The next big digital company could be a luxury titan
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The next big digital company could be a luxury titan

According to Forrester Research, China will likely see more than $1 trillion in online sales this year. The incredible growth of the Chinese Ecommerce scene has not been lost on western luxury companies, whose return to growth is being driven by it in large part. As a result, the digital gap is closing: big names like LVMH and L’Oreal are buying Silicon Valley startups and investing in their own tech. It’s a wise strategy: the Chinese might be moving first, but the trend towards online sales is a worldwide phenomena.

L’Oreal, LVMH, and Estee Lauder have all seen positive performance, year to date

graph 2004 loreal

SOURCE: Yahoo Finance

On March 16 of this year, French cosmetics group L’Oreal announced that it would acquire Canadian tech company ModiFace. The company creates virtual mirrors through the use of augmented reality that lets consumers test out various styles of blusher and eyeshadow. The appeal for L’Oreal is obvious: it will get its products into consumers’ houses without having to physically get its products into consumers houses.

This isn’t L’Oreal’s first foray into the digital world. In 2017, the company added over 1,700 new members of staff to work on “digital issues” over four years. They’re also working with French telecommunications entrepreneur Xavier Niel on putting together an accelerator for beauty-tech companies.

LVMH is another company that is working with Niel, having announced a new program earlier this month: La Maison des Startups. The goal is to “support entrepreneurs at Niel’s Paris-based campus for new companies” in technologies and services that could be helpful for LVMH’s businesses (perfumes, cosmetics, wine, fashion, and more).

Not to be left out, another French giant of the cosmetics scene, Estee Lauder, is also investing heavily into tech. In December of last year, the company announced that it was partnering with beauty technology startup Perfect Corp. to create an augmented reality program aimed at its own 17,000 beauty consultants.

Increasingly, as the potential for digital tools to transform luxury businesses are becoming widely acknowledged, it looks as though one of sectors slowest to embrace Ecommerce may well become its most fervent champion.

Disclosure

Dominion holds L’Oreal, LVMH, and Estee Lauder in its Global Trends Luxury Fund.


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