Personalisation at scale – L’Oreal

When a billion people use your skin care & hair care products and your cosmetics range, you need to consider innumerable textures & colours. All these consumers want products that are tailored to their needs. For L’Oreal, delivering personalisation at this level of scale meant thinking about innovation in a different way.

It would no longer mean a one solution to one problem approach. It meant tailoring the solution for individual consumers who experienced the same problem in different ways.

Leveraging industry 4.0 to achieve personalisation at scale

Industry 4.0 includes robotics, IoT, data, blockchain, VR, AR & AI. All these technologies have a place in the modern industrial framework. They can be combined and can be deployed to make manufacturing more productive and efficient.

L’Oréal not only leveraged e-commerce and recommendation engines during the pandemic, but the company also tested and implemented technologies to deliver personalisation at scale.

Initiatives and solutions

We’ve already covered L’Oreal’s Modiface in a previous blog. Some of L’Oreal’s other various initiatives are:

  • Le Teint Particulier, under the brand Lancome – a product which allows consumers to have their skin tone ‘measured’ at point of sale. A personalised concealer is then manufactured for them right there in the store. The concealer is a combination of one of each of 8,000 shades, 3 coverage levels, and 3 hydration levels. Even the packaging is personalised with information including the customer’s name. It also includes a reference ID for quick and easy reordering.
  • Custom D.O.S.E by Skinceuticals, a L’Oreal UK brand. According to L’Oreal’s tech incubator, “Custom D.O.S.E by SkinCeuticals is the first ever automated system that delivers highly concentrated combinations of SkinCeuticals’ most potent ingredients on-the-spot. Addressing the concerns of over 250 skin types, the D.O.S.E technology is first-of-its-kind because it’s able to mix active ingredients into a single serum at the point of service specifically to target the appearance of skin aging issues, like wrinkles, fine lines, and discoloration.”
  • Agile production lines – by leveraging several industry 4.0 technologies, L’Oreal has been able to manage final product differentiation later in the value chain. Stéphane Lannuzel says, “We can produce the base and then choose the colour for a lipstick right at the very last moment”.
  • Perso, this gadget personalises and customises make up for your every need. Perso relies on an AI derived diagnosis of a photo (corresponding phone app by BreezoMeter) of a user’s face to highlight imperfections ranging from fine lines to dryness. Perso then creates a final product formulated for the user’s skin, pulling from a library of ingredients.

The results speak for themselves

For the year ended 31 December 2021, L’Oreal’s brands grew by 16.1%, nearly twice that of the global beauty market. Sales was up 15.3% vs prior year, with profits up 29% vs prior year.

The group reported double digit sales growth in H1 2022 at 20.9% increase YoY.

The state of flux in FMCG

FMCG brand managers are facing an unprecedented and almost overwhelming combination of challenges, which are coming at them faster than ever. We have labelled this phenomenon the age of progressive FMCG – political and social tensions, culture wars, gender wars, warnings of impending environmental disasters, the obesity crisis and the collapse of trust in traditional media and other forms of authority. It makes for a darkly dystopian mix.‘ according to a report by FINN, a communications agency.

Despite all this change, FMCG companies continue to homogenise shopper characteristics by generational cohorts for different markets. While this worked well 30 years ago, when each generation had its own signature characteristics, today, this has changed.

Patterns across generations

These days, due to technological advances, there are similarities in shopper behaviour across generations that could be used to categorise shoppers rather than relying on generational similarities.

For example, each generation has people who adopt technology early. Not only that, but Baby boomers needed to undergo a ‘crash course’ in ecommerce and social media during the pandemic for everyday shopping and to keep in touch with their family.

As a result they found that e-commerce is a far more convenient channel for their shopping needs than travelling to stores. This is especially so for baby boomers who maybe mobility constrained & for those baby boomers living in emerging markets, where proximity to stores and traffic are deterrents to shopping at stores.

Another commonality across generations is the impact of price. While only 73% of Baby Boomers considered price a key factor influencing their purchasing decision vs 78% of Gen Z, the delta between the two is not significant.

Consumers across generations love a bargain, with 75% of both millennials and baby boomers agreeing that they’re more likely to purchase if they have a coupon or loyalty discount. For more information on multi generational retail strategies, read this report.

Pre pandemic studies on FMCG now out of touch with consumers

Most studies on shopping preferences and styles of the different generations were done pre-pandemic. These are now of out of sync with the consumers of today, and that includes baby boomers and Gen Xers.

A recent 2022 study by Hubspot on how each generation shops shows more similarities that differences between many of the generations. While 50% of Gen Z shoppers said that a brand’s ESG initiatives are important to them, 35% of Baby Boomers also said the same, with Millennials at 41%.

Millennials & ESG initiatives
Gen Z & ESG initiatives

While only 25% of Baby Boomers say that ESG initiatives by brands influence their choices, 71% of those who agree want companies to take action on Climate change.

The key takeaway is that consumers across generations are concerned about similar things. The only difference is the percentage of each generational cohort.

Leveraging similarities

Today, we live with spiralling inflation, geopolitical conflicts and the ever present threat of another pandemic. These uncertainties are impacting consumption choices yet again.

Perhaps it is time to regroup consumers by how they discover products & shop and what features/benefits influence their choices rather than relying on generational similarities to target consumers.

Benefit Cosmetics and how they leveraged NFTs to increase consumer engagement & sales

The term NFTs (these days) is commonly associated with art these days. According to The Verge, NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
However, this is not about art, today our blog is about how Benefit Cosmetics leveraged NFTs to increase consumer engagement and sales during the pandemic by building a bespoke Virtual Atoms (a form of NFTs) powered platform.

Launch amidst lockdowns

When the UK announced nationwide lockdowns in 2020 and early 2021, Benefit Cosmetics needed a way to engage their consumers and encourage sales to mitigate closure of their stores and concession stands. Lockdowns were hard enough on sales of cosmetics, but even harder on launches of new products in cosmetics, skin care and hair care. And this was exactly the challenge Benefit Cosmetics needed to overcome. They had a new mascara product to launch when lockdowns hit. The new product being launched was They’re Real! Magnet Extreme Lengthening Mascara. The company needed a way to launch the product, reach their target consumers (‘BeneBabes’) and drive conversion.

A new way to reach their target

They needed a new approach to their sales strategy and the new consumer engagement platform needed to appeal to a jaded and frustrated audience who were now bombarded with Facebook & Instagram ads. Benefit Cosmetics describes its target consumer as ‘committed to the brand and active in social media interactions’. This meant that any ads or campaigns on Facebook, Instagram, Twitter or TikTok, would be just another ad to the target Benefit consumer. They needed a way to get their attention.

To do this we used a pioneering new technology, Virtual Atoms (VA) – a form of NFTs, to create a ‘lashtastic’ virtual-media campaign with real-life results.

Virtual Atoms (VA)

Benefit Cosmetics used a new technology, Virtual Atoms (VA), to create a virtual media platform and campaign to reach and wow their consumers. The VA campaign was multi channel and gave ‘BeneBabes’ a full 360degree experience if they so wished. Ads on social media encouraged fans and potential consumers to sign up to the VA platform. The platform engaged its users through virtual and real life experiences that had gamification at their core and drove them to buy the new magic mascara.

Users were asked to drop a pin to share their location. Then using AR, registered consumers used their device camera to view and collect ‘surprises’ they could see around them within the safety of their home/wherever they were then.

The surprises, Virtual Atoms, were stored in their Virtual Atoms’ wallet and could be redeemed to ‘spin the wheel’ and win prizes such as virtual beauty consultations, mascaras and product discounts. Winners were then redirected to their virtual store where they could collect their prizes and also buy product.

The platform also housed exclusive content from well known beauty influencers and promoted the campaign with nearly 1.4million followers on Instagram.

The results

Through the innovative use of NFTs and Virtual reality, Benefit Cosmetics created an omni-channel campaign that was fun for its target consumers and also delivered results. The campaign delivered a conversion rate of 55.4% vs a target of 46% and a click through rate (from registration to the platform) of 39.4% vs a target of 35%. The average dwell time was 2 minutes and 22 second, 29,870 new BeneBabes registered and 16,534 prizes were collected.


Not only was invaluable data captured through this campaign, but the platform helped Benefit Cosmetics connect with new and existing target consumers during a time when other companies struggled to do so.

Internet and its influence on sales

On 12 March 1989, Sir Tim Berners-Lee submitted his proposal for the World Wide Web.

Sir Berners-Lee proposed a way of structuring and linking all the information (like a web) available on CERN’s computer network that made it quick and easy to access. This concept of a ‘web of information’ would ultimately become the World Wide Web.

The launch of the Mosaic browser in 1993 opened up the web to a new audience of non-academics. By 1995, the internet and the World Wide Web were established phenomena. In 1995, the Internet had less than 40 million users globally. In contrast, Facebook had 2.9billion monthly active users in January 2022.

While in its early days, the internet was structured on the basis of decentralisation (think p2p file sharing sites like Napster), these days, most use the internet for social media (Twitter, Instagram, TikTok etc), entertainment (think Netflix, Spotify) and for updates on current events, whether fake or not.

Why are we blogging about the internet today?

The internet has had an outsized impact on sales and predictability of sales since inception. While its early (negative) impact was on sales of music, books and movies, due to sites like Napster and Bittorrent, its later impact was on sales of consumer goods, both every day and luxury. This is largely due to social media.

Current events(‘news’) have always influenced our buying decisions. Prior to the advent of the internet, this was restricted to watching the news once a day or to the daily newspaper. So the influence was sporadic. These days, there are several websites (some legitimate, some not), that people can go to for their current events update. This has made the world a lot smaller and influences choices.

Influencers

Influencer marketing has been around since Roman times, when gladiators endorsed products (Source: Forbes.com). According to Forbes.com, the first well known influencer collaboration was when Thomas Wedgwood made a tea set in 1760 for the wife of King George III and marketed his brand as having ‘royal approval’.

In the early 2000s, mommy bloggers were the influencers sought out by various brands to popularise and talk about their products. But the term ‘influencer marketing’ was popularised by social media.

Social media

Of all the websites and apps on the internet, social media has the biggest impact on sales. This is not just owing to the influencers on the internet and what they post, but also due to what regular people like you and me post. With content now going ‘viral’, it is viewed not by 100s of thousands of people, but a few million or billions of people.

In June 2021, Musk tweeted a heartbreak emoji and a Linkin Park referenced meme while talking about Bitcoin. The result: The price of Bitcoin dipped 3.6%.

Another, rather infamous twitter post, was by Weetabix and Heinz. The post was polarising enough that other brands, retailers and even foreign embassies got in on it. Within just a week of posting this, Weetabix sales was up by 15% in Sainsbury’s alone (Source: The Grocer)

Increased information on brands/companies

As information has become the new currency of today, any actions taken by companies are fodder for news, which eventually makes its way to social media.

With Gen Z & Millennials now forming the bulk of shoppers and given how their views on purpose have influenced how Gen X and Baby boomers think about consumption choices as well, this increased availability of information has the power to change brand preferences, based on the information on decisions taken by these companies.

Following the start of the conflict in Ukraine, when Unilever, Pepsi & Coca Cola did not initially pause Russian operations, consumer responses influences sales enough that they then decided to pause operations in the country.

How can sales people predict changes in preferences and prepare for it?

  • Make it a point to stay updated on current events through legitimate sources.
  • Check social media sites regularly to keep an eye on what posts are trending.
  • If your view or preference has been impacted by a particular event, news or a social media post, you can be sure that there are several more whose preference has changed as well.
  • Join different social groups and ensure you regularly talk to people across different generations. Each generation reacts differently (or does not react).

People have always been influenced by the opinions of others. This has been so since times immemorial. Technology has magnified this and will continue to do so as people search for human connection on the internet instead of ‘in real life’.

Product – the most important element of retail execution & the marketing mix

Product is, probably, the most crucial component of the 6Ps. It originates directly from your consumer through an unmet need that they have.

This can be a physical item, a service, a platform or software. It is produced at a cost and is made available to the target audience at a price to help fulfil the need. Whatever the nature of the product, it always follows a lifecycle. A company can increase its competitive edge by ensuring a thorough understanding of the potential lifecycle of the product for proactive launches of product extensions or timely re-launches. Re-launches help the brand/product to remain relevant in a changing market or at the end of its lifecycle.

Product lifecycle

The 4 commonly used stages are introduction, growth, maturity and decline.

We like the hubspot model as it breaks this down into 6 stages – development, introduction, growth, maturity, saturation and decline.

Development: The development stage of the product life cycle is the research phase before a product is commercially launched for wider consumption. In the FMCG context, this is when the innovation team develops/conceptualises the product and the branding in collaboration with the R & D team, with key consumer focus groups providing feedback.

Introduction: The introduction phase is when a product is commercially launched. In the FMCG context, this is when marketing teams begin building product awareness amongst consumers and sales teams reach out to potential customers. Typically, when a product is introduced, sales volumes are low and demand builds slowly. This phase is dominated by advertising and marketing campaigns educating both the consumer and the customer (supermarket/wholesaler/distributor etc).

Growth: During this stage, consumers have accepted the product in the market and customers are beginning to buy in. This is the stage when competition begins developing.

During this phase, marketing campaigns often shift from getting customers’ buy-in to establishing a brand presence so consumers choose them over developing competitors. Additionally, as companies grow, they’ll grow distribution at existing and new customers.

Maturity: Once the brand/product gains strong foothold in market, it enters the maturity phase, with gradual slowdown in sales. The brand/product is already the market leader and demand grows only at the replacement rate.

Saturation: This means that a majority of the brand’s/product’s target households will own or use the product. At this stage, sales grows more or less on par with population. Price competition becomes intense and the brand/product teams focus on retaining shelf space and even their listings at stores.

Decline: If the product/brand doesn’t become or retain its position as the preferred brand for consumers, it enters the last stage – decline. Usually, this happens to strong brands only in the case of industry transformation. Eg. Kodak. Sales will decrease during this time and the only way to win at this stage is to innovate and launch a new or transformative solution.

It goes without saying that functionally, the product must be able to perform its function as promised and it must be available when the consumer needs it.

At this moment in time, availability in store is proving to be a bigger challenge than others. This is driving consumers to look towards what they already have for solutions and in the cases of some products/brands, is speeding up the onset of the ‘decline’ phase before the products/brands even get to the ‘saturation’ phase.

Why is availability at risk?

2021 has been a challenging year for the grocery sector. While the HGV crisis was not specifically driven by the pandemic, it only made it worse. This has caused unprecedented levels of stock outs in supermarkets. And then there is the legacy of COVID on consumption behaviour.

Covid has had a lasting impact on our lives, from the increase in home based working (driving higher consumption of toilet paper and cleaning products at home vs the office) to cooking meals at home instead of eating out (increased demand for oil, salt, cooking ingredients at the supermarket vs at wholesalers/distributors to the on-trade). People have realised that cooking at home during the pandemic has helped significantly with savings. The same goes for consumption of beer, wine & spirits at home instead of at the on-trade. These are behaviours that are expected to last, especially as the impact of price inflation is felt at home.

The above changes, combined with just in time ordering and production followed by retailers and by suppliers in this sector is putting pressure on availability.

As 2020 demonstrated, at one point, availability trumps price and brand loyalty. And, at the risk of using an over tired idiom, out of sight, out of mind.

Easter eggs – the stock out no one expected in 2021

This blog is about why Easter eggs went out of stock for Easter 2021.

The news outlets and consumers all agree on one thing. Easter eggs were out of stock for Easter 2021.

There were several angry and disappointed customers tweeting about the shortage and news outlets are also talking about this.

It certainly wasn’t caused by people stockpiling Easter eggs. Some speculated that this was caused because people did not buy them early enough. According to an article in The Guardian, Asda said it had seen a surge in hot cross buns, individual chocolate bunnies and even novelty bunny ears, while sales of Easter crafting, decorations and games were up a whopping 207% year on year.


They are using 2020 to compare 2021 with. The Easter Egg orders for 2021 were made based on 2020 sales. Now what do you think is wrong with this statement?

In March 2020, everyone was going into lockdowns, vs April 2021, when lockdowns were easing. When UK retailers were placing orders for Easter eggs in late 2020, lockdowns had eased to a large extent and was in the period just before the next lockdown.

So why did retailers use 2020 orders as baseline for 2021? They anticipated an increase vs 2020, but the increase was not enough to account for normal consumption rates pre-covid.

For those who know this industry, it wouldn’t come as a surprise. Retailer orders are based on or pegged to previous year sales, not based on expected consumer demand. However, consumers do not replicate consumption habits year on year.

Retailers and the brands that sell into retailers need to be more data driven when they place orders during these fast changing times. Consumer preferences and the factors that influence them change on an almost daily basis these days. Expecting consumers to mirror previous year sales and pegging their consumption to previous year sales plus an uplift results in the two extremes – under stocking (lost revenues/sales and angry consumers) or overstocking (cost of the working capital involved).

To learn more about how to use data to predict consumer preferences and order volumes, email me on veena@salesbeat.co

Breakfast cereal revival – a pandemic boost?

2o20 has been a very interesting year for breakfast cereals.

The breakfast cereal aisle is the one aisle I skip when I do my weekly grocery shopping. Not because I don’t eat breakfast, but because this segment had too much and too little choice all at the same time. That may sound contradictory.

The choice this aisle offered was purely contained to flavour. You had the usual suspects – vanilla, strawberry & chocolate and then other flavours like coconut, banana & berry. Consumers had too much choice (a minimum of 60 options at the average large format supermarket) and the paradox of choice struck.

People started eating less cereal for breakfast. They were also eating more breakfast bars and picking up breakfast to go from cafes. This was a double whammy for the industry as consumers wanted healthier choices as well – less added (natural or otherwise) sugar in their cereals, more fibre, more proteins etc – which the industry was not prepared for and this impacted breakfast cereal perception & consumption and resultantly, sales. According to a Forbes article in Aug 2019, the average US consumer has eaten 14 fewer bowls of cereal over the last 28 years and according to an article by Kerry in October 2019, US retail sales of cereal was expected to decline by 6% between 2017 & 2022.

In February 2020, before the pandemic brought the world to its knees, CNBC ran an article on the breakfast cereal sector and General Mills’ plan to revitalise this category in the US, the current largest breakfast cereal market . The article started off with a summary of key takeaways and the first was:

‘U.S. cereal sales have gone stale in recent years as consumer tastes change.’

Sales volume was in decline for the at-home breakfast cereal sector when the pandemic hit. But then, people started working from home, children started schooling from home and breakfast at home became a regular routine. With professionals still working (albeit from home; so, no time for a hot breakfast!), cafes still under lockdowns and takeaway breakfast joints competing for who has the longest queue, breakfast cereals saved the day for all the moms, dads and working professionals out there.

So the pandemic saved the breakfast cereal industry. It was almost as if the pandemic compelled this industry to listen to what their consumers were asking for (clue: no more flavour variations!) This last year saw an almost unprecedented pace of innovation in this sector. Instead of offering a plethora of yet more flavours, brands instead focussed on creating options along the ‘health spectrum’ spanning from indulgent to healthy.

While the new normal may see a drop in at home cereal consumption compared to that in 2020/early ’21, with kids going back to school, the drop may not be as steep as working from home is here to stay… and breakfast cereal also makes a great snack!

So what prompted this blog today? Weetabix just announced indulgent variants of their fibre rich cereal with Chocolate Melts Duo.

So what does the future look like?

So what is the future of retail as it pertains to groceries?

We believe that brick & mortar stores, whether they are supermarkets, convenience stores or even open air markets, are here to stay. Online grocery stores will take more share from brick & mortar stores. However, they will co-exist. 

Total grocery revenues will be almost evenly split between online and brick & mortar stores. Customers will use grocery stores to explore and discover new brands, and buy fresh groceries and meat. 

Companies will use brick and mortar presence to signal brand credibility to customers and to encourage trial. Just like D2C brands are now building their brand identity selling directly to consumers, there will come a time, when brand identity is built at brick & mortar retailers and consumers will look to establish brand credibility at stores.

Deliveries are becoming less of a pain point as an increasing number of stores offer delivery service to customers once they buy their groceries at stores. There will be fewer brick and mortar grocery stores in the future as their revenues will not justify the rent on the space. 

Additionally, there will be fewer stores in prime locations, further lowering the rent paid annually by these retailers. The reason they currently have stores in prime locations is for convenience (of their customers). But online shopping is likely to be the more convenient choice of the future, whether it gets delivered or whether it is picked up from a convenient location. This would leave a higher margin for retailers than they currently have.

The winners in this space will be:

  • the ones who can get delivery of fresh produce right. The greatest concern/barrier for customers buying online is fresh produce. Online grocery stores and brick & mortar stores that have an online presence should build a reputation for delivering high quality produce consistently to encourage repeat purchases and new customer sign ups
  • the stores that can offer a ‘pick-up at store’ option for those who shopped online or the online stores (like Amazon fresh) that offer deliveries within an hour
  • the brick & mortar stores that can offer busy households a painless shopping experience without queues, like Amazon Go. This combines the convenience of buying online with the experience of buying at stores
  • the ones who have an online presence combined with brick & mortar stores

Watch out for this space next week to understand what led us to these conclusions!

The Future of Retail as we see it at Salesbeat

A month or so ago, I sent out a survey to understand the future of grocery retail across the globe. We got more than 300 responses from 25 countries and across ages ranging from 20 until 70+. Super appreciate everyone who replied. Thank you!

Everyone talks about how online buying is on the rise and that one day, everyone will be buying their groceries online. We wanted to get a better understanding of why everyone saw online grocery buying as the future and whether all countries around the globe felt the same way, so we could set our users up for success.

We intended to leave the survey open for just a week initially, but seeing some of the initial responses, which were very contrary to expectations, we decided to leave it open for response for a couple more weeks, which turned into a month.

So what did we see? We’ll be posting 3 blogs about the results:

  • The first will be on what is happening now
  • The second on what we see as the future from the results we got
  • The third will go into why we came to that conclusion

71% of our respondents buy their groceries from Supermarkets. Just 2.9% of our respondents buy their groceries online. The remainder 26% said they shopped both online and in stores regularly. 

Of the 2.9% who responded that they only shopped for groceries online, the bulk of respondents were in the 50-70 age range. We were expecting these respondents to be much younger – Gen Z respondents to be specific. Or even late millennial respondents.

But when we dug into why we saw these results they made sense. 

It turns out that most of Gen Z enjoy the grocery shopping experience. They prefer going into stores to get what they want. As the current working culture turns more to remote working and flexible working, it does indeed make time for the Gen Z respondent to go into stores to shop on a weekly basis. Also, they feel they need to touch, feel and see the actual product on shelf. 

Most millennials have a preference for shopping at stores and topping up online. 

The previous generations, in contrast, had far less time because of their commute into work and due to the squeeze on time, you see more respondents who shop both online and at stores. Online for convenience and stores when they had time. 

Also, we found that respondents in the 50-70 age range found it far more convenient to buy mostly online due to mobility issues. 

More to come on this next week!

Top reasons why Food & beverage start-ups and NPDs fail (continued)

So last week we spoke about what could go wrong with new product launches and we are continuing that theme this week. You’d be surprised how many things can trip you up close to launch date, after launch or even well after launch.

  1. Bad customer experiences: Your customer has been very specific about the configuration of the cases and pallets of your brand. But unfortunately, your manufacturer has not heeded instructions and delivered your first order the way they have always done things, which is quite at odds with your customer requirements. They do this a second time. They get this sorted out the third time, but by then your customer has made a note of this. The next time something goes wrong, they delist you. 
  1. Bad consumer experiences: Your first two weeks of launch have gone great. Your brand has been flying off the shelves. You know the third week may not be great, as your first two weeks have gone splendidly. Your fourth week should go well. But it doesn’t. Your sales drops. Your fifth week sees almost no sales and in the sixth week, the category manager tells you that unless your sales rebound, they are considering delisting your brand in favour of a competitors. So what went wrong? Your brand obviously fills a gap, but consumers just did not come back to buy more. It became difficult to drive trial too. Did you look at whether you were getting bad word of mouth? Did you get feedback from any of your consumers from the first two week? Anything can go viral these days and all you need is one or two people who dislike the product to start a social media campaign. Maybe someone got a bad batch or just did not like the taste.
  1. Weather and seasonality: ‘The weather, really?’ you are thinking. Yes, the weather and the season play a very important role in the success of seasonal or weather dependent foods. For example, the best time to launch an ice-cream or frozen dessert brand is during the summer, when your consumers will be open to trying new brands and products. During winter, if a consumer is buying ice cream, he/she already has a favourite and she/he’ll go for that brand/flavour. The same goes for beer in winter and mulled wine, mince pies and winter soups in wummer. Any of you who launched your ice cream brand during unseasonably cold summers will know what I am talking about!