Why Is L’Oréal Increasing Its Focus On Augmented Reality ?
Recently L’Oreal (OTC:LRLCY) announced that it had entered into a new exclusive license agreement with its partner Image Metrics regarding the augmented reality app Makeup Genius. The new agreement allows L’Oréal to exclusively use Image Metrics’ technology to develop new features and add new products and functionality to its Makeup Genius app. Launched in 2014, Makeup Genius converts the smartphone’s camera into a mirror and uses innovative technology to allow users to try L’Oreal’s product virtually, share them on social networks and buy them conveniently. The company claims that the app has almost 20 million users globally. With the new deal, L’Oréal aims to add functionality to the app with advanced augmented reality technology, so as to provide consumers with a personalized beauty e-routine. We believe these initiatives should provide a boost to the company’s e-commerce sales and attract younger shoppers to its products.
Consumers buying cosmetics like to try them out and check how make up products will look on their skin before making a final decision. While stores offer to try on cosmetics before purchase, it is not always convenient for consumers to do so, Nor is this option is feasible for online purchases. To allow consumers to experience multiple products before they can finalize a purchase and do this conveniently, L’Oréal launched the Makeup Genius app in 2014. This app uses facial mapping technology which transforms the mobile phone camera into a virtual mirror where consumers can “try” the company’s products in real time. It also allows consumers to scan a product to detect colour match, test curated looks from its expert make-up artists and share the experience on social media. With its recent deal with Image Metrics, L’Oréal is now looking to get exclusive access to the technology behind the app. This will allow the company to enhance features of the app and make the buying experience more personal. In 2015, L’Oréal’s e-commerce sales were 5% of its total sales and reached nearly $ 1 billion (Read L’Oreal : Year 2015 In review). Digital initiatives should enable L’Oréal to improve its sales in China and U.K., where retail e-commerce sales are projected to be nearly 20% of total retail sales by 2018.
L’Oréal’s digital initiatives should enable the company to attract younger customers to its products and allow the company to tap into the e-commerce trend, especially in China and U.K. where e-commerce forms a significant percentage of total retail sales. The company seems to be well poised to capture this trend, as reflected in its FY 2015 results where it saw strong e-commerce sales. L’Oreal is the leader in digital initiatives in the beauty industry and the first company to launch wearables in this industry (Read With Wearable Technology Is L’Oreal Taking the Beauty Industry To The Next Level). The current partnership with Image Metrics should enable the company to continue its digital initiatives and ride the technology wave in the beauty industry.
- Is There More Room For Growth In L’Oreal Stock?
- After Underperforming The Markets, Can L’Oreal Stock Rally?
- L’Oreal Stock Poised For Bounce Back After Rough Month?
- After Dismal Performance Last Month, L’Oreal Stock Looks Set To Rebound
- L’Oreal Stock Looks Set For A Rally On The Back Of Strong Earnings Growth
- Forecast Of The Day: L’Oreal Makeup Revenues
View Interactive Institutional Research (Powered by Trefis):
Global Large Cap | U.S. Mid & Small Cap | European Large & Mid Cap