to understand consumers fromall walks of life in the urban and rural areas. "We find out what the different ethnic groups are using, their approach to health and beauty, their spending habits, the products they use or what would they like to have," he says. L'Oreal Paris' Revitalift was created following a home visit more than a year ago. It essentially led to the creation of a single product with whitening and anti-aging properties so that consumers would not need to buy two separate products. Tailoring the products to Asian needs was reflected in the group's advertising campaigns. "A decade ago, corporations used international stars as their spokesmodels but our research tells us that it is no longer enough. Local consumers want reassurance from a local spokesmodel," says Stanleick, adding that local spokesmodels like Maya Karin, Liyana Jasmay and Aaron Aziz are just as successful if not more popular than some of the global spokesmodels. L'Oreal now uses a combination of local and foreign celebrities in its advertisements. Not slowing down L'Oreal Malaysia which enjoys a 15% market share of the local cosmetics industry has seen double-digit growth in the past five years with an annual turnover in excess of RM500mil. Last year, it became the number one cosmetics company in Malaysia. "Malaysia is a key contributor of growth in Asia as its consumption of beauty products is higher. Although losing out to some Asian countries in terms of population, it punches above its weight," he says. The per capita spending on beauty products here is 10.7 euros compared with Thailand's 10.1 euros, China, 4.1 euros and India, 1.4 euros, according to Nielsen Retail Audit. He also points out that the men skin care market in Malaysia has "accelerated despite the economic downturn of 2008". "Interestingly, the men's market has really expanded. From our research, men are starting to use grooming products at a younger age and there is pressure on them to look good at the office," he says. One example is Garnier Men, the men's range of products which was launched in January 2010. With a 22% market share, the brand, according to Nielsen has seen a 157% average growth in the past year and three times the growth rate of the mass male skincare market. In the global arena, L'Oreal has not shown any "sign of aging". Even with recent economic turmoil in its core markets - Europe and the United States - Stanleick believes that the group can still sustain sales. "The cosmetics market is very resilient in times of crisis or recession. We've seen that during the Great Depression, Second World War and in current economic downturn." He points out that while people may not commit to big ticket items like cars or houses, they will still spend on themselves to look good. "Women in particular, still want to put on a brave face' to get through the day. They may not be able to afford the Yves Saint-Laurent dress or Giorgio Armani handbag but they can afford our brand of fragrances," he says. While economic uncertainty will be cause for concern, the past has shown that this industry is recession-proof. That said, L'Oreal responded well to the crisis of 2008. "We had to adjust our business model and I think one of the things that we've done successfully was launching accessible and better value products," he says. Giving back to society Besides enhancing external beauty, L'Oreal gives back to society through four of its philantropic initiatives - L'Oreal for women in science campaign (recognises and supports young female researchers), hairdressers of the world against AIDS (educational training kit for hairdressing instructors), Look good feel better workshops in collaboration with Cancer Society of Malaysia (makeovers for cancer patients) and the Keep in school scheme which supports 100 children affected with AIDS alongside the Malaysian AIDS Foundation. The company encourages staff engagement during weekend charity activities to promote interaction and team-building. "Internal communication is really important," Stanleick says, adding that the company has newsletters, monthly town hall meetings where he takes questions from the staff. "More and more young people are willing to challenge, ask questions about the direction and decisions of the company," he notes. He adds that the need for talents in Malaysia is also a catalyst for corporations to retain those with potential. "The country has suffered an element of brain drain so there is quite a small pool of talent from which so many corporations are fighting to get their workers," he says. L'Oreal has an employee engagement programme called MyConnect Team and an integration programme called FIT to help newcomers integrate into the company with the guidance of a mentor. |
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