A good sunscreen is not going to make a 22-year-old's Instagram or Snapchat selfie look any better, and for that reason (and a few others), Estée Lauder's makeup sales have continued to outpace those of skin care products during the three months ending on March 31, 2016. Excluding currency fluctuations, makeup sales grew 11 percent while skin care sales were flat. Total revenue for the company, which owns Clinique, MAC, Smashbox and Bobbi Brown among other brands, increased by 6 percent.
And all of those brands saw growth in makeup, specifically. It's not a new phenomenon or one that's unique to Estée Lauder brands — L'Oreal saw a similar trend in its first quarter report this year — but in a phone interview on Tuesday, Estée CEO Fabrizio Freda went deeper into the social media trends that have have caused it, and how the company can tap into them.
For one, it's thanks to social media and online video that consumers are growing more and more educated about the increasingly wide breadth of products available to them and about how to use those products. Second is "selfie culture," as Freda described it. "If you take a photo 10 times today... the result is people are using more makeup and more instant skin care," meaning products that will improve the appearance of your skin immediately, not over time.
So if the millennials Estée Lauder so desperately wants to reach are finding out about products through social media, how does Estée Lauder tap into that as a beauty company? In addition to the obvious — ramping up its brand websites and social media efforts — it's also seen success with MAC's global artists posting their own educational videos, since they are "creative people," not just brands posting promotional stuff.
Another thing that helps: having Kendall Jenner as a brand ambassador and using her own social channels to promote things like Estée Edit, the now-one-month-old, millennial-focused cosmetics line that she helped create, and, say, thanking Estée Lauder for her Met Gala beauty look. While it's too early to see the full impact of Estée Edit on sales, Freda said he's seen "very encouraging results," thanks largely to "Kendall and her enormous following."
Another upcoming collaborator with a sizable following is Victoria Beckham: Estée Lauder has partnered with her on a makeup line due out this fall. For a designer whose look is generally clean and simple, we had trouble picturing what a makeup collection with her would look like, or why one would make sense at all. "There is obviously the positive effect of [her relevance in the fashion industry]; there is the element of the social media input, the in-store activations and in store excitement [when the products launch]," explained Freda of the collaboration. "It's one of the ways to activate interest for the brand." He used MAC as an example, which has a proven track record when it comes to collaborations. "MAC does more than one [collaboration] per week with people. It's a very well validated methodology."
It sounds like we can expect a lot of newness from the company in the near future. Freda announced a new multiyear initiative called "Leading Beauty Forward" that is meant to allow the company to be more nimble and responsive, and to anticipate beauty trends. This was likely stressful news for some investors and employees, as it means the elimination of 900 to 1,200 positions globally (about 2.5 percent of the company's workforce) and costs of up to $700 million. But for us consumers, Freda says it will mean "better innovation, more communication in social media, better creative assets, more retail stores, services and experiences."