GO­ING ROUGE

Prestige Indonesia - - Profile -

Iyou’re mil­len­nial and reg­u­lar buyer of cos­met­ics, the chances are that you do many, if not all, of your pur­chases on­line rather than at the mall. That’s be­cause e-com­merce has be­come an enor­mously dis­rup­tive force in the beauty busi­ness. “The global cos­met­ics mar­ket is boom­ing and is ex­pected to hit US$390 bil­lion by 2020,” Cos­met­ics Busi­ness mag­a­zine re­ported ear­lier this year. “Growth will be mainly driven by e-com­merce. More than 10 per­cent of beauty sales in the US were made on­line in 2016.”

Core­sight Re­search, a New York-based re­search firm, found that, in 2015, the cos­met­ics in­dus­try saw US$6.2 bil­lion (nearly 8 per­cent) of its sales oc­cur on­line. “Cos­met­ics are taking off on­line, and it’s a fas­ci­nat­ing phe­nom­e­non,” said the NBC News web­site. “This is stuff that by its very na­ture seems nec­es­sary to try on (or at least look at) in-store, but con­sumer trends in­di­cate other­wise. The global cos­met­ics mar­ket is an­tic­i­pated to grow an­nu­ally by 4.3 per­cent to reach US$429.8 bil­lion by 2022 - and at the rate th­ese on­line brands are go­ing, we can ex­pect e-com­merce sales to make up a nice piece of the pie.”

Ama­zon was re­spon­si­ble for 21.1 per­cent of on­line beauty sales in 2016, the largest of any e-com­merce re­tailer, ac­cord­ing to a re­port by 1010data, a big-data re­search plat­form. Macy’s racked up 17.4 per­cent of on­line beauty sales in 2016 and Sephora placed third at 15 per­cent.

Does all this mean that those colour­ful cos­met­ics coun­ters you see in the depart­ment stores have be­come passé and are doomed to ex­tinc­tion? Ab­so­lutely not, de­clares Umesh Phadke, Pres­i­dent Di­rec­tor of L’Oréal In­done­sia - pro­vided that brands wake up to the new re­al­i­ties and raise their dig­i­tal games.

“Look at the Kiehl’s coun­ters in Jakarta,” says Phadke dur­ing an in­ter­view in his cor­ner of­fice one Fri­day af­ter­noon at DBS Bank Tower, lo­cated next to the Cipu­tra build­ing in Kuningan. “They’re fan­tas­tic – they look like old world New York apothe­cary shops - and they’re do­ing very well. That’s be­cause cus­tomers en­joy great ex­pe­ri­ences when they go there. They’re made to feel wel­come by the staff in their at­trac­tive uni­forms, they learn about the cos­met­ics in an in­for­ma­tive and en­ter­tain­ing way, and they are en­cour­aged to han­dle the prod­ucts and try them out. The chances are that if they don’t buy some­thing there and then, they will or­der it on­line later.”

Kiehl’s is one of the lux­ury brands that L’Oréal, the world’s largest cos­met­ics com­pany with 2017 rev­enues of 26 bil­lion eu­ros and 89,000 em­ploy­ees, mar­kets in In­done­sia. Oth­ers in­clude Lancôme, Gior­gio Ar­mani Beauty, Yves Saint Lau­rent Beauty, Ralph Lau­ren Fra­grances, Shu Ue­mura, Vik­tor&Rolf and Ur­ban De­cay.

L’Oréal is an old friend of In­done­sia, hav­ing been present in the ar­chi­pel­ago since 1979. This coun­try is more than just a promis­ing growth mar­ket for the Clichy, France-based com­pany - it’s also an im­por­tant pro­duc­tion cen­tre. The L’Oreal Group has op­er­ated a large fac­tory here since 1986. It’s the Group’s seat of pro­duc­tion for the en­tire South­east Asian re­gion, with 70 per­cent of its out­put go­ing for ex­port.

An­other key ad­van­tage for the L’Oréal Group is its dis­tri­bu­tion reach. “L’Oréal is the only cos­met­ics com­pany in In­done­sia to be present in all dis­tri­bu­tion chan­nels: from hair sa­lons and beauty in­sti­tutes to tra­di­tional shops, and from mass re­tail to se­lec­tive chan­nels, our brands are ac­ces­si­ble to the en­tire In­done­sian pop­u­la­tion,” Phadke points out. “L’Oréal In­done­sia of­fers a port­fo­lio of 15 in­ter­na­tional brands, with com­ple­men­tary pric­ing and po­si­tion­ing, to sat­isfy a de­mand­ing and di­ver­si­fied clien­tele.

“Al­though the two most prom­i­nent con­sumer brands in the mar­ket are L’Oréal Paris and May­belline New York, the suc­cess of Garnier in Asia is one of the Group’s finest ac­com­plish­ments. As the num­ber-two brand in whiten­ing prod­ucts, the de­vel­op­ment of Garnier Light Com­plete, a prod­uct range spe­cific to In­done­sian skin, of­fers con­sumers a wide range of af­ford­able and in­no­va­tive prod­ucts.

“Pro­fes­sional brands like Ma­trix, Kéras­tase and L’Oréal Pro­fes­sion­nel are also very pop­u­lar in the hair and beauty sa­lons dot­ted all over the ar­chi­pel­ago, mak­ing L’Oréal the leader within this high added-value mar­ket. Mean­while, the lux­ury cos­met­ics sec­tor con­tin­ues to show steady year-toyear growth.

E-com­merce has be­come an enor­mously dis­rup­tive force in the beauty busi­ness. “It’s a small part of our busi­ness right now, but it’s grow­ing at break­neck speed. It’s a revo­lu­tion that’s wait­ing to hap­pen,” Umesh Phadke, Pres­i­dent di­rec­tor of L’Oréal In­done­sia, tells Chris han­ra­han

“We have a young, dig­i­tally en­abled and beau­ty­con­scious con­sumer base in In­done­sia”

“The over­all suc­cess of L’Oréal in the In­done­sian mar­ket is a tes­ta­ment to its con­tin­u­ous growth and am­bi­tious objectives. This dynamic mar­ket has a con­sid­er­able reser­voir of po­ten­tial con­sumers and is of strate­gic in­ter­est for the en­tire Group. Con­quer­ing one bil­lion new con­sumers within a span of 10 years is part of the Group’s in­ter­na­tional strat­egy, and In­done­sia has a big part to play in that.”

Born in Bahrain and raised in the Mid­dle East, Phadke is mar­ried with two chil­dren. He ob­tained a de­gree in En­gi­neer­ing in Vado­dara (for­merly Bar­oda) in Gu­jarat in western In­dia and an MBA from Mum­bai. As a 23-year vet­eran of the fast-mov­ing con­sumer goods busi­ness and hav­ing worked in In­dia and all the coun­tries of Asean, this ge­nial, knowl­edge­able and well-trav­elled CEO has ac­cu­mu­lated a deep un­der­stand­ing of the mar­kets and con­sumers of South­east Asia.

“I was head-hunted to join L’Oréal eight years ago,” says Phadke. “I was in­vited to France and I had eight job in­ter­views with dif­fer­ent ex­ec­u­tives in one day. You might think this was over­whelm­ing, but I en­joyed the ex­pe­ri­ence. It was one of the most fas­ci­nat­ing days of my life. All of the con­ver­sa­tions we had were so candid. Ev­ery­thing about that ex­pe­ri­ence busted the myth about L’Oréal be­ing a very nar­row­minded French com­pany. Ev­ery­one I met was im­pres­sive and open to talk­ing about the com­pany’s strengths and weak­nesses, and how I could fit into the pic­ture with my ex­pe­ri­ence and knowl­edge of Asia.

“L’Oréal’s cor­po­rate cul­ture is de­fined by its strong com­mit­ment to beauty. We are com­pet­ing glob­ally with other large FMCG com­pa­nies. But un­like our ri­vals, which have wide port­fo­lios of brands in many busi­nesses and in­dus­tries, we are to­tally ded­i­cated to beauty. Beauty is all we do at L’Oréal, and it’s been that way for 109 years.

“What also makes us stand out as a com­pany is that we like to make prod­ucts that are grounded in in­no­va­tion. We were founded by a chemist (Eugène Schueller, who de­vel­oped a hair-dye for­mula called Auréale). We don’t of­fer hope in a bot­tle, but sci­ence in a bot­tle. Sci­ence is fun­da­men­tal to L’Oréal. The com­pany spends 4 per cent of its rev­enue on sci­en­tific re­search. We couldn’t func­tion with­out cutting-edge sci­ence and in­no­va­tion.”

Phadke joined L’Oréal In­done­sia in April 2016. Prior to this, he was Man­ag­ing Di­rec­tor of L’Oréal Thai­land, where he led that busi­ness to be­come the coun­try’s fastest-grow­ing beauty-care com­pany for sev­eral years. Deeply in­volved in de­vel­op­ing dig­i­tal mar­ket­ing and e-com­merce here, Phadke says it’s fas­ci­nat­ing to be in­volved as L’Oréal trans­forms it­self into a more univer­sal, more con­sumer-cen­tric and more dig­i­tal or­gan­i­sa­tion.

Out­side of work, he likes to think of him­self as an in­trepid trav­eller, vis­it­ing un­usual and re­mote lo­cales such as Antarc­tica and North Korea, and a se­ri­ous pho­tog­ra­pher, mostly in the street pho­tog­ra­phy genre. For gritty sub­jects, Phadke of­ten uses film th­ese days. “It’s not so hard to find now. It has come back, like vinyl records,” he grins. He is a col­lec­tor of vin­tage cam­eras, most of which he has picked up at flea mar­kets while on his trav­els and some of which still work, and he de­vours books about pho­tog­ra­phy and cin­ema, no­tably the work of Amer­i­can pho­tog­ra­pher Steve McCurry and Fran­cis Ford Cop­pola’s The

God­fa­ther tril­ogy. The con­ver­sa­tion shifts from the dif­fer­ences be­tween film and dig­i­tal pho­tog­ra­phy to the in­cred­i­ble growth of dig­i­tal busi­ness. “The most ex­cit­ing phe­nom­e­non th­ese days is e-com­merce,” says Phadke. “It’s revo­lu­tion­is­ing re­tail ev­ery­where, es­pe­cially cos­met­ics. In­done­sia is pos­si­bly the most ex­cit­ing place where this revo­lu­tion will hap­pen in the en­tire re­gion. L’Oréal pre­dicted that dig­i­tal would be the next big thing 10 years ago, and we have be­come one of the cutting-edge com­pa­nies in dig­i­tal mar­ket­ing.

“The sec­ond wave af­ter dig­i­tal mar­ket­ing is e-com­merce. It’s a small part of L’Oréal In­done­sia’s busi­ness right now, but it’s grow­ing at break­neck speed. It’s been dou­bling yearon-year for the last cou­ple of years and this rate of growth will go on for the next five years. Com­pa­nies like Lazada, Shopee and Toko­pe­dia are help­ing to boost this chan­nel. We have a young, dig­i­tally en­abled and beauty-con­scious con­sumer base in In­done­sia. The ar­chi­pel­ago is the fourth­biggest user of Face­book in the world. Half the pop­u­la­tion is on it! This coun­try is a dig­i­tal hot house with a young pop­u­la­tion that wants to try all the lat­est brands. It’s a revo­lu­tion that’s wait­ing to hap­pen.”

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