How the world works has changed during the past 20 years, but the COVID-19 pandemic accelerated those changes. Companies that embraced the change will thrive in the years to come, while others will be left behind. William Lauder, executive chairman, The Estée Lauder Companies, reviewed how his business has changed during the past year and what’s ahead for the beauty industry during the Personal Care Product Council’s Virtual Summit last month.

In an interview under the topic, “Leading Through Turbulent Times,” Lauder said he marveled at the resilience of everyone to adapt to a meaningfully-changed environment that’s been changing nearly every day for the past 18 months.

“(Yet), for many of us in this Zoom environment, we’ve only been marginally less productive than working in person,” he told WWD’s Jenny B. Fine.

Lauder noted that lack of a commute has been a boon for many. Moreover, this technology has enabled him to reach more than 10,000 employees during the past year.

“Without technology, I would have had to travel constantly to touch that many people,” he told Fine.

At the same time, technology, driven by the pandemic, has accelerated changes at retail. Lauder noted that online sales as a percentage of overall sales has accelerated for decades, but the pandemic forced retail shutdowns around the world. It’s all changed how beauty companies communicate, interact and engage with their customers. That said, ultimately, when the time is right, consumers will emerge from their cocoons and be ready and willing to shop for cosmetics again.

Although Lauder is certain that consumer travel will return to pre-pandemic levels when it is safe, he said business travel has changed forever.

“We thought business travel was essential and we would fly around the world for a three-hour meeting,” he recalled. “(Going forward) Business travel will be more discerning.”

Business travel may be in flux, but getting back to business is essential, according to Lauder. He recalled how, in the early days of the pandemic, protecting employees, consumers and suppliers was top of mind.
“Companies are really only about two things: great brands and great people,” he reasoned. “Without protecting our people we don’t protect our brands.”

The Estée Lauder Companies has 30 brands and operations in 100 countries. Brands operate among themselves and regions work with the brands. That didn’t change during the pandemic, according to Lauder, but the company did make efforts to reach out to employees so that they felt connected even in a pandemic.

Estée Lauder offices remain open and employees can come in if they want—they just have to make a reservation. Lauder told Fine that he expects offices to be back to regular business hours by October, but admitted that no specific safety policies are in place. Moreover, the company doesn’t have the footprint to ensure social distancing. One solution is a hybrid environment, where employees are in the office two or three days a week.

“We must create an environment where everyone feels safe,” he added.

Sustainable Innovations

During the pandemic, concerns about the environment have intensified and Lauder noted that, at this point, sustainability is no longer a choice for companies.

“We have to think about what we make and sell from cradle to grave,” he noted. “How can we get more recycled material in our packaging? How can we reduce the use of plastic and other components that end up in landfills?”

(For more on sustainable packaging options, click here).

Whether a company is making efforts to use sustainable ingredients, reduce their dependence on water or cut their emissions, Lauder said that transparency is critical and that companies must remain engaged with employees and consumers. He noted that for more than 100 years, beauty companies have surprised and delighted the consumers by providing a product that she didn’t realize she wanted and now can’t live without it—that hasn’t changed. But Gen Z and Millennials expect their employers to stand for something, too.

“I had a conversation with somebody who was asked by an employee, ‘When can I wear my company sweatshirt to my kid’s soccer game and be proud to wear it?’” Lauder recalled. “Are your employees proud enough to wear your badge?”

Sustainability and science go hand-in-hand. Lauder said the pandemic has put renewed emphasis on the importance of science and predicted there will be extraordinary amounts of resources put on chemistry, biochemistry and the like. As a result, he predicted more students will become doctors, chemists and engineers, which will lead to rapid changes in medicine and technology.

“Innovation feeds on itself; it is a virtuous cycle,” said Lauder.

He also predicted that the next decade will be one devoted to biochemical and medical sciences. According to Lauder, the number of medical school applicants has risen 50% in the past year. That will accelerate the discovery and development of new molecules which will ultimately benefit the beauty industry.

The Shopping Experience

Innovation at retail must follow innovation in the lab. According to the Estée Lauder executive, traditional shopping excursions will be replaced by hybrid experiences; that two-day trip to Michigan Avenue can be accomplished online. Retailers don’t need to hold inventory on site so there is too much square footage when it comes to traditional retail. Lauder predicted that the 180,000 square-foot retail space can be trimmed to 120,000 square feet. But no matter the size, executives must ensure that retail space isn’t just more of the same. He pointed out that the money people spend on shopping is not solely based on consumption—it is partially based on experience.

“We need more stimulation. Shopping in our category is entertainment and not a necessity,” insisted Lauder. “We must be in service to the consumer and make it fun enough for her that she would rather spend her money on beauty products rather than going out to dinner with friends.”

As for that 800-pound gorilla, Lauder said it is too early to comment on how Amazon has impacted shopping. And then he went on to comment anyway!

“Amazon is evolutionary. It made shopping better for the consumer, but online shopping hasn’t enhanced the shopping experience,” he insisted.

Lauder called online shopping, “keyhole shopping;” that is, the shopper can only see finite amount of what’s available in-store. In contrast, when a shopper is in-store, she may make several impulse purchases.

“Discovery is the fun thing and that is not fun online,” he insisted.

He admitted that Amazon made shopping for books easier; and as a result, Amazon replaced booksellers nearly as quickly as Netflix made Blockbuster obsolete. Still, it all comes down to a better experience.

“No food blog is better than me visiting my favorite restaurant,” Lauder noted.

A Chance to Lead

With so much of the beauty industry in flux, Lauder insisted that the key characteristics of leadership haven’t changed. To be an effective leader, one must be a communicator who can deliver a clear, concise and repeatable message.

“You must have empathy for the people you lead,” he added. “You have to be consistent and persistent to achieve your objective. Make your point enough to make it a mantra.”

He urged leaders to remember all of the stakeholders in their organization, including consumers, employees, suppliers and regulators, and said all of their interests must be included when making a business decision. At the same time, leaders must be mindful of the outcomes as well as the perceptions of the outcomes.

As a long-time lecturer at his alma mater, the Wharton School, Lauder has some definite ideas on what he expects from tomorrow’s leaders.

“If they can’t communicate their questions, they won’t be effective,” he told Fine, and he also has questions of his own that effective leaders must answer:

• What did you accomplish in your career?
• How were you challenged and stretched during assignments?
• Did you turn around a lousy market?
• Did you volunteer for a job that you weren’t quite ready for? If so, what did you learn from it?
• Do you have confidence in yourself to do well? Do you have confidence in your team?

According to Lauder, there are three leadership styles:

• Front: let me show you;
• Side: let me do it with you; and
• Behind: I trust you to do it yourself.

“In the medical world, there is a saying: See one. Do one. Teach one,” he explained. “The real test for any leader is to teach someone else the skill that you are learning. That means you are a good communicator.”
Good communication has helped The Estée Lauder Companies survive and thrive for 75 years. But according to Lauder, the company’s success is based on having a brand and a product that is relevant to the consumer and will remain relevant for the next 75 years. 

Walmart’s Latriece Watkins Receives Madam CJ Walker Latriece Watkins, executive vice president, consumables, Walmart US, received the inaugural Madam CJ Walker Award for Excellence in Diversity, Equity and Inclusion (DEI). The award was presented during last month’s 2021 PCPC Virtual Summit. The award recognizes individuals who demonstrate an outstanding commitment to DEI through strong leadership and sustained efforts with a focus on workplace culture, programs and policies, or through external engagement with consumers and communities. “Beauty and personal care products companies are committed to helping shape a more diverse, equitable and inclusive world. This award is an opportunity to recognize peers who are ahead of the curve and leading by example,” said Keech Combe Shetty, PCPC board chair and executive chair, Combe, Inc. “It is my distinct honor to present the first award to Latriece, a catalyst for change whose exemplary work inspires us all to do better.” Watkins is broadly recognized and admired across the industry as someone who leads with respect and lifts others, according to PCPC. She champions DEI programs that create sustained, consistent and significant impact, both within her company and her community. The award honors Walker, an industry pioneer who started her hair care business at the turn of the 20th Century during a time when women of color had few rights and little opportunity. “We are proud of our progress and, while we know there is more work to be done, we are fully committed to creating a more beautiful and sustainable world,” said Lezlee Westine, president and CEO, PCPC. “It is critically important that we examine society’s challenges and do what we can to address them.”