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Beauty Companies Are Pursuing Digital Initiatives

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Jul. 15 2016, Updated 11:07 a.m. ET

Proliferation of social media

With the proliferation of social media, digital marketers are exploiting these platforms to drive consumer interest in brands by replacing campaign-specific sites with social media communications. In addition, mobile phones and tablets are often the first-access devices to the Internet.

The growing popularity of e-commerce and m-commerce has several counter recessionary characteristics like low operational costs.

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Global luxury goods conglomerate LVMH Moet Hennessey Louis Vuitton (LVMUY) (MC.PA), the parent of beauty products giant Sephora, also acquired e-commerce startup Luxola to expand its online retail channel. Brands such as L’Oréal (LRLCY) and Shiseido (SSDOY) are also stepping up their digital initiatives.

Social media initiatives

Estée Lauder (EL) launched several marketing initiatives in the realm of social media. For example, Estée Lauder provided online lessons with how-to videos and visuals of makeup transformations to drive consumption. This social media interaction helped MAC Instagram drive sales.

To draw new consumers, Estée Lauder continues to collaborate with celebrities like Selena Gomez and Victoria Beckham for brand penetration, especially on social media.

Procter & Gamble’s (PG) Pampers’ value share of US diapers was more than 1.5 points last fiscal year and was up a point in the March quarter due to a robust online presence.

Coty also aims to increase presence in e-commerce by selling through websites that support an e-commerce-only product distribution business. Currently, Coty’s 39 brands have marketing sites, 34 have social networking activities, and 12 are sold on branded e-commerce sites.

Brand-enhancing through social channels

Beauty companies continue to expand into a multi-pronged digital strategy that encompasses e-commerce, m-commerce, as well as digital and social media. This will help them in brand-enhancing strategies across all online activities and also increase direct access to consumers.

EL and PG together make up 1.1% of the iShares Dow Jones US ETF (IYY).[1. Updated as on July 13, 2016]

In the next part, we’ll analyze beauty companies’ 1Q16 inventory levels.

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