Nicolas Hieronimus recently attended the annual results presentation for the first time as CEO of L’Oréal Group. Nicolas Hieronimus gave six key insights on the current overall situation of the global beauty industry.
On February 9, French beauty giant L’Oréal Group reported its 2021 financial results, with better-than-expected sales performance driven by spending during the holiday season in mainland China and the United States.
On February 10, Nicolas Hieronimus attended the annual results presentation for the first time as CEO of the L’Oréal Group. At the event, he said: “The global beauty market has been transformed by COVID-19. In an increasingly digital market, consumers hope healthier, safer, more transparent, more sustainable and more scientific products.” Nicolas Hieronimus assumes the role of CEO of L’Oréal Group as of May 1, 2021.
Nicolas Hieronimus gave the following six key insights about the current overall global beauty industry landscape.
1. Beauty is a brand-driven market where scale matters
The global beauty market grew by 8% last year, according to L’Oréal Group estimates. “After an 8% decline in 2020, there is a rebound in 2021,” Nicolas Hieronimus said.
He said, “This year has shown us that the desire for beauty is huge and universal, and that beauty is essential to humanity.”
“Beauty is a market driven by innovation, technology, intuition and creativity; beauty is a market driven by brands, where each consumer is individualized and forms an infinitely diverse connection with the brand …. Scale is important in the beauty market: the big brands, the big star products will win.”
2. The beauty market will also continue to be high-end
Nicolas Hieronimus is optimistic about the whole of 2022, despite the fact that inflation may squeeze purchasing power and that tight supply chains will lead to higher prices. We are confident in the continued growth of the beauty market,” he said. In addition to being driven by a larger middle class, the market will continue to premiumize.” “We expect the beauty market to grow by 4% to 5% by 2022.”
3.L’Oréal Group will make a “combination” to cope with cost pressures
Nicolas Hieronimus explained, “Inflation and the increase in commodity costs will be a negative factor in the first half (of 2022), which will be partially offset by our operational teams through value-based analysis negotiations or alternative solutions.”
He said that in addition to product premiumization, the group will mitigate the impact of rising costs through an AI-driven price management strategy that will integrate all aspects of revenue growth management, blended price increases, and promotional formats, most of which have already been agreed upon with retail partners.
4. The key to future growth is beauty technology and sustainability
Nicolas Hieronimus said, “What will really enable L’Oréal to stand up to the challenges of the future is our transformation around beauty technology and sustainability.”
On formulations, for example, he says, “Our artificial intelligence formulation tool can save months of time while we are adapting formulations to meet sustainability goals and changing regulations. Artificial intelligence also helps us collect all the reviews posted online about our products in real time, and we upload the feedback to our research database.”
He added that in consumer-facing projects, “our brands are already exploring new worlds of gaming and metaverse.”
5. 2022 will see a further recovery in travel retail
On the channel, Nicolas Hieronimus said, “Travel retail has experienced a major rebound, but is still well below pre-epidemic levels, and we can bet that travel retail will recover further in 2022.” “E-commerce remains a strong growth driver. The recovery in brick-and-mortar stores has been sporadic with the epidemic situation, but has rebounded overall.” The Group estimates global e-commerce channel growth of 6% in 2021, brick-and-mortar store channel growth of 6% and travel retail growth of 16%, driven in large part by continued growth in Hainan, China.
6.The medium-term outlook for the Chinese market remains very positive
When it comes to the slowdown in China, the executive was optimistic, saying, “The Chinese market slowed in the second half of the year, which was in contrast to a period of high growth (when the world was hit by an epidemic blockade and only China had no new infected areas). But growth in China remains very strong compared to 2019, and the medium-term outlook is very positive. By 2030, 370 million new people will be added to the middle class and they will need beauty products.”
