Though distribution in Kohl's through Sephora, and Target through Ulta Beauty, has just begun and had only a minimal impact on net sales growth for the quarter, the company anticipates increased growth during the holidays and remains pleased by the early results, added Tracey Travis, executive VP chief financial officer.
Like other beauty companies, Estee Lauder is leaning into burgeoning social commerce trends, digging more deeply into its efforts through Instagram, Snapchat, TikTok, WeChat and other platforms.
Meanwhile, a recently deployed tech solution that enables its brands to better customize consumer outreach by leveraging data to merchandise and personalize communication is powering higher conversion rates for new consumers, said Freda, as well as a deeper level of relationship building after the initial purchase to foster retention.
“Initiatives such as this position us well to realize even greater success with trial and repeat,” he noted.
Consumer Behavior Shifts
As the company invests to meet the shifting behavior trends of today’s consumer, it expects that the consumers who were new to e-commerce will remain as they enjoy the experience. With 28% of its business in online, the company is growing in all online channels, including owned and retail.
And though results vary by region, the company expects this to continue even with a full recovery of brick-and-mortar. Estee Lauder’s online business is nearly double the size of the pre-pandemic fiscal Q1 2020. The company sells in around 150 countries and territories.
Freda also remains bullish on the company’s brand discovery capabilities, noting that the exploration of newness in the world of beauty “will never stop.”
“Personally, I don't have any data points that suggest it was dependent on COVID,” he said. “The exploration is not only about new brands, but the exploration is about the newness of the existing brands. In fact, our percentage of newness continues to be very, very high.”
Estee Lauder also released its annual Social Impact and Sustainability Report highlighting its progress and priorities within its social impact and sustainability goals.
The company is taking steps to implement new gender equality commitments, close the gender pay gap and increase representation of women from underrepresented groups. As part of this, it’s established an Equity and Engagement Center of Excellence to further more equitable advancement opportunities in the company.
It’s also set a goal to increase the amount of post-consumer recycling material in its packaging to 25% or more by the end of 2025, as well as reduce the amount of virgin petroleum plastic in packaging to 50% or less by the end of 2030.
Meanwhile, a green chemistry program to enhance visibility in product R&D is being spurred by consumers seeking more visibility in the product development process, while seven more brands in the Estee Lauder portfolio have published ingredient glossaries on their websites.