P&G and L’Oréal: beauty to come back through ecommerce

Date : 18 February 2021

Francis Ramos

Senior Retail Analyst

The pandemic has triggered the decline of the beauty market in 2020, but key suppliers such as Procter & Gamble and L’Oréal are now expecting growth to return, through their online sales.

L’Oréal: ecommerce to aid return to growth of cosmetics

Although the total sales of L’Oréal has dropped for the full year of 2020, APAC is the only region that reported growth during the year.  This is mainly driven by China’s 27% increase in like-for-like sales, and accelerated by ecommerce which has grown by 62% across all divisions.  Its Chairman and CEO, Jean-Paul Agon, commented, “Thanks to its strength in digital and ecommerce, which has again increased considerably during the crisis.  L’Oréal has been able to maintain a close relationship with all its consumers and compensate to a large extent for the closure of points of sale.”  Agon added that L’Oréal is confident to perform better this year.  During the presentation of the company’s results, he mentioned that “this will be like the roaring 20s, there will be a fiesta in makeup and in fragrances just like the 1920s post-war economic boom.”

P&G: SK-II to collaborate with Lazada as it personalises online shopping

Procter & Gamble’s skin care brand SK-II has grown its ecommerce business by 7% last year, with the channel now accounting for a quarter of its total sales.  The brand has expanded its online presence with partners such as Tmall and Rakuten, as well as brick-and-mortar shops that have expanded online such as Sephora, Aeon and Lotte.  To keep the brand engaged with its consumers in the new normal, it has recently announced a partnership with Lazada to enhance online shoppers’ experience.  SK-II is now able to offer virtual skincare consultations through Lazada’s chat function.  SK-II’s Chief Executive Officer, Sandeep Seth, noted, “We know our shopper is spending more time online and has shown higher interest in skin care than ever before.  We aim to create connections in this time of social distancing, turning to e-counselling with our beauty consultant to answer the most-asked skin care questions and providing a personalised shopping experience from the comfort of her home.” 

Lotte: South Korea sees jump in perfume sales

Despite the growth of ecommerce during the lockdown, both L’Oreal and P&G have noted that they do not see it as a replacement for brick-and-mortar health and beauty stores.  Physical outlets also play a key role in helping the beauty business return to growth.  They need to revisit their store performance to identify product categories that appeal more to shoppers nowadays, so they know where to put more focus.  For example, in South Korea, Lotte has seen the growth of perfume sales, despite the suspension of testers in-store. The retailer attributes the sales spike in fragrances to the lower demand for colour cosmetics since people are either staying at home or use face coverings.  Lotte said that “consumers are replacing cosmetics with perfumes as a way of expressing themselves in the pandemic era.”