L’Oreal USA Boosts Digital Presence By Partnering With Powa Mobile Technology

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L’Oreal Group’s largest subsidiary, L’Oreal USA, recently announced a partnership with Powa Technologies, a popular mobile platform. The partnership enbles L’Oreal to tag any of its advertising, promotions or in-store products and allow their instant e-commerce purchase. PowTag’s technology can convert any consumer touch point—including print and television advertising, e-commerce, retail stores, and social media—into a platform through which mobile transactions can be completed. PowaTag  provides 2-D barcodes which can be scanned with an application to complete online purchases.

L’Oreal USA’s Chief Marketing Officer, Marie Gulin-Merle, stated that innovation is one of the key reasons for L’Oreal being a forerunner in the global beauty industry and this partnership will further bolster the cause by merging the online and offline channels, facilitating user purchases of the company’s offerings. L’Oreal’s customer engagement and visibility will be further enhanced through PowaTag’s technological framework, as advertisements through smartphones will create a deeper penetration for L’Oreal’s products. [1]

We have a $37 price estimate for L’Oreal, which is almost in line with the current market price.

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See Our Complete Analysis for L’Oreal Here

The “Beauty Boom” In The E-commerce Arena

According to consulting firm Booz & Company, 8% of beauty sales in 2012 was through the online media (generating sales of over $5 billion), while the beauty sales through retail channels averaged around 6%. [2] The New York based research agency, L2 ThinkTank.com found that while global beauty industry grew at 6% in 2013, sales through e-commerce channel witnessed a 29.1% growth during the same period. Internet plays a crucial role in today’s beauty purchases with over 30% of consumers researching online before making a purchase.

L’Oreal is one of the forerunners to make its presence felt in the online community. L’Oreal allocated $1.5 billion towards its U.S. media budget in 2012, and stated that digital as a percentage of sales had witnessed double digit growth since 2010. Three of L’Oreal’s brands (Lancome, Kiehl’s, and L’Oreal Paris) were labelled ‘Genius’ by L2 ThinkTank’s Digital Beauty report in 2013. [3]

L’Oreal’s Digital Focus

In 2014, L’Oreal’s online sales grew 30% on a year-on-year basis and contributed to around 6% of its total revenues. Almost 10% of L’Oreal’s China sales come from digital channels. L’Oreal China is present in online brand boutiques, allowing a seamless online shopping experience. L’Oreal holds the leading position in Chinese cosmetics B2C segment both with L’Oreal Paris (skin care) and Maybelline (make-up).

L’Oreal wants to pursue the China model on a global scale and this was underlined by the appointment of Lubomira Rochet as the Chief Digital Officer, a newly created position in 2014. The company recruited over 700 people in the last four years for the development of its eCommerce reach. The company dedicates 16% of its media to digital formats and it achieved sales amounting to €800 million (~$870 million) in eCommerce in 2014. L’Oreal’s increased focus on the digital media was widely discussed by its management in its recently held Q4 2014 earnings call. [4] The company is on the lookout for partnerships with companies such as Facebook, Google etc to further enhance its digital presence.

Some of the efforts undertaken by the company to enhance its online presence till now, are as follows:

  • L’Oreal utilizes the digital medium to provide personalized skincare advice for problems such as acne, eczema, or sensitive skin. It is one of the leading brands providing such services in France, Russia and Canada. [4]
  • L’Oreal launched Em in August 2013, a prestige color cosmetics brand from YouTube beauty blogger Michelle Phan. Ms. Phan had endorsed Lancome previously. Em is sold solely through the online channel via Emcosmetics.com. [2]
  • In May 2014, L’Oréal Paris launched a mobile application, the first mobile augmented reality make-up simulator, allowing consumers to try and live thousands of looks and products. The application, Makeup Genius witnessed over 6.3 million downloads, so far. [4]

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Notes:
  1. L’Oreal USA Moves to Make All Types of Ads — Online and Off — ‘Shoppable’, AdAge, March 12, 2015 []
  2. L’Oreal Attacks Fast-Growing E-Commerce Space, AdAge, September 10, 2013 [] []
  3. Digital Gives Boost To Beauty Sales, CosmeticsDesign.com, March 5, 2014 []
  4. L’Oreal’s (LRLCY) CEO Jean-Paul Agon on Full Year 2014 Results – Earnings Call Transcript, Seeking Alpha, February 13, 2015 [] [] []