Photo courtesy of L'Oreal. L'Oréal CDO Lubomira Rochet.
“Virtual makeup” sounds like sci-fi to pre-Millennials. But today everyone from CoverGirl to Rimmel London and Estée Lauder have launched their own augmented reality cosmetic apps.
The world’s biggest global beauty manufacturer L’Oréal—with an annual revenue of over $28 billion—is no different, and its sub-brands Maybelline, Lancôme and Yves Saint Laurent, have all released smartphone tools that let fans “try on” different hair or skincare looks using their smartphone camera.
Last month however, the French beauty group broke new ground, acquiring its first startup, Modiface—a Silicon Valley startup powering hundreds of these digital makeover experiences.
“We acquired Modiface because we absolutely believe that services are the future of beauty,” Lubomira Rochet, L’Oréal’s Chief Digital Officer tells Forbes.
“People are really craving for experiences such as virtual try-on apps, skin diagnostics and live streaming for influencers. Technology will only impact beauty more and more.”
Spotting startup talent
While Modiface was sold for an undisclosed amount, its Chinese equivalent Meitu is worth billions of dollars, and L’Oréal’s announcement at the Viva Technology in Paris detailed how its new asset would help the company improve its existing AR and AI services, as well a new breakthrough one-to-one beauty advice service.
This marks a tide change for the incumbents of the beauty world, showing that big brands are willing to cash out for fast, flexible startups and the talent and fresh ideas they bring.
“We don’t have a monopoly on all the good ideas out there,” says Rochet. “And when it comes to tech, that’s very specific and requires very highly skilled people.”
Nurturing a new generation of beauty-tech talent is key to progress, it appears, with L’Oréal last year backing the beauty track at Station F, Paris—the world's largest startup campus.
Here, Rochet says, L’Oréal isn’t just supporting technology, but building up new brands like The Experimental Perfume Club. “It’s about creating the Nespresso of perfumes, which we think will be a really hot trend,” says the CDO.
Despite this “buzzing” French scene, L’Oréal’s support extends far beyond the company’s home turf.
In 2016, the business announced its ongoing involvement with London-based digital accelerator Founders Factory (launched by serial entrepreneur Brent Hoberman of MADE.com and Lastminute.com), and this brought about partnerships with startups like Tailify (a Norwegian leader in influencer marketing), Cosmose (a Polish digital ad service), Alegra (the Turkey-based content and eCommerce platform) and Veleza (a Lithuania-built beauty community).
Even before Rochet took up her post in 2014, the company had set up camp with the Silicon Valley elite, launching its own incubator in San Francisco in 2012. This is where it’s developed its industry-leading personalized foundation kit Le Teint Particulier (today being tested at London’s Harrods), it’s stick-on UV sensor, and CUSTOM D.O.E.S, its personalized skin care service.
“Digital knows no borders,” says Rochet of L’Oréal’s global approach.
“We want to spot the right technologies for our brands first, and then scale them—not just across one or two projects here and there, but embedded across our website, our stores, and beyond.”
Adapt or die
Rochet says the biggest challenge for big global businesses is simply keeping up. “It’s about being able to seize change as its happening: if you have that you can survive and thrive, if you don’t, it’s pretty complicated,” she explains.
It’s this never-ending creative challenge that Rochet will be discussing at Cannes Innovation Festival this month with YouTube CEO Susan Wojcicki.
“We know video has to be at the center of everything we do because that’s the format everyone’s chasing,” notes Rochet. “Our marketers have had to evolve from 30-second TV commercial to embracing totally new services, shorter formats, Instagram stories as well as content and influencer marketing.”
To make a difficult job more complex, every digital strategy has be adapted to the world’s wide and varied markets, not just goliaths like the U.S. or China, Rochet adds.
“We see fantastic emerging markets like fast-grower India (which grew by more than 70% each year), and there are markets like Brazil, Indonesia and the Middle East where people have leapfrogged the website to go straight to Facebook and Instagram and local alternatives,” she explains.
“Your digital strategy has to work with your local reality, which is what makes my job so exciting.”
The business appears to be striking the right chord though: Just this year L’Oréal’s videos have been viewed 1.4 billion times, with 250 million followers across its social networks.
Rochet also credits digital innovation with L’Oréal’s e-commerce boon: It’s now passed the 2 billion euro mark, with online sales representing 8% of the Group’s revenues.
And its consistent 30% growth rates (over the last 5 years) have been propped up by growing numbers of digital savvy staff: L’Oréal has recruited not only 2,000 digital employees to improve its tech, but 15,500 members of existing L’Oréal have been trained through the company’s Digital Upskilling program.
“Digital is at the center of everything we do at L’Oréal. It’s not something which is “nice to have” but something that is going to profoundly change the way we do business.”
Modiface might have been L’Oréal’s first tech acquisition, but it’s doubtful it will be its last.