By Sara Castellanos
Cosmetics industry mainstays like Estée Lauder Cos. are looking
at ways new technology can help them stay competitive amid rivals
that now include dozens of new beauty brands that are growing fast
and appealing to younger crowds.
For Estée Lauder -- which is considering uses for artificial
intelligence, data analytics and 3-D printing -- this has made its
information technology group more involved in innovation.
"Our consumers are expecting experiences that really merge
prestige beauty and technology," said Michael Smith, chief
information officer of the New York-based firm.
Technology is a key component of the company's growth strategy,
he said. An IT group consolidation last fall made it easier for
teams to collaborate on technology-focused consumer experiences.
Previously spread across eight locations in the New York area, the
IT team now occupies two offices: one in Melville and another in
Long Island City, Queens.
The Queens location also features a dedicated office space for
the company's first IT-focused innovation lab.
Large beauty industry companies such as Estée Lauder have always
invested heavily in innovation. Now, IT groups are getting more
involved. For example, IT teams can help companies leverage data to
help spot trends early and respond to consumer needs with new
tools, analysts say.
Estée Lauder, whose brands include Aerin, Clinique and Jo Malone
London, reported quarterly net sales of $4.01 billion for the
period ending Dec. 31, a 7% increase over the prior-year quarter,
driven by demand for high-end beauty products in Asia.
Estée Lauder's Queens outpost hosts design-thinking sessions at
the innovation lab, in which data scientists, user experience
designers and engineers collaborate with employees in customer
engagement, retail and marketing.
Some of the sessions focus on how technology can create unique
experiences that will make customers linger in the store or
experiment with a product in a new way, said Kimberly Saxton, vice
president of global IT operations and strategy.
"There's many products that are effective out there," said Ms.
Saxton, who reports to Mr. Smith. "How do you differentiate and
create that sort of love and that really intense following? It's
part of wrapping the product in additional experiences."
The IT leadership team is testing a few cutting-edge ideas
related to customer experience that came out of a hackathon, held
last November at the Queens office. About 240 people participated
in the event, including international Estée Lauder teams, college
students and technical professionals from other companies.
In one idea, users scan their face with a mobile device and
receive product recommendations based on an analysis of their skin,
factoring in wrinkles and blemishes. In another, users can upload
photographs of a makeup look they want to replicate and an app will
recommend lipsticks, eye shadows and other products that match the
photograph.
Another idea being discussed at the innovation lab is how 3-D
printing could possibly lower a customer's carbon footprint by
manufacturing products in stores, Ms. Saxton said.
Revlon Inc., another beauty industry giant, in late 2018 formed
an in-house technology council led by Chief Technology Officer Chau
Banks. The council, which includes employees in areas such as IT
and global customer engagement, is evaluating several technologies
propelled by AI and augmented reality, said Debbie Perelman,
president and chief executive of Revlon.
"IT does play a part in this as we are learning the importance
and role technology plays in the customer purchasing decision and
journey," Ms. Perelman said in an email.
Ingredient innovation in the beauty industry remains paramount,
but technology-enabled consumer experiences are becoming more
important to help brands stand out from the competition, said
Carrie Mellage, vice president of consumer products for research
firm Kline & Co. "IT teams are getting more involved," she
said.
Competition in the beauty industry is fierce, with about 100
independent brands luring consumers with factors like celebrity
appeal, social-media influence, a cult following, and commitment to
sustainability and clean ingredients.
"We've seen those 'indies' or 'ankle-biters' really taking a
share of the industry," Ms. Mellage said. Large beauty companies
are still successful, but up-and-coming brands are growing much
faster in some cases. "In the past, they were maybe not
collectively as much of a threat as they are today," she said.
Estée Lauder's Mr. Smith, whose IT group consists of hundreds of
employees, says culture and talent are the driving forces for
innovation. The Queens outpost -- with game rooms, standing desks,
high-tech meeting rooms and a rooftop -- was designed with that in
mind. The office lists about a dozen IT job openings. "We can and
should be the destination for the top tech talent on the planet,"
Mr. Smith said.
Write to Sara Castellanos at sara.castellanos@wsj.com
(END) Dow Jones Newswires
March 20, 2019 18:28 ET (22:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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