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Gerschtein details the keys to L’Oréal’s preeminence

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The outbreak of COVID-19 at the start of the year and subsequent efforts to control the virus created much uncertainty in the beauty care business, but did little to disturb the preeminence of L’Oréal. Under the direction of president Nathalie Gerschtein, the L’Oréal USA Consumer Products division adapted quickly to changing dynamics in the marketplace, enabling it to maintain a leadership position across a broad spectrum of categories, including color cosmetics and skin, hair and nail care.

Natalie Gerschstein

Natalie Gerschstein

Gerschtein took the helm at L’Oréal’s largest division in March 2019, after spending her entire career at the company. She began with L’Oréal in her native France in 2002, when she became marketing director for L’Oréal Paris. Following a stint as head of brand marketing for the Garnier brand in Europe, she held leadership posts in India and Thailand, before moving to the U.S. to become president of Maybelline New York, Garnier and essie.

Gerschtein recently spoke with Jeffrey Woldt, editor-in-chief of Chain Drug Review. In the extensive interview, she discusses the evolving preferences of beauty consumers, L’Oréal’s robust product pipeline, the advantages stemming from the company’s global reach, and efforts to help retailers reenergize in-store beauty departments.

 WOLDT: L’Oréal has consistently outperformed its peers, both prior to the arrival of COVID-19 and after the pandemic broke out. What do you attribute that success to?

GERSCHTEIN: It’s true that we’ve been able to navigate well the volatility of the past few months, and I would attribute this success to four main points.

The first one is that we’ve — and it’s always been the case, but even more so in the past few months — been putting the consumer first. This is especially true at a time when consumers have been adjusting their beauty regimens, the way they shop, the way they engage with the brands.

So, it means bringing innovation to the market that consumers want, that answers their needs. And, obviously, listening intently and connecting with them through CRM, all social channels, and providing the right content, in the right place, at the right time and, really, everywhere someone needs us.

Then there’s the power of our brand portfolio with a footprint in all beauty categories. Our brands, as you know, are getting stronger and more diverse. They are addressing every need in the market. We play in skin care, hair care, hair color and makeup. Whether you’re into fashion or naturality, we really offer a product at every price tier and for every age group able to answer the beauty dreams of American consumers.

And then, in terms of brands, we are lucky to have an amazing portfolio of brands: from L’Oréal Paris, which is the No. 1 beauty brand in the world and in the U.S., to Maybelline New York, which is the No. 1 makeup brand in the world and the U.S. We also have other brands that you know very well, like NYX Professional Makeup, which is an indie at heart and has proven to be extremely successful in the past few months targeting Gen Z consumers. We have Carol’s Daughter, a great hair care brand for the diverse, multicultural consumer in the U.S. We have had great success with our Micellar collection from Garnier. We have many big brands and also a lot of brands like essie, for example, which is a nail polish line and has proven, again, to connect very successfully with their audience in the past few months. I would say that’s the second key point.

Then the third one is our digital and beauty technology acceleration. We had started already several years ago, and it has really prepared us to win this fight during these past few months and to capture the shifts of the market. We lead the industry with research and innovation, and we really keep technology at the forefront of everything we do. This digital transformation has been accelerated through the past few months.

Garnier’s Green Labs line marries the best of nature and technology.

Linking product innovations that are powered by research and innovation, together with marketing, that is a key strategic advantage. But it also means this digital transformation and the strength of our brands’ online presence that enables us to adapt the ­content in real time to remain very close to our consumers. That has been extremely relevant and powerful in the past few months.

Another factor is the way we can structure our organization to be able to help our retailers to win online as well, and to bridge online to off-line. That omnichannel approach has been very successful since the beginning of the year. That is the third point.

Last, but not least, is our employees. Our teams are absolutely amazing, and we realized their strength during the beginning of this year, despite an extremely difficult environment — and this crisis has been tough because it’s been a health crisis, an economic crisis, a social crisis. In the end, we engaged with our employees the right way, taking care of their needs the best we could as a company, and making sure to protect their health, their jobs and their salaries during the pandemic.

Because we were there for them, they’ve been able to have the head space to focus on the business. Our teams showed that they were passionate, curious, creative, and that they can be mobilized quickly. That was really a genuine desire from the team to learn through this moment. Very early on, we were categorized as essential. Our teams on the front lines, in the distribution centers and the labs, continued to work. We’re still producing hand sanitizers and doing what we can do to contribute to the community. The rest of our employees have worked seamlessly from home when they could. It’s been incredible to see the strength and the passion of our employees and their dedication.

WOLDT: You talked about the importance of brands and products, as well as L’Oréal’s commitment to research and development. What’s on the horizon for the fall season?

GERSCHTEIN: The commitment of L’Oréal to innovation is extremely deep because, as you know, the founder of L’Oréal, Eugene Schueller, was a scientist. So that’s why this commitment to science, to research, to innovation, to testing and learning, to always trying to bring the best technology to our products has been absolutely ingrained in our DNA since day one. Innovation is really at the heart of our brands. It’s the engine for incrementality, but also for excitement and for the good of our business.

This fall, all our brands have a stellar lineup of innovation, as you might imagine. A lot of things are new to market, bringing a new viewpoint on beauty, pushing the categories further, as our big brands usually do. We also had some launches from earlier this year that were not given the visibility they deserved because of the confinement period, so we’re going to come back on those as well.

I’ll share with you a few of my favorites and the products that we are going to highlight. At L’Oréal Paris, we’ve been on the great success story for Revitalift Derm Intensives, which is our skin care line inspired by dermatologic ingredients. We launched the Hyaluronic Acid Serum last year, we launched the Glycolic Acid Serum this year, and we are currently launching a new serum, a really pioneer innovation, our serum with pure retinol. Retinol is already a well-known ingredient in the U.S., but this one is going to be a pioneering innovation because it’s done with pure and stable retinol. So, it’s going to complement our range of Derm Intensives very well, and really provide the best of antiaging technology for youthful-looking skin at any age.

And, talking about any age, we’ve launched, actually, in January of this year, a new line of makeup under our Age Perfect range that is addressing the boomers generation. Unfortunately, with COVID-19 it’s been not easy for us to deliver the right visibility to that launch, but we’re going to reactivate it now to make sure we give it the success that it deserves.

For Garnier, our major natural skin care launch is going to happen in October. It’s called Green Labs, and it’s really about the idea of marrying the best of nature to the best of technology. We are taking superfruits and marrying them with a derm ingredient to get the best of skin care. In hair care, we already launched the Fructis Treats line early this year that we’re going to reactivate in the rest of the year.

For Maybelline New York, we launched, earlier this year, Falsies Lash Lift mascara, which is the No. 1 new item in makeup this year. It really replaces a trip to the salon to get your lash lift, and it’s been successful since the start, and we’re going to keep activating it. We recently launched Lifter Gloss in lip that is doing extremely well in-store.

For Carol’s Daughter, which is our hair care brand catering to the needs of the multicultural consumer, we’ve launched Wash Day Delight, which is a revolution in hair cleansing. It’s specifically tailored to very textured hair, and it has a formula that is cooling and penetrates the hair extremely well with a special applicator nozzle. The product is also doing very well in-store.

Dark & Lovely’s hair care line for protective styles.

For Dark & Lovely, which is the No. 1 hair color brand for the multicultural consumer, we are launching a new line, which is dedicated to protective styles. It is a line of very specific products, which are only available in very limited distribution so far. The new line reflects our mission at the Consumer Product Division for L’Oréal — to democratize the best of beauty. And so, to be able to launch a first-to-market innovation dedicated to protective style in mass distribution is extremely important.

One word on NYX Professional Makeup. We are launching the Bare With Me Primer with SPF. The formula is very translucent, and so it works on every skin tone. Now you can wear SPF and protect your skin without it appearing to look extremely dull or that kind of whitish or grayish effect on skin. We are also launching our Epic Ink liners — they are doing very well especially in expressive eye looks — and Filler Instinct, which is a new lip product. So, you can see that there is a lot going on.

WOLDT: That’s an impressive list lineup. In beauty care, a lot of new ideas have traditionally originated at the high end of the market. What’s the source of all this innovation that L’Oréal’s Consumer Products Division is introducing?

GERSCHTEIN: We have a portfolio of brands that are extremely diverse and also very well positioned at different price points. We are really bringing in innovation at every end of the market. In skin care, for example, we have L’Oréal Paris that has the bulk of its business in antiaging, more premium skin care, but, at the same time, we have Garnier, where a big part of the skin care business is the cleansing and exfoliating range. Thanks to the diversity of our portfolio, we can cater to the diversity of the needs of our consumers.

WOLDT: You recently bought Henry Thayer’s Natural Remedies. How does the company fit into your plans?

GERSCHTEIN: I’m extremely happy that we just signed a deal to acquire Thayer’s Natural Remedies. It’s a unique American brand with a strong heritage and a premium portfolio of high-quality products. The brand has a very strong following with a diverse group of consumers and especially young ones. This acquisition is definitely part of our strategy to develop our skin care business.

Thayer’s Natural Remedies will really strengthen and complement our iconic brands, such as L’Oréal Paris and Garnier, and help the Consumer Products Division increase our footprint in skin care, an extremely important part of the beauty regimen of American consumers. A more diverse portfolio is going to help us answer the beauty dreams of our customers.

WOLDT: Are you open to further acquisitions if you find the right targets?

GERSCHTEIN: Absolutely.

WOLDT: L’Oréal is a global company. How big an advantage is that as you work to address the increasingly diverse marketplace here in the U.S.?

GERSCHTEIN: It’s a great question. L’Oréal’s main strategy is anchored by the term “universalization,” and it means for us globalizing while respecting differences in desires and needs and traditions. I can really testify about that because I’ve been working for L’Oréal since 2002, so for almost 18 years now, only eight years of which were in Europe. I spent three years in India, five years in Thailand, and two years in the U.S. I can tell you that this balance between globalizing and, at the same time, embracing the diversity of our consumers, is really important.

L’Oréal is strategically concentrated on the commitment to meet the aspirations of the consumers in every part of the world, while being operationally decentralized. This balance is what has made the group extremely successful. Our footprint allows us to really understand global trends from their inception and provides us with deep insights that our local teams, through a worldwide network of research and innovation centers and marketing hubs, then are empowered to adapt and create the right products for their unique consumers.

To your question more precisely, we have a multicultural division here in the U.S. that includes brands such as Carol’s Daughter and Dark & Lovely, which we spoke about before, and that sit within our Consumer Products Division. So this division is reporting to me, and we created a U.S.-based multicultural beauty lab to drive innovation and ensure that L’Oréal consumers are able to find what works for them within the very wide range of skin tones and hair textures, and to have the right products to address each and everybody’s needs.

We truly believe that in order to develop products for the diversity of consumers, we need to really understand them, and we need to ensure our workforce is reflective of the market. We are committed to continue to foster a diverse and inclusive workforce, in order to authentically reach the multicultural consumer with the right products at the right touch points, and with the right language. We are really proud that L’Oréal USA was also named No. 1 company for multicultural women, according to Working Mother magazine.

We are an organization that creates and uses best practices in hiring, retaining and promoting multicultural women in the United States. I’m very proud that within my team we have people coming from different origins and very diverse backgrounds. Of the six general managers that I have reporting to me, five are women and two are African American women. We are really doing that at each and every level of the company.

WOLDT: You mentioned that your career path at L’Oréal took you to India and Thailand. Does the beauty market in Asia differ fundamentally from what it in the U.S. or in Europe?

GERSCHTEIN: The markets are pretty different, but the desire for beauty is really the same everywhere in the world. What’s important for us is to understand what’s behind the desire. Like, for example, what really struck me when I arrived in the U.S. is the importance of makeup. Makeup is really an intrinsic part of the beauty regimen of American women. But when you go to India, what matters the most is hair. When you ask someone what does it mean to be beautiful, they’re going to talk to you about hair. If you go to Thailand and you ask, ‘What does it mean to be beautiful,’ they’re probably going to talk to you about flawless skin.

So, it’s very interesting and very important, again, to be extremely consumer-centric and understand what’s behind the desire for beauty. It can take different forms, depending on the different countries in the world, because, of course, it’s impacted by culture, by traditions, and it’s important to understand all of this. And, that’s what’s extremely exciting.

WOLDT: Correct me if I’m wrong, but in the U.S. it seems that in recent years skin care has become more important than color cosmetics. Is that accurate?

GERSCHTEIN: We can definitely say that skin care is on the rise. I think the desire for flawless skin and the importance of the quality of the skin and taking care of your skin has become more and more important. If you look at the growth rate by category for the past few years, skin care is the engine of the market.

Now, when it comes to makeup, it remains an extremely important category in the U.S. I think makeup is evolving. It’s true that last year the makeup market has not been very dynamic because people, again, are looking for more natural beauty looks. So, you still need to use products, but not the same products. And probably the brands have not pivoted fast enough to really answer these beauty needs, which we have done now.

If you think of Maybelline, we are relaunching our BB creams that are in that kind of skinification trend in makeup. This was one of the drivers of the market last year. And then, obviously, in the first part of this year, because of the beauty-at-home trend due to confinement, people have not used as much makeup. I think this is really a temporary thing. I’m very much looking forward to the makeup market being much more dynamic in the months to come. We can see it because there’s an appetite for women to come back to makeup, because it’s a very important part of socialization as well.

WOLDT: L’Oréal has always made it a point to be a supporter of creating a more equitable environment for women. What forms does that support take?

GERSCHTEIN: L’Oréal USA is really dedicated to the advancement of women across its business. In addition to formal and informal mentorship programs within the company, we’ve created employee think tanks to ensure that women are developing at an equitable level. L’Oréal USA partners with the Harvard Kennedy School in an inclusive leadership program designed to remove bias from the workplace, and hosts an annual executive conference to discuss these topics. The company’s work in this area has been validated with EDGE certification for gender equality.

Today, women represent 70% of the company’s global workforce and make up about 50% of our U.S. management. We are pretty well positioned, and we remain committed to creating an environment that ensures that women are thriving and advancing into leadership positions.

I’m very proud to be the female leader of the Consumer Products Division in the United States, which is the largest beauty division in the largest market for the largest beauty company in the world, which is L’Oréal. I’m even prouder to say that for the Consumer Products Division in the U.S., every one of our brands is led by a woman.

It’s also inspiring to work in an industry where many of our retailer beauty categories are led by successful women.

At L’Oréal, our business has always been rooted in science, and for more than 20 years, L’Oreal has supported the advancement of the female scientific community. Our U.S. for Women in Science grant program is one of the 50 national and regional fellowships of the L’Oréal-UNESCO For Women in Science program, which recognizes and rewards women scientists around the world at critical stages in their careers.

Women make up 50% of the population, but they absolutely do not make up 50% of scientists. And, because science needs diversity, and because the world needs science, science needs women. So, it’s really been extremely important for us. Since the worldwide program began in 1998, more than 3,000 scientists in over 115 countries have been awarded for their work.

From the brand perspective, each and every one of our brands is very much committed to women. The one I would like to mention, too, is that 2020 marks the 15th anniversary of the L’Oréal Paris Women of Worth program, which celebrates the power of every woman to make a difference in the world. Each year, a number of everyday heroes and change makers are honored for their community impact. There have been 150 incredible Women of Worth in the U.S. to date. The work that they do in their communities is really remarkable, and I’m glad that we’ve been able to support them.

WOLDT: Let me shift gears now and just ask you about COVID-19, which we’ve touched on at a couple of points. What long-term impact do you think the experience of the pandemic will have on the beauty business?

GERSCHTEIN: It’s not easy to say at this point but, over the past few months, out of necessity, it’s only natural that with consumers staying at home, their shopping behavior has shifted temporarily or maybe more sustainably. While people were adapting to new ways of meeting and working, we still saw extremely high engagement in the beauty category, as well as growth in online sales, which are both very strong indicators of the resilience of the industry. So, the consumers have never left beauty; they just consume beauty in a different way because of the situation.

While the hair salons were temporarily closed, we saw a boom in home hair color, because, at the end of the day, people still want to color their hair. We saw a boom in nail polish as well; again the spas and the salons were closing. And, with all the innovations that give a professional experience and performance, we’ve been able to guide these consumers while they were at home to get the best result that they were looking for.

We are learning every day about consumer habits and the categories that they are engaging with, including skin care, hair color and nail, that have taken root in the new normal. Work-from-home makeup has also become a conversation of its own. Many people are not going to do a full-face makeup, but maybe they are feeling the power of a swipe of lipstick, eyeliner or mascara. We are very much in tune with the conference call look, as the new work-from-home makeup.

Within our portfolio, we’ve been able to be extremely successful in many areas. One is essie, which we mentioned before. Essie was a hit with more consumers doing DIY manicures and looking for ways to better care for their nails. Essie really is a great brand, and we were lucky that we introduced, at the beginning of the year, expressie. The launch came at the right time because it was the perfect solution to the millions of women wanting a fast, easy and very colorful nail experience.

If we look at hair color, we saw a tremendous uplift in the category, and not just in covering grays. More consumers discovered how easy it was, and they started to use some different products in our range. There is our L’Oréal Paris Magic Root Cover Up touch-up spray that has been extremely successful these past few months. The fact that Eva Longoria did her hair color live on Instagram, and she did it with Excellence Crème, was also extremely convincing to consumers because there’s a lot of apprehension before you do something new. Eva showed how coloring your hair at home for the first time is really that easy.

We’ve been here to give as much guidance, as much education to our consumers as possible. So the right product, right beauty vision, right guidance, whether it’s through our spokesperson or our hair color experts. We did a lot of tutorials and live streaming to be there to help people through their new beauty routines.

Even if the makeup market has been less dynamic, there are some segments that have remained pretty strong, like brows, for example. How do you define your brows at home was one of the top searches during COVID-19. L’Oréal Paris, Maybelline New York and NYX Professional Makeup all have a lot of brow styling products that are really great to do at home.

And, with people wearing protective masks for some time, I expect a kind of mascara index to be a real thing. Before, during the past recessions, we spoke a lot about the lipstick index. Well, probably now it’s going to be more of a mascara index. Women are treating themselves more with mascara than with lipstick in the new normal. We will closely monitor that because Maybelline New York is extremely strong in mascara with products like Falsies Lash Lift and L’Oréal Paris with Lash Paradise, and they are trending really well.

Even though makeup was more challenged during the past few months, there are a lot of pockets of positive news. The same for concealer. Again, people want to look good. They want to not look tired. They want to have a healthy look, and makeup is extremely important for that.

WOLDT: During our conversation, you mentioned social media. How is L’Oréal’s marketing and communication strategy evolving with the growth of these new technologies?

GERSCHTEIN: As we said, it all starts with building a deep relationship with the consumers. Our touch points with consumers are multiplying actually, right now. We do everything in our capacity to meet them and to delight them in every direction. Marketing is an engine to our brand, and it’s one of the muscles that we keep reinventing and strengthening over and over.

Marketing today is very different from marketing when I joined L’Oréal many years ago. Our approach starts with the consumer, which has always been the case, being there every step of the way. And now, the digital channels have allowed for a richness of insights. We start communicating with consumers even before a product is born, building it with social listening insights, asking the right questions, reading every review, investing in what makes a real difference in how we’re perceived.

Our campaigns are now spanning a wide breadth of media, from TV to social media but also digital TV and many more. What keeps evolving is really our capacity to keep our scale, but transforming it into precision at scale. This is what makes communication really relevant and unique, and lets it resonate with the right consumer at the right time on the right channel. It’s true that technology is an engine for marketing innovation; as more consumers choose to interact with our digital services like virtual try-ons, online diagnostics, or education and content, then they tell us what they want to hear from us and what speaks to them.

The fantastic thing about the new marketing today is that kind of two-way communication. When I started, marketing was very much a one-way communication, and it’s changing the entire game. I think that social media also allowed for content and education, to link with entertainment, which is also pretty new and it’s, like, edutainment, it started exploding really because of COVID-19, but it might be really here to stay. Recent experience shows that people like screens, fun content on e-commerce and online events. I’m pretty amazed by the talent and the capacity of our team to keep raising the bar for marketing that is going to be even more relevant, more cool and always more consumer-centric.

WOLDT: Do you do any direct-to-consumer sales at this point?

GERSCHTEIN: Yes, in the Consumer Products Division we do direct-to-consumer sales for NYX Professional Makeup and also for Carol’s Daughter.

WOLDT: Are you considering the addition of more brands to your D-T-C business?

GERSCHTEIN: We are always on the pulse. It’s true that having a D-T-C has been helpful during the past few months, but it only can complement what we do with our brick-and-mortar retailers and what we do with our key business partners.

WOLDT: You noted the benefits of two-way communication with consumers. Is that affecting the way you go about developing new products?

GERSCHTEIN: Absolutely. We really listen to what people want and what they don’t want. Those insights influence the way we design and the way we create our products.

WOLDT: One last question. How is L’Oréal working with its retail partners to rethink the beauty experience in light of COVID-19?

GERSCHTEIN: We are working tirelessly on this topic, which is really extremely important. In the Consumer Products Division, we continue to support our consumers by providing them with complementary online and in-store initiatives that create engagement and give them a reason to shop beauty. A clear example of that is an exciting event that we have created called Beauty Forward, which is starting to really have an impact with our retail partners.

It’s an event that we initiated within the Consumer Products Division to invite our consumers to engage with our beauty brands, both in-store and online. It’s a way for us to drive traffic to the beauty category, to highlight skin care and makeup, and give people even more reason and desire to shop these categories.

The retailers are very excited about it. As the shopper has started to emerge from this pandemic, we believe that stores remain a very important part of the beauty experience. While it will take some time to make the in-store environment exciting, engaging and different again — a process that will involve technology like our Modiface, which uses AI and AR to let customers do virtual try-ons –- the store will play an extremely important role in the shopper’s journey for beauty. We believe our consumers’ willingness to embrace new beauty habits and in-store engagement with our brands is extremely strong.


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