Estee Lauder: Legacy Retailer Reinvention

LEGACY RETAILER REINVENTION VERONICA GERMANO — BRITNEE HOPKINS — MADISON DONALDSON — IRIS LEWIS FASM 410 — RETAIL MANAGEMENT — ALONSO

TABLE OF CONTENTS ABOUT ESTÉE LAUDER

—

3

INTERNAL ANALYSIS

—

6

COMPETITOR ANALYSIS

—

11

RETAILER REINVENTION: STRATEGY 1

—

20

RETAILER REINVENTION: STRATEGY 2

—

30

ABOUT ESTÉE LAUDER

COMPANY HISTORY 1946: Estée and Joseph Lauder launch the company with 4 skin care products based on the simple idea that every woman can be beautiful 1947: First department store order at Saks Fifth Avenue for $800 (approximately $10,000 today) 1952: Word of Mouth Marketing, “Telephone, Telegraph, Tell A Woman.”

Revolutionized how products were introduced using “Gift With Purchase” marketing campaign 1953: Estee create Youth-Dew, a bath oil that doubled as a skin perfume, which became so popular that it propelled the brand to become a multimillion-dollar business 1960: international expansion begins with first account with Harrods in London 1962: firts makeup collection debuted 1968: Clinique is launched, recolutionizing the skincare industry with clean products 1993: the company begins fragrance licensing, starting with Tommy Hilfiger 1994: the company buys a majority stake in MAC, finishing the acquisition in 1998 1995: Estée Lauder goes public on the NYSE at $26 a share 1995: the company acquires Bobbi Brown Cosmetics 1996: launches first ecommerce shops for Clinique and Bobbi Brown 2010: the company acquires Smashbox Cosmetics 2012: the company exceeds $10B in net sales for the first time

ESTÉE LAUDER HERSELF

Inspired by her uncle, chemist John Schotz, Estée focused her entrepreneurial spirit on skincare. Her uncle had taught her the methods of cleansing skin with oils rather than harsh soaps.

They developed one of the recipes, and as Estée recalls it was “a preciously velvety cream, this potion, one that magically made you sweetly scented, made your face feel like spun silk, made any passing imperfections be gone by evening.” This became the the Super-Rich All Purpose Creme. It was the first time she saw “the power to create beauty.” Estée went on to continue being a revolutionary in the industry, overseeingthe creation of Aramis, Clinique, Prescriptives, Lab Series and Origins all while being a mother and maintaining her family.

INTERNAL ANALYSIS

SALES/PROFIT/STOCK TRENDS

5YEAR SUMMARY 2019 — $149.1523 2018 — $139.0983 2017 — 2016 —

$97.3528

$85.6212

2015 —

$79.5640

6MONTH SUMMARY MAR 2019 — $162.74 FEB 2019 — $155.00 JAN 2019 — DEC 2018 —

$135.18

NOV 2018 — OCT 2018 —

$127.54

$126.32

$126.32

EstÊe Lauder’s investment in hero franchises, fast-growing channels, and social media resulted in higher sales in every region and increased global share. Focus on on industry trends in skincare and inclusive beauty helped propel their brands forward.

TREND ANALYSIS

SALES BY CHANNEL

DEPARTMENT STORES — 42% SPECIALTY/MULTI-STORE — 11% ONLINE — 7% Estée Lauder is still significantly dedpendant on department stores for the majority of brand sales. Further diversifying sales channels and focusing on a more independent brick-and-mortar presence and increasing online sales will help increase sales long-term.

TARGET CONSUMER Laura Age: 58 Location: Atlanta, GA VALS: achiever Education: Bachelor’s in Marketing from University of Alabama Career: Laura moved to Atlanta with her boyfriend (now husband) after graduation after they both received job offers from Coke. Currently she is a marketing manager in the Product Innovation division. She hopes to retire within the next 5 years and fully focus on her growing handmade soap business Income: $75,000/year Relationship Status: married to her husband of 35 years Household Income: $305,000/year Hobbies: In her free time she likes to plan family vacations, and she currently has her sights on Peru. She loves to play tennis and go boating with her husband and 24-year-old son. Her and her husband are also very active in their church and community.

Special Skills: makes her own soap

COMPETITOR ANALYSIS

INNOVATIVE PRODUCT

LUXURY

MASS MARKET

TRADITIONAL PRODUCT

COMPETITOR ANALYSIS

BY PRODUCT CATEGORY

TARGET CONSUMER Meryl Age: 55 Location: Redmond, Washington VALS: achiever Education: Bachelor’s in Economics from Syracuse University Career: Worked in financial planning for a tech start-up before meeting her husband on a blind date. They briefly settled in Westchester before her husband gained an employment opportunity in Seattle. Now, Meryl works freelance consulting while also being a stay-athome mom to her 16 -year-old twin daughters Caroline and Elizabeth.

Income: $35,000/year Relationship Status: married to her husband of 20 years Household Income: $285,000/year Hobbies: When she’s not attending PTA meetings and working on client accounts, Meryl enjoys sunrise yoga in the park and tending to her vegetable garden. She also enjoys planning family camping trips on Mount Rainier.

Special Skills: can bake perfect macarons

COMPETITIVE ADVANTAGE Lancôme has maintained its prestige through heritage and celebrity brand ambassadors

TARGET CONSUMER Olivia Age: 28 Location: Brooklyn, NY VALS: Innovator Education: Bachelor’s in Film and Television from NYU Career: Started an independent production company with her college roommate in a warehouse in Buschwick. Together the team works on content for alternative musicians and independent fashion films. Eventually, Olivia hopes to place in the Sundance Film Festival.

Income: $125,000/year Relationship Status: living with her partner of 2.5 years Household Income: $300,000/year Hobbies: Olivia frequently attends hardcore punk and house shows as a way to release stressful energy. She goes with her partner, who is the drummer in an internet-famous band. They also enjoy finding new coffee shops and waiting for streetwear drops together on the weekends.

Special Skills: Is fluent in Italian.

COMPETITIVE ADVANTAGE Beauty line has luxury association and existing consumer loyalty by being under the Chanel brand.

TARGET CONSUMER Nicholle Age: 25 Location: Boston, MA VALS: Experiencer Education: Master’s in Fine Art from Boston University Career: Currently, she is working on her senior thesis show for her mixed media paintings.

Her plans are focused on getting a grant to open her own studio post-graduation.

Income: $75,000/year Relationship Status: single and focusing on herself and her art Hobbies: Nicholle likes to travel to the countryside to hike and sketch field drawings for future painting reference. On the weekends she takes cooking classes and host dinner parties with her friends in her apartment in College Station. Eventually she wants to be able to fully cater all of her future gallery openings.

Special Skills: used to be a competitive rower before fully focusing on painting

COMPETITIVE ADVANTAGE Brand awareness and loyalty built from cult beauty product- Orgasm blush.

TARGET CONSUMER Mariana Age: 32 Location: San Francisco, CA VALS: Innovator Education: MBA from UC Berkeley Career: After working in business development at Google after graduating, Mariana has spent the past 3 years at a tech-start up incubator firm. She loves her position since she is at the forefront of innovation in the industry.

Income: $185,000/year Relationship Status: married to her husband of 3 years Household Income: $435,000/year Hobbies: Mariana loves driving around NoCal and stopping in local antique stores and flea markets in search of rare records for her collection. Her and her husband enjoy traveling the Pacific Northwest and hiking the national parks. The loves of her life are their 3 cats.

Special Skills: has a second degree in Art History and Analysis

COMPETITIVE ADVANTAGE Current beauty trend of hyperfocus on skincare allowed the brand to successfully market luxury product to millennial consumers

TARGET CONSUMER Emma Age: 21 Location: Austin, TX VALS: Experiencer Education: Bachelor’s in Advertising from UT Austin Career: She is currently finishing her senior year with a focus in art direction and has a job lined up at the agency she interned with the previous summer. She and her copywriting partner hope to eventually work as a creative team for top ad agency Wieden+Kennedy.

Income: $35,000/year Relationship Status: exploring the dating landscape Hobbies: Emma loves hanging out with her friends who are part of the DIY scene, mostly streetwear designers and independent musicians. They spend their time creating content, going to each other’s art shows, and attending music festivals. She is working toward being completely vegan by the time she graduates.

Special Skills: has given over 20 stick-and-poke tattoos to her friends

COMPETITIVE ADVANTAGE E-commerce and social media friendly, direct-to-consumer model is extremely successful with millennial consumers

RETAILER REINVENTION: STRATEGY

JO

STRATEGY OVERVIEW EL is going back to its skincare roots to complete the “product family” with a men’s line.

It will initially feature a his & hers approach with the target age of 25-45. The strategy will work first on targeting an existing consumer base (partners of current EL customers) and expanding market share to men who desire quality skincare. The line geared toward the contemporary man with a varied selection of high quality skincare and introductory face makeup. Since the market for male beauty is still up-and-coming, the new line will be a continuous work in progress as the consumer becomes more aware and vocal of his needs.

STRATEGY TIMING

AREAS OF IMPACT

INNOVATIVE PRODUCT

LUXURY

MASS MARKET

AFTER

TRADITIONAL PRODUCT

INNOVATIVE PRODUCT

JO

BEFORE MASS MARKET

LUXURY

mass market

TRADITIONAL PRODUCT

STRATEGY OUTLINE ESTEE LAUDER is going back to its skincare roots to complete the product family with a men’s line. The assortment will feature the latest in skincare advancements in men’s personal care. This extension will allow ESTEE LAUDER to increase its market share by catering to this new segment.

COMPETITIVE ADVANTAGES By entering the men’s beauty market now, EL will be able to position itself at the forefront of men’s beauty. They can help engage in the narrative with the consumer and gain their trust from the line’s inception.

TARGET CONSUMER Miles Age: 32 Location: Brooklyn, NY VALS: Experiencer Education: Bachelor’s in Art History from Syracuse Career: After graduation, Miles worked as a curator in the European museum curcuit before returning back home to work as a collections specialist for the Modern and Contemporary Art department at the Metropolitan Museum of Art Income: $85,000/year Relationship Status: married to his wife of 3 years Hobbies: Miles has always had a passion for design so when he’s not searching for the next breakthrough contemporary artist, he is working on his personal printmaking work. He has been featured in multiple galleries and magazines for his work and hopes to eventually run his own studio full-time. On the weekends he likes to go to the farmer’s market with his wife or go hiking in the mountains.

Special Skills: can grill the perfect steak

CONSIDERATIONS & CHALLENGES

MARKETING The biggest challenge and goal will be to effectivel target and communicate authentically to a relatively new target consumer to the EL brand and the beauty industry as a whole. EL can take advantage of current social trends toward the normalization of male skincare and beauty to show that self-care is for everyone.

For the line EL will need to constantly monitor and evolve this new marketing voice as the needs of the male beauty consumer develops.

MERCHANDISING EL will need to adjust space and signage in their in-store displays to account for the JO line. The new product displays must be visually different enough to be distinguishable from the original EL line, but also inviting to the new male customer. The biggest challenge will be learning how the male beauty consumer prefers to shop in-store and adjusting strategy as new trends emerge.

CORPORATE CULTURE Making sure the EL brand maintains a feeling of family in the brand image and values, remaining consistent across all lines. The company will need to continue to foster an environment where new ideas and fresh perspectives are encouraged.

HUMAN/CAPITAL RESOURCES Increased work training with new hires and current employees assigned to the new focus team for the JO line. The team will work to make sure that new hires can be representative of and provide insight toward the new target market and to continue to propel the EL brand in the direction of innovation.

SYSTEMS Increased focus on online targeting with the creation of a JO microsite and new social media accounts. Market basket analysis geared toward tracking sister purchasing across the JO and ESTEE LAUDER lines.

MOCKUPS

SKINCARE

MAKEUP

SOCIAL MEDIA

WEBSITE

PRINT ADS

e

STRATEGY OVERVIEW After the commercial flop of the Estee Edit, EL will refocus its efforts on a smaller, more targeted line built for the consumer who appreciates innovation and practicality. Updated marketing efforts will incorporate an authentic and separate voice while taking advantage of the existing online beauty community with a shoppable instagram and dedicated mobile app. The fresh, multi-use range will be geared toward the omnichannel consumer with a more developed online launch and updated in-store branding.

STRATEGY TIMING

AREAS OF IMPACT

INNOVATIVE PRODUCT

LUXURY

MASS MARKET

AFTER

TRADITIONAL PRODUCT

INNOVATIVE PRODUCT

e

BEFORE MASS MARKET

LUXURY

mass market

TRADITIONAL PRODUCT

STRATEGY OUTLINE To successfully capture a younger market segment, ESTEE LAUDER will focus the new targeted line mostly to an online consumer. This will include optimizing the omnichannel experience and updating online channels such as a microsite and dedicated app to encourage consumer loyalty and ease of purchase.

COMPETITIVE ADVANTAGES Successfully positioning the EL brand with a younger consumer will help the longevity of the brand itself while gaining market share of an increasingly lucrative segment. The launch will help inform EL as to best ecommerce practices to adjust current systems to be best suited for the online consumer.

TARGET CONSUMER Jackie Age: 26 Location: Nashville, TN VALS: Experiencer Education: Bachelor’s in Communications from Vanderbilt Career: She is currently a customer experience adviser for Warby Parker and loves going to job every day for such an innovative company. Eventually she wants to have her own startup in the user experience field.

Income: $75,000/year Relationship Status: exploring the dating landscape Hobbies: Jackie loves attending local concerts and supporting her friends, a lot of whom are musicians. They all love to go barhopping downtown on the weekends or escaping into the mountains when the stress of work and the city becomes too much. Her beauty philosophy is she feels that makeup should enhance her features and she is willing to pay more for quality.

Special Skills: can do a fresh face of makeup without a mirror

CONSIDERATIONS & CHALLENGES

MARKETING The focus group for the e line will need to create and maintain an authentic voice for their consumer, not the more traditional EL voice trying to relate to millennials.

The team will need to focus on creating content mostly for the online consumer and staying active on social media accounts with original content, including video and motion media.

MERCHANDISING Sales tactics will focus heavily on the online and multibrand retailer consumer.

Product displays in-store will contain a contrasting visual design language from the original EL line so it is easier to differentiate the products and any inherent consumer associations with the EL brand.

CORPORATE CULTURE The EL company attitude will need to become more open toward the younger consumer and recognizing their importance as the future of the brand’s growth.

HUMAN/CAPITAL RESOURCES After the previous commercial flop of the Estee Edit in 2016, the new e line will begin as a smaller capsule with a lesser initial investment that can grow over time as the line develops based on consumer feedback. The focus team assigned to the e line will also incporporate new hires that will introduce an authentic youthful mindset to the group.

SYSTEMS The launch of the associated e microsite, mobile app, and separate social media accounts will require increased focus on the online consumer and omnichannel logistics. Increased work with user experience design to create a framework that is more competitive with current online beauty brands.

MOCKUPS

SKINCARE

SOCIAL MEDIA

WEBSITE

THANK YOU

SOURCES STATISTA - ESTEE LAUDER DOSSIER ANNUAL REPORT MARKETWATCH STATISTA - EL BY CHANNEL