The world’s famed cosmetics conglomerate Estée Lauder is feeling the impact of the current global health crisis as sales figures drop in its lucrative travel retail business in Asia. Despite investing heavily in digital marketing and omnichannel approaches to post-Covid retail, the company reported a 10 percent decrease in sales for the second quarter of 2020 compared to the same period last year. How will a company as influential as Estée Lauder navigate the current and changing consumer landscape? Vogue Business takes a look.
1. Estée Lauder Takes a Hit in Asia
Estée Lauder has recently experienced a sharp decline in sales in the Asia-Pacific region. Predominantly attributed to the staggering effects caused by the coronavirus pandemic, the regions most hard-hit economies of South Korea, Japan, and China have all reported major dips in the sale of Estée Lauder products.
However, the famed cosmetics brand is far from defeated. With dedicated focus on expanding online retail operations, the company is committed to providing innovative digital solutions for its loyal customers. Furthermore, as countries in the region steadily recover from the pandemic, Estée Lauder awaits an opportunity to relaunch its physical presence in select regions.
- Online Presence Expansion:Estée Lauder is committed to expanding its online retail presence and offering innovative digital solutions for customers.
- Physical Presence Reintroduction:As countries in the region gradually recover from the pandemic, Estée Lauder awaits an opportunity to re-establish its physical presence in select regions.
2. Travel Retail Stumbles in Asia
The retail environment has been anything but smooth sailing for luxury goods over the past couple of months. In Asia, travel retail took a mighty dip as the sight of packed airports became a distant memory. Furthermore, the aviation industry had already been struggling before the pandemic struck.
The diplomatically-imposed exit from China has further compounded the woes of many luxury brands operating in Asia, especially those with a heavy reliance and dependence on the Chinese market. Many of these brands have had to contend with a drying up of customer demand and an inability to expand into new markets.
- High-end stores in the region have recorded steep declines in sales as customers have become increasingly cautious with their spending.
- The travel retail landscape has been disrupted in the region due to the closure of airports, declines in tourism, and restrictions on international travel.
3. Estée Lauder Sales Down 10%
Estée Lauder has registered a 10% drop in sales during the past quarter as the cosmetics giant continues to feel the impact of the coronavirus pandemic. The company has attributed the decrease to:
- A sharp decline in tourism related purchases
- The loss of duty-free sales
- Fewer people going to department stores and shopping malls
Despite the decrease in sales, Estée Lauder has remained resilient in the face of the crisis, with the company’s CEO lauding their “strong global business model”. It has also maintained its focus on digital and media investments, which helped contribute to offsetting some of the effects of the decline in physical retail.
4. Retail Outlook for Estée Lauder
Estée Lauder, the flagship brand of its makers, is believed to have an optimistic retail outlook as the year progresses. The company’s long-standing roots in the beauty industry have been the main catalysts in helping them find their footing in the ever-changing market.
This year, Estée Lauder is expected to:
- Grow its presence online – With more stores shifting to an e-commerce model, Estée Lauder intends to take full advantage of the situation. It has committed to expanding its e-commerce operations to reach more consumers.
- Adopt a global approach – Taking its cue from the necessity to build its distribution network, the company is looking at promising markets abroad. Estée Lauder’s brands are already present in more than 150 countries across the globe.
- Focus on customer experience – Prioritizing customer service, Estée Lauder is investing both time and resources in its physical as well as digital customer experience. Its in-store consultants are well sought-after and customers continuously look for more unique and personalized offerings.
These measures should help Estée Lauderdale progress further in terms of its international presence and ambition. As we progress into the year, the beauty giant looks set to take the retail market by storm.
The rise in Estée Lauder’s sales came to a sudden halt with the coronavirus impacting the travel retail market in Asia, which has now prompted a decline in the company’s quarterly sales. It is likely that with the reopening of international travel, Estée Lauder will be able to regain some of the lost sales in the coming quarters. However, it remains to be seen how the beauty brand will cope with a world that may not be quite the same following the pandemic.
