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How L'Oréal Adopted New Technologies To Scale Personalisation, Adapt To New Customer Demands and Evolve Into The Top Beauty Tech Company

The document discusses how L’Oréal has leveraged new technologies, particularly augmented reality and artificial intelligence, to enhance personalization and adapt to changing consumer demands during the COVID-19 pandemic. It highlights the company's digital transformation journey, including the acquisition of ModiFace and the implementation of virtual try-on services across various platforms, which significantly increased consumer engagement and e-commerce conversion rates. The collaboration with Matas in Denmark exemplifies the successful integration of these technologies to meet consumer needs and drive sales.
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0% found this document useful (0 votes)
23 views9 pages

How L'Oréal Adopted New Technologies To Scale Personalisation, Adapt To New Customer Demands and Evolve Into The Top Beauty Tech Company

The document discusses how L’Oréal has leveraged new technologies, particularly augmented reality and artificial intelligence, to enhance personalization and adapt to changing consumer demands during the COVID-19 pandemic. It highlights the company's digital transformation journey, including the acquisition of ModiFace and the implementation of virtual try-on services across various platforms, which significantly increased consumer engagement and e-commerce conversion rates. The collaboration with Matas in Denmark exemplifies the successful integration of these technologies to meet consumer needs and drive sales.
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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How L’Oréal adopted new

technologies to scale
personalisation, adapt to new
customer demands and evolve into
the top beauty tech company
Received (in revised form): 7th May, 2021

JaKenna Gilbert
Nordic Group Digital Director, L’Oréal, Denmark

JaKenna Gilbert is the Nordic Group Digital Director at the L’Oréal Group. She leads the Nordic hub in
creating innovative digital strategies that meet consumer needs, building long-term brand equity through
best-in-class digital experiences and ensuring the various L’Oréal brands have an advanced digital
footprint in the region. She has over 10 years’ international experience in digital marketing.

L’Oréal Denmark, Havneholmen 25, Copenhagen V 1561, Denmark


Tel: +45 43246484; E-mail: [email protected]

Abstract Across the globe, the COVID-19 pandemic has had a massive — and likely
long-lasting — impact on commercial and consumer trends. For companies specialising
in consumer packaged goods and traditionally reliant on physical stores for the majority of
their sales, success is no longer about staying relevant, but rather on preparing for a world
where significant portions of their business will emanate from e-commerce. With brick-
and-mortar sales declining and consumers becoming more tech-savvy, this paper argues
that beauty companies (both large and small) must look to advanced ways for customers
to discover, consider and purchase beauty products. By way of illustration, the paper
describes how L’Oréal embarked on a programme of digital transformation that would
prepare it to outlast the current context and continue to advance in spite of a challenging
market.

KEYWORDS: beauty tech, virtual-try-on, digital services, digital marketing, consumer


behaviour, digital transformation, innovation

THE HISTORY OF BEAUTY TECH face, chooses the products or looks to try
AND SERVICES AT L’ORÉAL on, and the app renders the products onto
L’Oréal first began its digital services the face. These were the beginning stages of
transformation with the launch of the makeup VTO and, in practice, AR was yet
augmented reality (AR) app, Makeup Genius, to be seamlessly integrated into everyday
in June 2014.1 Developed in-house for the lives. As an example, Snapchat launched in
L’Oréal Paris brand, Makeup Genius placed 2011, but the now popular Lenses feature
the power of makeup virtual-try-on (VTO) for which the app is most known was not
directly into consumers’ hands. The app was introduced until 2015 with the acquisition of
a simple interface. The consumer scans their AR and selfie animation app, Looksery.2

102 Journal of Digital & Social Media Marketing Vol. 9, 2 102–110 © Henry Stewart Publications 2050-0076 (2021)
Gilbert

Makeup Genius represented the start SCALING BEAUTY TECH


of L’Oréal’s beauty tech obsession, and AND SERVICES IN THREE PHASES
just before the app launch, in March Today, the ModiFace technology is present
2014, the Group hired its very first global in 80 countries across L’Oréal’s owned brand
chief digital officer (CDO) — Lubomira websites, as well as retailer partner websites.
Rochet — who has been the Group’s With this scale,VTO usage has increased
Executive Vice-President and Global CDO by five and reached 1 billion visits globally,
for the last seven years, and has sat on the tripling e-commerce conversion rates in
Group’s executive committee to ensure 2020.7 In what follows, the paper describes
that digital transformation is discussed how L’Oréal scaled beauty tech and services.
and strategised at the highest levels of the
organisation.3 Phase one: Scaling makeup VTO
As of April 2021, the Group has appointed pre-COVID-19
a new Global Chief Digital and Marketing ModiFace is a key partner and strategic
Officer (CDMO), Asmita Dubey, to lead the necessity in L’Oréal’s ability to scale beauty
next generation of digital transformation and tech and services across the company’s global
continue L’Oréal’s journey as a digital-first footprint. Approximately 30 of the 42 brands
company, where beauty services continue to in the company’s portfolio offer virtual
play a major role in accelerating the digital services across owned websites and platforms,
revolution.4 as well as through key strategic retailers.
In 2018, L’Oréal further expanded its The first stage of services roll-out focused
expertise in beauty tech by acquiring primarily on owned brand websites as it is a
ModiFace — the first non-beauty brand to controlled environment where internal teams
join the company’s portfolio.5 ModiFace is can manage all phases of an integration from
the industry-leading artificial intelligence kickoff to deployment, and it is a wholly
(AI) and AR technology specifically branded universe that can foster strong
tailored for the beauty industry, servicing consumer relationships. The integration
multiple product categories in order to consists of a software development kit (SDK)
facilitate makeup VTO, hair colouration that is built directly into the site’s code,
VTO, hair diagnostics and skin diagnostics. inserting the services onto any page within
ModiFace has since become a major force the site — most frequently the product detail
in accelerating and scaling beauty tech page (PDP) as this is a primary research
for L’Oréal and for the beauty market as source during the consideration phase, where
a whole. In the company’s own words, all product information is housed and where
ModiFace produces ‘real-time facial analysis potential consumers add products to cart or
and feature tracking for videos and photos. click through to retailer e-commerce sites.
Highly accurate 3D facial micro-feature Subsequent product catalogues and available
tracking tracks movements and expressions shades are managed through the ModiFace
through 68 non-identifying parameters content management system (CMS). This
including lip and eye edges, iris size and initial roll-out on owned brand websites
location, head pose, as well as skin features benefitted the Group in three ways:
including spots, texture, and wrinkles’.6
It is one of the most precise tracking and • First-party data collection and enrichment:
analysis technologies in the world — • known first-party data can be used to
giving L’Oréal a very strong competitive generate strategic audience insights that
advantage and building a robust foundation can be analysed and integrated across
to achieve scale. the entire digital ecosystem, including

© Henry Stewart Publications 2050-0076 (2021) Vol. 9, 2 102–110 Journal of Digital & Social Media Marketing 103
How L’Oréal adopted new technologies to scale personalisation

website, CRM, media, re-targeting, Phase two: Scaling with ModiFace


search and content development, during COVID-19
resulting in a clearer understanding of The COVID-19 virus has altered the
the brand’s target groups; and beauty, makeup and skincare experience as
• enrichment of known first-party data it removed one of the most crucial points
with supplemental attributes around along the consumer interaction with brands
product and shade preferences, skin and products, namely the in-store experience.
concerns or issues allows for hyper- With various stages of lockdowns occurring
personalisation and targeting across the globally at varying intervals, many retailers
entire digital ecosystem. began implementing services to bridge the
• Consumer experience optimisation: consumer need across the consideration
• owning the full consumer experience phases, to facilitate and ease purchase
allows the brands to test and learn decisions online. Beauty e-commerce has
throughout the various touch points traditionally been a replenishment system,
and interactions, giving rise to where 56 per cent of beauty buyers typically
optimisation opportunities to reduce buy products they already know they
adoption friction; and want, while 28 per cent are information
• by way of example, the latest internal seekers focusing on inspiration, discovery
performance results on a global scale and reviews across brands and products.9
show that makeup VTO engagers With continued store closures, however, the
try on 20–30 shades per session and e-commerce behaviour in 2020 consistently
spend more than seven minutes on increased across categories from month to
the services, meaning the consumer month. Indeed, according to a recent survey
can then be activated and re-targeted conducted in the USA, 38 per cent of
with those products and shades during respondents made a digital purchase in health
various points along the website visit or and beauty in February 2020, rising to 45
within the brand’s digital ecosystem in per cent by December 2020.10
order to drive towards conversion.8 Phase two of the ModiFace
• Omni-channel touch-point bridge: implementation roll-out is directly
• the ModiFace CMS is activated across connected to these shifts in the market
all devices, allowing for integration during the COVID-19 pandemic and
on iPads for in-store experiences with subsequent store closures. At the time of
trained beauty advisers; and writing, the Group has collaborated with
• this connection between in-store try-on 27 key strategic partners across 30 countries
and purchase seamlessly bridges the to implement ModiFace directly onto their
consideration and conversion stages of websites for applicable L’Oréal brands,
the consumer journey. including TMALL, Amazon, Douglas,
LYKO, Matas and many others worldwide,
Takeaway successfully scaling the accessibility of VTO
Scaling on owned branded platforms and services to consumers globally.
or websites allows for greater flexibility,
with many ‘test and learn’ opportunities Case study: Matas and L’Oréal meet
to further enhance, enrich and optimise consumer demand in Denmark
the total consumer experience, feeding Matas is a key strategic partner for L’Oréal
audience insights into the brand’s entire as the two companies have a fruitful history
digital ecosystem and providing important together, based on decades of collaboration.
operational learnings for future integrations. Matas is Denmark’s leading retailer for

104 Journal of Digital & Social Media Marketing Vol. 9, 2 102–110 © Henry Stewart Publications 2050-0076 (2021)
Gilbert

health, cosmetics and personal care products, • the face category (consisting of
and despite lockdown, generated a revenue foundation, bronzer, blush, concealer
of over US$606m in 2020.11 Matas has fully and other sub-categories) generated
embraced digital transformation, and the a conversion index uplift of 133 on
local L’Oréal teams collaborated directly Modiface PDPs versus non-Modiface
with the retailer to prioritise makeup VTO PDPs; and
implementation on the Matas website, on all • ModiFace PDPs generated an average
makeup PDPs within the L’Oréal product session duration of 13 minutes and 15
range, including for such brands as Lancôme, seconds, while non-ModiFace PDPs
IT Cosmetics,Yves Saint Laurent Beauté, generated an average of only 2 minutes
Giorgio Armani Beauty, Maybelline, L’Oréal and 27 seconds.
Paris and NYX Professional Makeup. The • Key takeaways:
following outlines this strategic collaboration • Engagement and conversion:
in more detail, highlighting the project – there is a clear correlation between
objectives, the observed results and the ModiFace engagement and
subsequent key takeaways that continue to conversion, indicating that increasing
shape the ongoing partnership: site traffic to services will have a
positive impact on conversion and
• Objectives: profitability over time;
• prioritise the delivery of – there are differences in which
industry-leading and personalised categories and sub-categories are
beauty services to Matas consumers; driving higher performance, with the
• implement ModiFace makeup VTO lips category generating a conversion
within all applicable PDPs within the rate that is more than twice as much
L’Oréal product ranges; as non-ModiFace PDPs in the same
• bring VTO and beauty services closer to category; and
the point of purchase; and – the majority of engagers prefer Live
• gain insights into shopping behaviours Mode, which means this experience
and usage of VTO and services during must be as optimised, seamless and
the purchase cycle, and the ensuing frictionless as possible to ensure easy
impact on conversion. usage and thus foster conversion.
• Results, 1st December, 2020 – 4th May, • Services visibility: This is a crucial
2021: element to drive customer engagement
• a total of 78,849 site visitors engaged and reach performance targets. The
with ModiFace; Matas and L’Oréal teams have developed
• of those site visitors, 85 per cent aligned animation planning to increase
preferred engaging via Live Mode awareness and visibility across several
rather than Photo Mode; touch points and activate consistently,
• across product categories, a total of including the following channels:
394,705 shade variations were tried on; – on-site trade visibility via homepage
• when comparing conversions on PDPs placements, landing pages and brand
with Modiface versus PDPs without universes;
Modiface, the Modiface PDPs show an – influencer activations across social
index uplift of 133; media and other platforms;
• the lips category (consisting of lip – in-store visibility and seamless access
gloss, lip liner and lipstick) generated to services via quick response (QR)
a conversion index uplift of 219 on codes or iPad integrations; and
Modiface PDPs versus non-Modiface – retailer and brand media on owned
PDPs; channels and platforms.

© Henry Stewart Publications 2050-0076 (2021) Vol. 9, 2 102–110 Journal of Digital & Social Media Marketing 105
How L’Oréal adopted new technologies to scale personalisation

• Data-sharing agreements: These are vital in government restrictions, preparations must


order to properly understand and give also be made to ensure consumer safety
visibility to performance, and should be in-store when engaging with products. Some
negotiated and built into agreements so retailers have opted to remove testers all
that both brand and retailer are aligned together, while others have a considerably
on performance expectations. Important reduced tester assortment in-store. In either
metrics and key performance indicators scenario, the physical handling of products is
(KPIs) to share, and thus better severely limited or removed all together to
understand performance, include: ensure high sanitary conditions and reduce
– overall services usage and per cent the spread of the COVID-19 virus.
of total site traffic engaging with L’Oréal is combating these limitations
services; by scaling VTO and services to in-store
– live mode versus photo mode usage; experiences, providing customers with
– shades and/or products tried; quick access to VTO via QR codes that
– products added to cart; are printed on materials and visuals, giving
– purchases and conversion rate; customers opportunities to interact with
– traffic source; products without fear of contamination.
– average session duration and shades This roll-out is in progress globally, bridging
tried per session; and seamlessly from in-store to online and
– if multiple brands are included, quickly becoming a cornerstone of the
brand, category and product-level omni-channel strategies moving forward.
data across the above parameters will When implementing QR codes that
provide even more granularity and direct to services, it is important to keep the
rich insights. following parameters in mind:
• Category-level solutions: For a company
like L’Oréal with multiple brands • connect directly to the PDP or landing
in-house, opting for category-level page where the VTO or service is
solutions, rather than brand-level implemented to avoid confusion or
solutions, puts consumer centricity at negatively impact bounce rates or site
the core of the service, marries well engagement;
with the retailer multi-brand visibility • train all beauty advisers or in-store
model, reduces adoption friction personnel to ensure customer support and
and avoids fragmented consumer adoption;
experiences. • separate data performance views by traffic
The Matas and L’Oréal collaboration has source, from online site traffic versus
truly solidified both companies as tech-savvy, in-store site traffic, to compare results and
industry leaders and digital first-movers. The optimise future strategies; and
results show that the Matas consumer is eager • if possible, create dynamic QR codes to
and excited to engage with virtual beauty reduce reprinting if site landing pages
services and this engagement has led to change. Consider security implications,
increased conversion rates across all makeup employ strict governance and restrict
PDPs where ModiFace is implemented, access to QR code creation to limit any
further positioning Matas as the market possible infractions.
leader and L’Oréal as a trusted partner for
digital innovation. Takeaway
The COVID-19 pandemic has shifted
Omni-channel considerations consumer shopping behaviours, with
As stores globally enter into varying stages more and more consumers turning to
of opening and closing, dependent on e-commerce to purchase products beyond

106 Journal of Digital & Social Media Marketing Vol. 9, 2 102–110 © Henry Stewart Publications 2050-0076 (2021)
Gilbert

just replenishment. Support these shifts L’Oréal is continuing to meet this rising
by offering services directly on retailer market demand by extending the ModiFace
sites in order to provide consumers with technology to all skincare brands across the
high-quality online experiences that portfolio and connecting each product to
support product research, engagement and analysed skin attributes with the ability to
conversion. offer tailored product recommendations.
Scaling to retailers with this category-level
Phase 3: Scaling skin diagnostics solution is underway — with the first
during COVID-19 retailers implementing the SDKs in progress.
During COVID-19 lockdown periods, This is consumer centricity at its apex —
consumer shopping trends have shifted providing superior service, meeting demands,
heavily in favour of skincare products that offering a multitude of products, while being
benefit and complement longer time periods hyper-personalised and relevant.
spent at home. Most notably, the aptly
called ‘cocooning’ trend has surfaced across Takeaway
influencers, bloggers and social media mavens While the makeup category is being
as consumers are opting for new skincare challenged by the ongoing global pandemic,
products and regimens to pamper and treat the skincare category is growing. L’Oréal is
themselves while in lockdown or quarantine.12 fuelling this by expanding ModiFace services
L’Oréal’s annual results for 2020 mirror to include skin diagnostics, offering virtual
these trends, with the skincare category analysis of skin quality to provide consumers
growing fastest of all. The Active Cosmetics with personalised and bespoke skincare
Division within L’Oréal, encompassing regimens.
the skincare brands La Roche Posay,Vichy,
CeraVe, Decléor and SkinCeuticals, saw
tremendous growth during 2020, with PREPARING FOR THE FUTURE TODAY
13 per cent like-for-like growth and sales E-commerce now encompasses a
exceeding €3bn.13 record-level 26.6 per cent of L’Oréal’s total
Increasing consumer demand for skincare global sales, increasing 62 per cent over
products coupled with closed stores gives 2019.15 Much can be attributed to the
rise to ample service-oriented opportunities, COVID-19 impact on brick and mortar
focusing on overall skin diagnostics to closures, but the growing trajectory of
assess various elements of the skin with e-commerce is embedding itself deeply into
hyper-precision to deliver hyper-personalised consumer behaviours. L’Oréal is continuing
recommendations. to fuel e-commerce internally with newly
Via the ModiFace technology, formed digital roles, ambitious e-commerce
several L’Oréal brands, including Vichy’s targets and stronger retailer partnerships that
SkinConsult,14 dive deep to analyse skin are supported and further fuelled by this
attributes like radiance levels, pore quality obsession with beauty tech and services.
and firmness in order to provide tailored The Group has to continue accelerating
product and routine recommendations. These and scaling services in order to bridge
analyses are incredibly informative for the any consideration gaps when consumers
consumer, providing much needed guidance are in the purchase cycle, particularly if
when making a first-time skincare purchase. in-store dynamics shift, lockdowns ease and
When combined with an e-consultation shoppers continue to embrace online buying
to discuss results, the consumer is also behaviours.
thoughtfully and carefully guided towards The future of beauty tech and services is
purchase with confidence in the products. starting to present itself in different ways, all

© Henry Stewart Publications 2050-0076 (2021) Vol. 9, 2 102–110 Journal of Digital & Social Media Marketing 107
How L’Oréal adopted new technologies to scale personalisation

of which are encompassing AR, AI, platform products, and launched in 2018 shortly
integrations and direct links to e-commerce after the ModiFace acquisition. This strong
purchasing behaviours. The following partnership has kept beauty innovation at
outlines the current beauty tech integrations the core of the Facebook user experience.
that are enhancing consumer experiences
and engagement across platforms: Takeaway
Platform integrations allow VTO and
• ModiFace and WeChat bring VTO to services to scale much further than just a
messaging: While the western world brand or retailer’s website. This scale reaches
continues to advance and accelerate VTO consumers when they are at critical points
and services across categories, products along the purchase cycle and begins to
and brands, L’Oréal Asia Pacific has reduce barriers to technology adoption that
integrated ModiFace VTO within the will push AR and AI over a tipping point
WeChat messaging application, piloting and into the mainstream.
a mini-programme with Giorgio Armani
Beauty that links directly to a shopping
experience within that programme.16 The WHAT DOES THE FUTURE LOOK
WeChat integration also gives customer LIKE?
care teams the power to utilise VTO L’Oréal has made impressive strides in
during chat sessions, recommending shades driving the adoption and integration
and products during direct conversations of beauty services around the world
with customers. through owned and retailer platforms,
• ModiFace and Amazon bring VTO to the as well as strategic platform integrations.
world’s biggest e-commerce company:17 L’Oréal The proliferation of and increased access
has further expanded the ModiFace to VTO and AI/AR services, however,
reach by partnering with Amazon to add provides a glimpse into a future where
VTO to applicable L’Oréal PDPs in the people’s homes and lives are even more
USA, the UK, Japan and Canada.18 As connected through technology. For
the world’s biggest e-commerce platform, example, connected mirrors and smart
53 per cent of product searches begin on beauty mirrors are already in stores, making
Amazon,19 and this integration provides it possible for consumers around the
a dedicated base of beauty buyers a way globe to try products at the point of sale.
to try thousands of products virtually It is surely only a matter of time before
before making a purchase within the same consumers will be able to access VTO and
platform. skin diagnostics through connected mirrors
• ModiFace and Google bring VTO to the in their own homes. The possibilities here
search results page:20 In late December are extremely exciting — imagine a mirror
2020, L’Oréal and Google announced the that provides skincare recommendations
ModiFace integration directly into Google based on one’s skin analysis in real time,
Shopping formats. This brings VTO into helping to combat dark circles or dull skin
a very important step along the consumer after a restless night. Once the skincare
journey, as 23 per cent of shoppers use regimen is underway, the connected mirror
Google to research products before will then assist with a makeup look for the
making a purchase.21 day, providing VTO options and suggesting
• Modiface and Facebook bring VTO to the potential looks. Although such products
social media experience:22 This long-term are not yet on the market, given the rate of
collaboration facilitates AR experiences VTO and services adoption, the future is
delivered directly via Facebook Camera approaching quickly.

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Gilbert

CONCLUSION have an opportunity to leverage new


During an uncertain time, when the technologies to meet rising consumer
COVID-19 virus has altered consumer demands and catapult immersive beauty
behaviours, closed brick-and-mortar stores experiences into the future today, building
and accelerated the e-commerce market, long-lasting, trustworthy and exciting
L’Oréal and its partners around the world new relationships with customers across
have emerged as true innovators that support the world. As an industry leader focused
evolving consumer needs with a focus on on consumer centricity, excellent service
hyper-personalised services. Tech-savvy offerings and fearless innovation, L’Oréal will
consumers are now equipped with tools that continue to drive the digital transformation
empower them to make the right product forward.
decisions, across makeup, haircare and
skincare routines. At the same time, L’Oréal References
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with dermatologists’, available at: https://www.vi- products/shopping/shopping-beauty-product-try-it-
chyusa.com/skin-care-analysis-ai.html (accessed 1st google/ (accessed 25th January, 2021).
February, 2021). 21. Ibid., ref. 19 above.
15. Ibid., 13 above. 22. L’Oréal (2018) ‘L’Oréal’s ModiFace launches
16. Marketing Dive (2019) ‘L’Oréal brings AR makeup long-term augmented reality collaboration
try-ons to WeChat’, available at: https://www. with Facebook’, available at: https://www.­
marketingdive.com/news/loreal-brings-ar-makeup- loreal.com/en/news/science-and-technology/
try-ons-to-wechat/558233/ (accessed 25th January, research-innovation/2018/08/09/00/00/­loreals-
2021). modiface-launches-longterm-augmented-reality-
17. Statista (2020) ‘Projected retail e-commerce GMV collaboration-with-facebook/ (accessed 25th January,
share of Amazon in the United States from 2016 2021).

110 Journal of Digital & Social Media Marketing Vol. 9, 2 102–110 © Henry Stewart Publications 2050-0076 (2021)

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