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During a full year of uncertainty and change, companies found few things they could bet on. But for Estée Lauder Companies, its hero product strategy provided to be fundamental. In its latest quarterly earnings, 10 of ELC’s brands saw growth. La Mer and its namesake brand Estée Lauder saw double-digit sales growth, thanks to iconic franchises.
“[The strategy is] really to focus on our hero products. Because first and foremost, these products are absolutely loved,” said Jane Hertzmark Hudis, executive group president of the Estée Lauder Companies, on the most recent episode of the Glossy Beauty Podcast. “They will drive the greatest amount of recruitment, which is new consumers to our brand, and repeat business, which is the loyalty to the products. Advanced Night Repair and Crème de la Mer are great examples. However, we do innovate in what we call those franchises.”
A long-term ELC veteran, Hertzmark Hudis started at Prescriptives within the company before taking leadership roles at Origins and Estée Lauder. She is often pointed to as the driver of the organization’s skin-care wins. In July, she became the first woman promoted to executive group president at the conglomerate.
Though the concept of prestige beauty is evolving, Hertzmark Hudis affirmed that Estée Lauder Companies will “be pure-play, focused on prestige and luxury.”
“The luxury business is booming, and people want more and more luxury, and more and more luxury experiences. So luxury is, quite frankly, here to stay,” she said.
Below are additional highlights from the conversation, which have been lightly edited for clarity.
Skin care for the win
“What’s so great is that this has been a time where people have focused inward about being healthier. Wellness is a huge trend, as you know, and skin care is really hot. People want to take the time to take care of their skin. And they have much more time in their bathroom, because they’re not on an airplane. So it’s been an amazing, amazing moment for skin care. I’m thrilled about that. Finding those opportunities have been amazing, because on the one hand, it’s been about women going to their classics and the products they love — things like Estée Lauder Advanced Night Repair. Crème de la Mer has been amazing. Initially, women and men flocked to the products that they knew and loved over time. And at the same time, they’re incredibly interested in newness, like Dr. Jart. We’re just in the middle of launching Dr. Jart in the U.K. in Boots, and the campaign is so extraordinary. It’s a fantastic digital campaign, and we’re launching it totally online first because the stores are closed.”
Looking to Asia
“The voracious appetite that Asians have for skin care has been an enormous lesson because, whereas in the United States, we thought there was only one step or two steps. People are really indulging in multiple steps; people are masking, they’re taking more care of their skin. And so there are a lot of lessons that are coming here. The idea of watery lotions, which is definitely an Asian skin-care trend, is starting to be used here, especially by Gen Z and millennial consumers. So that’s one aspect of it — product trends and niche trends and new trends. And on the other hand, China was the first market to go into virtual selling. And so we immediately rolled that out around the world, as an example. It started in China for VIP consumers, and we’re now doing it in every single market…. Another example is Bobbi Brown, a makeup brand that I oversee. Their world was always about having a makeup artist in the store. One of the interesting things is: What do you do about that once the stores are closed? Well, you take that experience online — and they developed an always-on artistry, which is absolutely fantastic. You can go online to learn how to do a smoky eye or a nude lip, etc. What’s so great about that is that, when I used to go into a store and somebody would give me a face chart, I would come home, and I would say, ‘How do I do this?’ Now, it’s almost like having a pocket artist at home with you, and you can learn how to do your makeup, quietly and privately or in classes.”
Prestige first
“We will continue to be a pure-play, focused on prestige and luxury [company]. The luxury business is booming, and people want more and more luxury, and more and more luxury experiences. So luxury is, quite frankly, here to stay, The other side of it is that the accessibility of beauty and the ability to buy beauty is also a parallel trend, which is why there are all of these new distribution opportunities, etc. — because it’s about getting new consumers, especially getting them online, but also getting them in store. The idea in our company is to match the right brand with the right level of distribution, because not all brands are the same. So if I give you an example, Crème de la Mer is in a very limited number of doors globally, because the idea is to, first of all, be where that VIP consumer is. And secondly, it’s to build the productivity of those doors, rather than just rolling something out because it would be not right for the brand. If you think of Hermès or if you think of other luxury brands, it’s a similar idea. Whereas Dr. Jart plays at the entry point of prestige. So for them, Boots is right. And for them, Sephora is right. And for them, Sephora at Kohl’s is right. So it really is about matching the brand, the experience, the consumer, in order to drive trial, repeat and consumers to our brands. But each brand is different and every strategy is different…. We are really brand builders, and we’re also brand builders over time. So the idea is that we’re really focused on sustainable and profitable growth, and that’s our mission. We don’t just roll out distribution to do it, or to get sales and shipments, or whatever. It’s really strategic and long-term.”
