The pandemic has given the world’s largest beauty company an opportunity to pick cues from evolving consumer trends and quickly build solutions around them, said Amit Jain, managing director of L'Oreal India
Amit Jain, managing director of L’Oreal India, has been keeping his ears to the ground, talking regularly to local grocery store owners. The protracted lockdown may have posed many challenges, but the pandemic has given the world’s largest beauty company an opportunity to pick cues from evolving consumer trends and quickly build solutions around them, said Jain. In the long run, Jain expects the beauty industry to be relatively stable amid the disruption caused to the consumer goods market. Edited excerpts from an interview:
What is your short- to medium-term outlook for L’Oreal in India?
The short term has been a big challenge. In April, off-take was seriously limited; (in) May, it began picking up. We are seeing many Indias at play right now. For example, the western part of India still remains very cloistered. The east is relatively open and south is leading the charge and is the best organized. In the short term, it is going to be all about how the crisis is being managed by the local governments.
People are talking about a ‘U’ shaped and ‘V’ recovery, I see it as a ‘W’ shaped recovery, depending on what happens in wave one, two, or even three.
We will see a lot of dislocation. But the headline in my mind is that the beauty categories will be relatively stable.
Are there still manufacturing and distribution challenges?
Our manufacturing now is pretty much in place with units working above 85% capacity. The problem starts as soon as you leave the factory gates and go into the realm of physical distribution, which is still an intensely manual activity. The reality is that a lot of labour has left for the villages. Labour, drivers and helpers in the transportation sector is going to be a challenge going forward. I see it remaining an issue for the next several months.
We also see retail operations badly stretched, unable to operate at their normal capacity levels.
Has the crisis made you rethink your business strategy?
Significantly. There is a team which is completely focused on deeply understanding the insights we are getting on change in consumer behaviour, change in the channels (trade), change in the categories and obviously, a very fast pivoting competition. And now, we are very quickly trying to pivot around our strategies vis-a-vis consumers, categories, go-to-market, channels, everywhere you are going to see some change.
Could you elaborate?
The category drivers now are going to be around hygiene, health and efficacy. In India, natural ingredients were a big driver. But, in addition to that, people will be very anxious about the efficacy of products. So, brands backed by strong research and development will be important.
While we are reading that consumers will seek value, in the beauty category, people will seek brands they trust. That’s one thing which is dominating our thoughts as we look at innovating around this consumer behaviour.
The other very obvious trend is going to be the channels, that is, go-to-market. Digital and e-commerce was growing, but it has grown faster than ever.
Earlier, the beauty category didn’t lend itself to e-commerce because consumers want to touch and feel (the product). Now, we are seeing some early data on e-commerce and it’s suggesting that almost 18% of the purchases in the beauty category were done by consumers who are first-time buyers. That’s the serious trend.
What will this mean for L’Oreal India?
Globally, our CEO set out a mission for us, saying L’Oreal is going to evolve from a beauty to a beauty technology company. We are working with platforms to get consumers to interact with our brands in what’s going to be a low-touch economy. You make sure that they get a similar experience of virtual trials. The low-touch part of it is going to be about VR (virtual reality) and AR (augmented reality) experiences for consumers that will pick up.
Did you have fresh investments planned for this year?
There’s global disruption for MNCs. If anything, the focus on India is going to be higher. Strategically, you want to focus on markets where there’s penetration opportunity. In a country like India, frequency of purchase may drop off, but you are offsetting it by recruiting more consumers.
Global supply chains are looking at de-risking dependence on any one or two centres. So, we also see the possibility of India emerging as an alternative for some of the categories.
For example, in hair colour, we are now positioning India to be supplying more to South-East Asia and Latin America.
And thanks to some of the very friendly policies of the government now on new investments, we see the importance of India on the manufacturing side growing.