USA: The Estee Lauder Companies Announces Internet Strategy
The strategy has three major goals:
- to develop a powerful database by interacting directly with vast numbers of consumers, adding a new dimension to the Company's marketing efforts;
- to increase sales in all channels by integrating traditional and
- to enhance the well-established equity of the Company's brands by
developing and maintaining a three-tiered Internet presence, where the Company's brands will be available exclusively.
The strategy includes the following components:
- a content-rich, multi-brand beauty site with a distinct identity that will offer prestige brands from The Estee Lauder Companies'
portfolio. The site is expected to launch by early 2001;
- additional individual sites for the Company's prestige brands,
building on the success of the Clinique, Origins and Bobbi Brown essentials sites, which have all developed substantial databases of registered users. All brand sites will encourage traffic to the multi-brand site through direct links;
- specially-designed microsites--"stores-within-stores"--that will be available on certain retailers' e-commerce sites. These microsites will convey the unique image and experience of each brand within the retailers' sites.
To accelerate the implementation of its online strategy, The Estee Lauder Companies has agreed to acquire gloss.com, a popular Internet beauty site. Gloss.com will be incorporated into ELC Online, which directs the Company's Internet activities.
Fred H. Langhammer, President and Chief Executive Officer of The Estee Lauder Companies, said, "The opportunities for The Estee Lauder Companies on the Internet are immense. The strategy we are announcing today will allow us to interact directly with millions of consumers, inviting them to experience our brands in an entertaining and informative way. Our specially-designed modules and sites--the only authorized outlets for our brands on the Internet--will maintain the strong brand equity we have built over the years. Our strategy also allows us to integrate our traditional and online distribution channels, which we believe is the most effective approach to this new marketplace. All of this builds overall demand for our brands and adds an exciting new dimension to our marketing efforts.
"Our role as a pioneer of beauty online--beginning in 1996 when Clinique launched its extensive site--has served us well in developing this Internet strategy. Today, the number of registered users on the Clinique site is growing at the rate of some 40,000 members per month. Our more recent launches, the Origins and Bobbi Brown sites, are also very successful. In fact, collectively, the Websites of Estee Lauder Companies' prestige brands have more than one million registered users. The opportunities for dramatically expanding and leveraging this database are enormous.
"Finally, our acquisition of gloss.com--whose talented managers and employees have both Internet experience and beauty industry expertise--will be a great asset as we drive our strategy forward."
Estee Lauder Companies' Internet activities will be developed, coordinated and executed by ELC Online, headed by Angela Kapp, Vice President and General Manager. Ms. Kapp has been leading the Company's Internet efforts since 1995, including the development of the Company's Clinique, Bobbi Brown and Origins Websites.
The impact on earnings of the Company's overall Internet strategy is expected to be immaterially dilutive for the first two years and accretive thereafter.
Acquisition of gloss.com
The acquisition of gloss.com is subject to certain notices, consents and waiting periods, such as Hart-Scott-Rodino, and is expected to be completed in the next few weeks.
The gloss.com team's solid understanding of the Internet, combined with its expertise in beauty merchandising and in developing compelling editorial content, will provide additional talent to the existing ELC Online operations.
Sarah D. Kugelman, President and Co-founder of gloss.com, said, "The entire gloss.com team, including my co-founders Deanna Kangas and Michael Hananel, is thrilled to be a part of The Estee Lauder Companies, the world leader in prestige beauty. The strategy they have developed--which will utilize our special expertise in both the Internet and the beauty industry--demonstrates their understanding of the Internet's great potential as a marketing tool. We look forward to being a part of the team that will set a new standard for beauty online."
Multi-brand Site Responds to Consumer Demand
The Estee Lauder Companies' multi-brand site will offer consumers an exclusive selection of prestige beauty brands in a single online environment. Extensive consumer research conducted by the Company indicates that 75% of prestige online beauty consumers show a strong preference for a multi-brand site. Of this group, 90% indicated that they would buy from a site that featured only Estee Lauder Companies brands.
The site will feature dynamic content along with interactive features and personalized recommendations. Through up-to-date trend and product information, expert beauty advice, store locators, and information on special retail promotions, the site will continue The Estee Lauder Companies' rich heritage of educating and servicing its consumers. The multi-brand site will, in effect, integrate the online and physical shopping experiences through content that encourages shopping in all channels.
Continued Expansion of Individual Brand Sites
Building on the success of its individual brand sites in developing rich consumer databases, the Company will expand and enrich these sites and will launch additional sites for its other prestige brands. Links from the individual sites will encourage traffic to the multi-brand site, where consumers can explore the range of prestige brands offered there.
The Estee Lauder Companies' prestige brand sites with content and e-commerce components are:
www.esteelauder.com (scheduled for Spring 2000)
www.maccosmetics (scheduled for Spring 2000)
Specially-designed Modules for Retailers
Select retailers that currently sell the Company's brands in their stores will now be able to sell them on their own e-commerce sites. For those retailers that meet specific requirements, the Company will develop and maintain "stores-within-stores" that, like retail counters, will reflect the distinct image and positioning of each brand.
"Our plans for the retailers' sites extend our bricks-and-mortar relationships significantly," said Mr. Langhammer. "Our retailers have embraced this strategy and are enthusiastic about the opportunities it creates. We are particularly pleased to offer online consumers the same Estee Lauder Companies' brands they are accustomed to seeing in their favorite stores."
Internet Strategy Capitalizes on Company's Unique Strengths
Commenting on the overall strategy, Mr. Langhammer concluded, "The successful Internet business model must address more than just products. For the past fifty years, The Estee Lauder Companies has been building its prestige brands and developing an unrivaled level of consumer loyalty. We have also established very strong relationships with traditional retail channels. More recently we have developed a firsthand knowledge of the Internet as a dynamic marketing tool. Taken together, these accomplishments put us in a unique position to unite the strengths of traditional marketing with the exciting opportunities before us."
The Estee Lauder Companies is one of the world's leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. The Company's products are sold in more than 110 countries and territories under well-recognized brand names, including Estee Lauder, Aramis, Clinique, Prescriptives, Origins, MoAoC, La Mer, Bobbi Brown essentials, Tommy Hilfiger, jane, Donna Karan, Aveda, Stila and Jo Malone. For the fiscal year ended June 30, 1999, The Estee Lauder Companies reported net sales of $4 billion and net earnings of $272.9 million.
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