“Sometimes we see an interesting competitive product that we have to step up to”
L’Oréal CEO on embracing change, leadership style and why he sees beauty market rising to €400 billion by 2030
A self-proclaimed “beauty junkie,” Nicholas Hieronimus has been at L’Oréal for nearly four decades. In that time, the beauty industry has changed dramatically. E-commerce and social networks have lowered the barrier to entry for startups, dermatological division have become a focus and more men are using beauty products. He predicts that beauty will be a market close to €400 billion by 2030 from €270 billion now. He sees growth coming from the rise of middle classes as well people wanting premium products with higher price tags and a widening consumer base beyond women and young people.
Hieronimus makes a point of sampling all the products L’Oréal makes. “I try my products, I try the competition just to make sure we have the best and sometimes we see an interesting competitive product that we have to step up to,” he said. Hieronimus spoke in an interview with Bloomberg TV’s Francine Lacqua about other ways he’s managing the world’s largest beauty company.
What's been your biggest surprise of how beauty has changed in the last 10 years?
The biggest transformation happening in beauty is what we call beauty tech. The help of technology to augment the performance of beauty products, either through diagnosis or through even personalized made-to-measure beauty products. And that's probably the future of beauty.
We also spend more than €1 billion every year in technology. And that's our pledge to become the leader of beauty tech. And, here we use AI to augment our researchers to invent new ways to formulate products.
What kind of leader are you?
I'm a competitor. I love sports and I try to be demanding for myself and demanding for everybody because we have big goals to achieve. Being number one and increasing our gap with the competition is not that easy. I believe in the power of the team. I like to build teams that are complementary and empower them. I like to surround myself with very strong people that may be stronger than I am in their particular area.
What do you think is the secret sauce to keep a competitive advantage?
If I take the top 300 managers of L'Oréal, the average tenure is 18 years in the company. You have this very strong corps of people who share the same passion and the same way to do business. We constantly bring in new people, even at a high level, to rejuvenate the blood. The secret sauce is this: You have very passionate, competitive people that love beauty and that have fun.
You talk about this big sense of purpose. What does that mean for sustainability?
We started working on sustainability topics in the early 2000s. That led us to reduce our CO2 emissions by 90% while increasing our production by 45%. So, we've really managed to decouple CO2 emissions from growth. We are enticing our suppliers — who need to do their sustainability transformation, to do it as fast as possible. We’re also investing to help consumers contribute because in the end, for example, if you talk about packaging or plastic, the best way to reduce plastic is to convert as many consumers as possible to refills. Today 25% of our luxe portfolio is refillable. Now it's about convincing consumers to change.
What's the hardest part?
There are many, many things that are difficult. We've committed to have 100% recycled plastic by 2030. Today the availability of recycled plastic is not big enough for us to transform everything. We are investing in our own VC in new technologies that will provide waste to recycle plastic.
Is there a segment of the consumer that's more in tune with buying products that seem greener?
Younger generations pay more attention to sustainability. They are looking at brands that are greener. But you have to make sure you're authentic because they hate greenwashing. What is very important to remember is that none of them, whether they're young or not, will ever sacrifice product quality and efficacy to sustainability, which is why part of the big transformation of our research and development where there's this billion euro we spend every year, most of it is spent on transforming our formulas from petrochemicals to bio-sourced ingredients and green sciences, but without losing the efficacy. And I think that in the future, if you talk about competition, that’s where the winners will be.
Where will L’Oréal be in five years?
My role is of course to grow the business, but it’s a legacy. I'm the sixth CEO in 114 years and my objective is to leave the company in even greater shape than it was. A couple of years ago, being a CEO was about beating the others, winning the game against the others. We still have to gain and to win and to win share, but more and more we have to work together. And I like the idea that sometimes I take my phone and I will call the CEO of one or two of our competitors to work together at creating solutions for the world. I like when we as an industry not only make sure we make people look good, feel better, but also we work together at having a positive impact on the planet.