Here’s How L’Oreal Is Gearing Up Its Collaborations With Tech Startups In Paris

by Trefis Team
-10.29%
Downside
48.39
Market
43.41
Trefis
LRLCY
L'Oreal
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By now, we are aware of how L’Oreal (OTCMKTS: LRLCY) is not only the biggest beauty company in the world, but how it is also a pioneer when it comes to digital initiatives. L’Oreal currently spends over $1 billion on its digital initiatives, annually. Starting from UV skin patches that detect sun exposure to hairbrushes that detect the quality of one’s hair, from funding digital startups to connecting its beauty products with the help of the Internet of Things, when it comes to digital innovations, L’Oreal leaves no stones unturned. Currently, the beauty giant is planning on launching a program in Paris that will involve the collaboration of start-ups in order to produce more products like ‘smart’ hairbrushes and skin patches. The company aims at developing a site in Paris where 10 to 12 startups might work in collaboration with L’Oreal to develop more innovative technology for beauty every year. We have a $43 price estimate for L’Oreal’s stock, roughly in line with the current market price.

L’Oreal’s Investments In Digital Startups Is Not New

L’Oreal currently recruits 1,700 people to work in its digital initiatives which signifies a huge growth in workforce give that only 5 years ago it hired around 150 employees for its digital segment. Around 7% of its revenues were contributed by online sales for the first half of 2017.

In May 2016, L’Oreal announced a partnership with Founders Factory, a global digital and incubator based in London. The exclusive partnership enabled the companies to invest in Beauty tech startups across the world along with the opportunity to co-create two new companies every year. L’Oreal promised to help the early stage startup companies with product launches while Founders Factory will guide them with their digital strategy. Towards the beginning of this year, L’Oreal took its partnership with Founders Factory forward by selecting five startups to further help them with their growth. These include companies helping businesses with social media reach and online campaigns, to companies selling customized skincare and nail art.

In its current initiative, L’Oreal will not only focus on digital enhancements for the sale of its beauty products such as artificial intelligence or connected makeup products, but it will also emphasize the development of more innovative beauty formulations in its skin care, makeup, and hair care segments. We expect such initiatives will further boost L’Oreal’s sales and that in turn will help maintain its dominance as the global leader of the beauty industry.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for L’Oreal
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