Estee Lauder Stakes Growth On China, Russia & Television, CEO Says
This article was originally published in The Rose Sheet
Executive Summary
Estee Lauder is compensating for a slowing market and challenging retail environment in the U.S. by focusing on its international business and multimedia sales channels, President and CEO William Lauder indicated during a Nov. 9 shareholders meeting
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Estee Lauder is compensating for a slowing market and challenging retail environment in the U.S. by focusing on its international business and multimedia sales channels, President and CEO William Lauder indicated during a Nov. 9 shareholders meeting. Over the last five years, Estee Lauder's sales have grown 20 percent annually in emerging markets, CEO Lauder said. "Sales outside the U.S. have expanded rapidly in the last five years and now account for more than half of our total sales. We expect this rapid growth rate to continue," he added. Estee Lauder entered the Russian market in 1981 but only recently has begun to expand its infrastructure for prestige retailing, the exec noted. The firm now sells 14 brands in 96 cities across the country; sales in Russia were up 70% in 2006 compared with the prior year. Demand for Lauder products in Russia is fueled by middle-class citizens' higher disposable incomes and desire for Western luxury brands, the CEO said. To grow its sales in the country, Estee Lauder is recruiting beauty advisors, building up affiliates, investing in promotional campaigns and adding brands, such as Bobbi Brown , expected to debut in Russia in spring 2007. Estee Lauder's business in Russia is approaching the level of success it has enjoyed in China, the firm's largest emerging market, where consumers increasingly are purchasing imported brands, following trends set by other Asian countries. After a period of heightened interest in Western-style brands, both Japan and South Korea returned to local products and local ingredients. Chinese consumers may follow this trend, CEO Lauder noted, so the company is exploring the creation of products inspired by traditional Chinese medicine. Estee Lauder's online sales rose 25 percent in 2007, according to the firm's CEO. The company gained a piece of the booming direct TV channel through its July acquisition of Ojon - QVC's top-selling hair-care brand, the exec said (1 (Also see "Lauder To Buy Ojon, Gain Ingredients Harvested By “People Of Beautiful Hair”" - HBW Insight, 16 Jul, 2007.), p. 4). - Molly Laas ([email protected]) |