Specialist
Former C-level, Luxury Division, Europe at L'Oréal SA
Agenda
- Luxury beauty unit growth drivers
- Luxury beauty pricing architecture
- L'Oréal's portfolio versus Estée Lauder
- Opportunities to improve luxury gross margin
Questions
1.
What are the key drivers of the recent double-digit growth between Estée and L’Oréal in prestige beauty over the last few years?
2.
How do you view L’Oréal’s positioning in China versus Estée in terms of product portfoli0, experience and maturity in the market?
3.
Do you think that Estée or LVMH’s brands can compete at the same scale in Asia as Lancôme in China?
4.
What’s the difference in channel split between China versus Europe versus US, in terms of travel versus department stores versus own stores or perfumeries?
5.
Do you think Estée has an advantage in D2C because of the data it collects from its own bricks-and-mortar estate?
6.
Estée Lauder has approximately 1,500 free standing stores and 650 company-owned shops. It’s performing well for now, but could this be a material risk over the next five years, given what we’ve seen in bricks-and- mortar and elsewhere, in different industries?
7.
What’s the split in the prestige beauty market in Europe by channel, between travel, online, department stores and own stores?
8.
You mentioned how Estée has more bricks-and-mortar and D2C, and L’Oréal has more wholesale B2B business. How does that define the culture and the structure of the business? We discussed the cost structure, and going back to the competitive advantage ofL’Oréal versus other players, is that B2B versus D2C focus embedded in the business model? How do you assess that?
9.
Can you comment on growth rates by category, where skin appears to be driving the majority of the growth in luxury?
10.
Do you think L’Oréal or Estée are at risk of seeing some of that commoditisation or pricing pressure creep into their premium fragrance brands?
11.
Considering the pricing architecture in luxury, what are the major differences by channel using Europe as an example? Is there a material difference by travel retail versus Sephora and traditional bricks-and-mortar?
12.
What does the pricing architecture for luxury in Europe look like? Is it a standard implementation of pricing power, 2-3% increase in price yearly? How does pricing work in prestige, in Europe?
13.
Does the difference in the cost base between Estée and L’Oréal mean that it will lead to different pricing increases and changes?
14.
We mentioned the various brands within L’Oréal and Estée’s portfolios, whether it’s Lancôme for L’Oréal or La Mer and Tom Ford in skin for Estée Lauder. How do you compare the positioning of the brand portfolios in prestige?
15.
Let’s return to the cost structure, also focusing on that go-to-market and how that not only defines the cost structure, but the business model as well. Prior to the Interview, we touched on the EBIT margins and differences. For L’Oréal luxury, even if you back out a couple of percent for R&D, it’s still 3% higher than Estée Lauder, and that’s down to the SG&A being higher for its freestanding stores, and higher D2C business model.
16.
Is L’Oréal’s organisational structure split regionally by unit or does it just have one HR function by region for all four units, for example?
17.
What do you think the impact of the growth in online has been for prestige beauty? Do you think it has decreased the barriers to entry in luxury?
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