What L’Oréal did next…

What L’Oréal did next…

Some time ago I wrote a blog post regarding the leadership prowess beauty giant L’Oréal holds within the digital market. From its seemingly endless ability to stay ahead of the digital game, keep its finger on the social media – and in turn millennial – pulse, and its onslaught of technological developments, there’s no denying it’s #winning as a digital disruptor.

But we felt there was so much more to this French conglomerate that makes it a cosmetics untouchable. The digital arm we’ve looked at, but in my opinion, it’s a triple threat, with its sustainability dedication and M&A activity completing the ever-successful triangle. A key marketing focus of most multinationals, L’Oréal has always been a green soldier, however, CEO Jean Paul Agon’s decision last year to have the Sustainable Development Department report directly to him showcases how the company is determined to lead in this area too. Speaking to Fast Company, Alexandra Palt, L’Oréal’s Chief Sustainability Officer said, “We are really serious about sustainability across all of our products and services.” Continuing, she herself agreed that sustainability sells, going ‘hand in hand with economic success.’ And while it may seem to some as simply a marketing ploy to shout about to the growing army of environmentally conscious consumers, going green goes far deeper than a new initiative or two. Indeed, as put by Fast Company, ‘In the beauty industry, an effective sustainability overhaul would look something like this: sourcing from renewable raw materials like plants; tightening transit routes and switching to electric vehicles to reduce transport-related emissions; converting manufacturing facilities to run on renewable energy; reducing the amount of water wasted in the production process by installing on-site treatment mechanisms; reengineering packaging to use less plastic, or biodegradable materials when possible.’ No, it’s far more than a marketing move.

And the third point in the triangle I hear you ask? There’s really no denying that the global companies which fare the best are not afraid of splashing the cash, with strong M&A activity a comprehensive action plan for any business aiming for financial success. Speaking to Fortune, Agon discussed the company’s plan in terms of acquisitions, and it’s a strong one. “So our model is and has been for 50 years to buy a brand at an early stage that we think can become a global successful player.”
Speaking about the cult brand Kiehls, Agon continued, “Kiehl’s we bought in 2000. The business was $20 million [annually]. It was a store on 13th St. [in New York City] and a few counters at Saks. Then for 17 years we have built the business of Kiehl’s, and now it is a $1 billion business. So the way we grow is exactly this combination of buy and grow. Its not buy or grow. And that’s what we do every year. Once the brands have been acquired, they are brands that we build.”

A simple story about what is no doubt an ongoing and difficult strategy to navigate. Indeed, Agon was philosophical about the risk of the Clarisonic acquisition. While not a normal buy for the beauty brand, he was clear about the company’s need to ‘be there’ when the cosmetic and beauty device market takes off in a few years (a movement he predicts will happen). And it’s this philosophy and ability to predict a trend that sets L’Oréal’s acquisition trail apart, and with its digital and sustainability coups hitting all the right spots, it really is a case of what will L’Oréal do next?’