Thursday, March 05, 2015

Some Thoughts About L'Oréal Opening Its Own Store Chain

L'Oréal Paris has opened recently its 4th store in Europe, in Milan. It is the elenth in the world. Despite the fact L'Oréal Paris said it does not want to open a retail network, it has been 2 years now that it launches stores. Probably the idea is to have flagship stores, that will allow to strengthen the brand experience, and to master its customer experience. But indeed it is not clear to see the real reason of those stores opening.

Indeed, retailing is a real trade. Not anyone can do it. Not even if they own a strong brand. Hence, the L'Oréal Group has already had previous difficult experiences with retailing. One on the Internet, with the shut down of "Les Créateurs de beauté", whereas at the same time the cosmetic market on the Internet was booming. The second one, with their purchase of "The Body Shop", which has been struggling to expand and grow as it was planned.

Especially, the retail industry don't have the same financial ratio than cosmetics companies have, and their wake EBIT rate may turn down l'Oréal to pursure the experience. Hence, it will be interesting to see how l'Oréal go on with its strategy.