Estée Lauder outlines six-month strategy to recoup lost market share in China

According to the company’s financial results for the three months ending June 30, its market share in China was 23%, down one point due to the lockdown, which led to the closure of its center. distribution for two months.

This impacted the company’s ability to serve the entire Chinese market until the end of May.

During his fourth quarter (Q4) earnings call, Estée Lauder Companies President and CEO Fabrizio Freda outlined the company’s plans to recover market share lost in China over the past six months. coming months.

First, Freda highlighted high-end haircare brand Aveda, which launched in China last month on Tmall and unveiled its first standalone store.

“We will strengthen [our strong portfolio of brands] with the launch of Aveda just starting, which is a very important launch for hair care…Luxury hair care is a big and growing category in China,” said Freda.

At the same time, it’s set to launch some exciting new products, including Estée Lauder’s Advanced Night Repair Eye Supercharged Enhanced Gel-Cream. According to the company, the launch considers modern lifestyles to address aging issues.

[Eye care] is one of the most important categories in China, and to be clear, it is one of the most important recruitment strategies is eye products in the market,”

Estée Lauder is also set to unveil a new R&D facility in Shanghai, which will increase its ability to develop localized products for the Chinese consumer.

“Fiscal 2023 is set to be a monumental year for us with the opening of our Shanghai Innovation Lab, advancing our ambition to create the best for Chinese consumers,” said Freda.

The company will strengthen its presence in the online space with the help of e-commerce partners Tmall and JD.com

“We will double down on Tmall and enter a successful new online distribution that we started with JD, where we still have the opportunity to roll out more brands in other areas where we test or distribute,”he said.

It also plans to enhance its brick-and-mortar distribution with openings in new and existing markets in China.

In addition, to mitigate the risk of its distribution interruption, the company will expand its distribution points. In August, it opened a new distribution center in Guangzhou.

“This will turn into a new second major distribution center underway in early 2023,”said Freda.

As for travel retail in China, especially on Hainan Island, Freda believes it will rebound strongly after the lockdown.

“We believe Hainan, despite the current lockdown, which is obviously painful in the short term but is a super strong opportunity for the long term. Hainan’s power in the future remains intact, and we have a strong presence and market share in this operation. »

In the fourth quarter, Estée Lauder’s net sales in the Asia Pacific region fell 19% organically and the decline was attributed to unrest in China.

Skincare, which accounts for about two-thirds of APAC business, was hit hard by the disruptions in Shanghai. Overall, net sales fell 21%, with the biggest impact felt by the Estée Lauder and La Mer brands.

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