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The keys to L’Oréal’s success in eastern Europe

L’Oréal is determined to hold onto its leadership position in eastern Europe. The efforts are spearheaded by Alexandre Popoff, who speaks seven languages and manages the Group in 32 countries. He explains his winning strategy.

L’Oréal and beauty care in Eastern Europe

L’Oréal’s longstanding presence in eastern Europe

“We established a presence in the region quite early on”, says Alexandre Popoff, Executive Vice-President, Eastern Europe and Africa, Middle East. “Business really took off in the early 1990s, when the Berlin Wall came down and the Soviet Union collapsed.” Twenty-five years on, L’Oréal operates in 32 countries across the region. The area that Alexandre is in charge of stretches from Vladivostok, via central Asia, in the east; northwards to the North Pole; and southwards to Turkey and Israel. The total population is 494 million, nearly half of whom are potential L’Oréal customers. All four of the Group’s divisions – luxury, active cosmetics, professional products, and consumer products – have taken up positions in this huge market.

Differing consumer profiles

All the countries in the region have youthful populations, but consumer profiles differ from one area to another. The first differentiating factor is purchasing power, which, on average, is three times less than in Western Europe. And there are also marked discrepancies from one country to another. The wealthiest nations include Israel, Poland and the Czech Republic, followed by Russia and Turkey, with central Asia and the Balkans bringing up the rear. Physical features are another differentiator. Alexandre explains: “Northern Slavic people generally have fine hair and fair complexions. Ottoman consumers, also present in the Balkans, Romania and the Caucasus, have darker complexions and are often prone to sunspots. A third cluster comprises consumers in central Asia. Here, the Asian influence is very strong: women have thick, straight dark hair and want a glowy complexion”.

A“glocal” strategy

Stay focused

“The region is certainly volatile – something’s always happening – but we are here to stay”, says Alexandre. “Our strategy is to stay focused and meet the beauty care requirements of the region’s women.” In short, it’s up to the Group to adapt to consumers’ needs and cope with economic ups and downs across the region. Alexandre Popoff points in particular to Russia, which has recently experienced three economic crises in a row: “The 1998 crisis was even harsher than the one Russia has just endured. The country was verging on bankruptcy and the shops were bare”, he notes. Another example is Turkey, which has “expanded strongly but is now is a tougher situation, with a depreciating currency and a migrant crisis to deal with”. Alexandre has lived through many such bouts of instability and believes there are more to come. “But”, he says, “they are always followed by bright spells”. He prefers to see the constraints as opportunities. “It’s what we call the ‘lipstick effect’: when an economy is ailing, it’s easier for people to buy a lipstick than a new house. Which means we have to adapt our make-up offering in order to address consumers’ overriding concerns.” That’s precisely what the Group did last year in Russia with loss leaders from L’Oréal Paris and Maybelline, which feature all the Group’s technologies but are still affordable.

Adjust to our markets

L’Oréal’s universal strategy is to start with the consumer. This sometimes involves producing locally, as the Group has done in Russia, Turkey and Poland. Alexandre Popoff explains: “In the vast majority of cases, we can meet local needs from our international catalogue. When we can’t, we develop a tailor-made offering”. So L’Oréal Paris developed the Age Expert range for Russia, making sure it was simpler and more self-explanatory than existing anti-age face care products sold in Western Europe. Age Expert was then renamed Wrinkle Expert and marketed outside the region. “This is what we call trickle-up innovation”, says Alexandre. “Other examples in the luxury product sector include two Russian-inspired fragrances from Armani Privé, Rouge Malachite and Vert Malachite, which are now part of the company’s international catalogue.”

Cultural differences also have to be factored into the strategy because they shape women’s beauty care routines. “Central European women tend to apply make-up unobtrusively, influenced by historical, cultural or religious considerations”, Alexandre explains. “In Turkey, round-the-eye make-up is the big thing. Skin care products have made little inroads into the market, so we’ve put the emphasis on toiletries and moisturising products, which are a starting point for more elaborate make-up routines. And in Russia, women take make-up very seriously – it’s a weapon of mass seduction!”

“We try to satisfy unexpressed needs, especially in Russia, the region’s biggest market in terms of size and economic clout. For that purpose, L’Oréal’s teams conduct in-store interviews and, in some cases, invite themselves into with women’s homes. “I’ve actually gone into homes in Russia and Turkey so that people can describe their beauty routines and chat with me about their ideal products”, recalls Alexandre.

The Group’s ambitions in the east

Attracting millennials

Millennials in the eastern region are just like millennials everywhere, as Alexandre Popoff knows very well. “This generation is totally globalised,” he explains. “The gap is no longer between regions but between generations. What millennials want are beauty care products that give instant gratification and immediate benefits. But above all, because they are less responsive to TV advertising, they want products that are marketed differently.” The ultimate weapon for winning over this target group is digital technology. Maybelline seems to be the Group brand that has made most progress in this area. In Poland, for instance, it invites women to be made up as New York City “It Girls” and have their picture taken.

Digital initiatives have to be tailored to each country. In Russia, for instance, VK and Yandex are the local equivalents of Facebook and Google. The same applies to influencers, who are the real stars of the digital marketing machine. Alexandre Popoff explains: “We’ve relied on the same formula in every country by teaming up with local influencers”. He quotes the example of Garnier Pure Active, a 3-in-1 wash-scrub-mask for teenagers everywhere, who all have the same skin problems. In Poland, singer Michał Kwiatkowski, who once competed in the French equivalent of The One talent contest, has name-checked the product in one of his hits.

L’Oréal’s ambitions

Alexandre Popoff has plenty of ambitions for the region. They include the roll-out of NYX Professional MakeUp, the US brand that made its name through digital marketing and is now used by millennials throughout the world. Another ambition is to expand distribution channels: “We still have work to do in order to increase our presence in the most selective channels, such as pharmacies and beauty salons”, says Alexandre. In his view, these new channels, combined with online shopping, are a powerful growth driver: “I may not have a crystal ball, but I’m very confident”.

About

L’Oréal

French industrial group, global leader in cosmetic products.

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