“Innovation Flourished” Inside Estée Lauder’s Massive Online Sales Growth

Power Retail By Power Retail | 11 Nov 2020

Estée Lauder has grown its conversion rate ‘tenfold’ with the recent enhancement of its digital offering.

As with millions of brands across the globe, the pandemic has shaken the retailer due to lower foot traffic and store closures. However, these reduced sales were partially offset by the massive surge in online sales.

The company reported net sales of USD $3.56 billion for its first FY, ending September 30. While this is down nine percent YoY, its sales grew 60 percent during the same period, with online sales comprising 35 percent of total sales in the United States.

Stores stayed shut in the majority of Asia Pacific, which resulted in major uplift in online sales, particularly in mainland China and Korea.

Net sales decreased in makeup, with falls in all brand sales except Too Faced cosmetics, which increased slightly. Furthermore, fragrance sales also saw a moderate decrease in net sales. However, there were ‘strong double-digit’ net sales growth in APAC.

The Immersive Experience

The beauty conglomerate, which owns brands such as Clinique, Bobbi Brown and MAC, has begun working with virtual try-on services and is now presenting more than one million sessions globally every quarter.

Each session lasts 30 minutes, The services help drive consumer engagement digitally, to consumers that ‘craving convenience and choice’.

Clinique launched a new technology that connects multiple hosts into a single shippable live stream, and Bobbi Brown introduced pre-booked consultations, as well as live chat and masterclasses in makeup. The live streams converted some of the makeup assets into ‘a network of virtual sellers’.

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“We are pleased with the stronger than expected start to our fiscal year amid this difficult moment as the global community continues to confront COVID-19,” said Fabrizio Freds, the President and CEO of Estée Lauder.

“We delivered significant sequential improvement in net sales growth in every product category driven by progress around the world. Asia/Pacific again excelled with double-digit year-over-year growth in mainland China. Travel retail was a stand-out performer as Chinese tourists were drawn to the growing duty-free shops in Hainan Island and purchase limits increased there.

“Innovation flourished, representing over 30 percent of sales in the quarter, and the online channel thrived in every region. We successfully adjusted our cost structure to minimize the deleveraging effects of lower sales, while continuing to invest for growth, enhancing our capabilities online and supporting our innovation.”

The Future

In August, the company decided to shutter between 10-15 percent of its stores across the globe, as well as begin to exit certain wholesalers from Western markets.

“Looking ahead, our focus, first and foremost, is still the safety and well-being of our employees and consumers. We remain mindful of the ongoing effects of COVID-19 on consumers, the retail sector and economies as well as geopolitical uncertainty,” said Freda.

“We continue to expect our multiple engines of growth strategy to deliver sequentially improving sales growth each quarter in fiscal 2021, which we expect will build upon our estimated global prestige beauty share gains since the pandemic began. We are confident in the long-term growth opportunities for global prestige beauty and for the Company, reflected in our announcement today to raise our quarterly dividend by ten percent.”

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