Estée Lauder China Prepares to Increase Presence Across All Retail Channels
Chairman, CEO and Director of The Estée Lauder Companies, Fabrizio Freda said he remained “absolutely excited about China’s potential.”
He noted that long-term trends, such as the rise of the middle class and rising per capita sales, all point to the growth of China’s beauty market.
The company aims to serve Chinese consumers”wherever they buy,said Freda.
“That is online, travel retail, brick and mortar – we are improving in all of these. We are increasing the number of towns where we have bricks and mortar. We are increasing online coverage.
The company also believes Hainan will continue to drive growth in China’s travel retail market even when international traffic eventually picks up.
“Hainan is becoming an extraordinary luxury place with amazing experiences… There are a lot of new retailers opening up. And so, in Hainan, there is more distribution being built in several retailers investing in Hainan. It is also something that will and will continue to generate expansion growth over time,” said Freda.
In addition, the company is currently a few months away from unveiling its new innovation center located in Shanghai.
“Our aspirations are bold as we aim to meet and exceed the desires of Chinese consumers. The center is designed to enable end-to-end innovation, from product packaging concept to development, scale and commercialization,” said Freda.
Prosper in the East
In the second quarter of its fiscal 2022, Estée Lauder’s organic sales increased 5% while Asia Pacific operating profit increased 6%, largely driven by China, despite the impact of the outbreak of the COVID-19 Delta variant.
“China delivered high single-digit organic sales growth, an impressive result given regional restrictions in the quarter that put pressure on brick and mortar and makeup,” said Freda.
By contrast, online and travel retail sales in China remained unaffected by the disruptions related to COVID-19.
“Our online business, which was unaffected by the shutdowns, grew double-digit in the second quarter and accounted for more than half of our business in China,” said Freda.
Last year, Estée Lauder launched its brands on Chinese e-commerce platform, JD. According to the firm, the Estée Lauder brand is now ranked as the number one beauty flagship store.
The brand also performed well on Tmall. At the Double Eleven Shopping Festival, Estée Lauder also took first place in the beauty category for the second year in a row. La Mer and Jo Malone London also lead in their respective categories.
Skincare and fragrances saw double-digit growth in China, and brands like Estée Lauder, La Mer and Dr. Jart+ increased market share this quarter, the company said.