Foreigners in business: Nihon L’Oréal

November 1st, 2011By Category: Uncategorized

Klaus Fassbender, President and Representative Director, Nihon L’Oréal

It doesn’t matter how tough the economy gets – women will always want to look their best. As the world’s largest beauty company with 23 global brands and a presence in 130 countries, L’Oréal is well positioned in the Japanese market.

Japan is one of the company’s three creative centers alongside France & the U.S. It has been operating a Research & Innovation Center in Japan for nearly 30 years to make products not only specifically for Japanese consumers but also for Asia and global needs.

Overseeing the operations of Nihon L’Oréal is Klaus Fassbender. Born in Germany, Fassbender graduated from the University of Hamburg with a Master’s Degree in, Business Administration. After working for Kraft Foods and Eckes Granini in Germany and France, Fassbender joined L’Oréal in 1997. He was president of L’Oreal Korea from 2004 until 2010 when he took up his current position in Tokyo.

GaijinPot sister site Japan Today hears more from Fassbender about the business in Japan.

How would you describe L’Oréal’s image in Japan?

We are known as an international company that offers the best in technology based on cutting-edge global and local research expertise — “science-driven innovation” and “science-based beauty.” I think we are also known as a company that understands beauty in all dimensions by offering diverse brands and products that are adapted to the diversity of beauty types, culture, and consumer purchasing trends.

How did the March 11 disaster affect business and how did you respond?

There was some effect at first, but we were fortunate that our business began to recover in April. Our priority was to focus on business continuity. Therefore, the management team remained in Tokyo, and our office and counters in department stores (except in affected areas) remained open enabling no business interruption. Ensuring product quality and safety to our customers was vital, so strict monitoring measures from supply chain to shipment were quickly put in place.

E-commerce also proved to be a crisis-resistant channel, offering products whenever and wherever customers want. As a result, we achieved positive growth in March despite the earthquake.

How do you market the company in Japan? Does each brand have a separate advertising campaign?

We offer a unique brand portfolio. To establish strong brand presence, we respect the brand identity/concept and where necessary adapt to the local preferences, needs. Each brand therefore has a separate promotion campaign, merchandizing, etc.

For example, our latest brand Kiehl’s boasts an ultimate brand presentation with focus on store merchandising – New York apothecary look, and also characterized by its simple, no-frills packaging and a policy of no advertising. In Japan, we opened the world’s first store in a train station location.

What are your best-selling brands?

Maybelline New York (mass-market brand) with its pure mineral BB cream and mascara, Lancôme (luxury brand) with its serum and mask by Génifique series and La Roche-Posay (sensitive skincare brand recommended by dermatologists) with its UVIDEA BB cream

Who are your core customers? How strong is customer loyalty in Japan?

We believe that beauty is for everyone. As such, we offer a diverse brand portfolio to meet the diverse consumer needs, from men and women to young and seniors.

To maintain strong customer loyalty, we always move a step ahead by offering the latest innovation. Innovations have proved to be a success, as in the expansion in new seniors market category with functional anti-aging creams by Lancôme Génifique, strong UV care category from daily care, make-up base, to outdoor sports use, and hybrid technology combining UV protection and BB cream

What are some unique characteristics of the Japanese cosmetics market compared to Europe or the U.S.?

In Japan, there is an ongoing polarization of entry price and luxury brands. There is also a reduction of beauty routines and emergence of products with multi-benefits like BB cream or UV/Whitening products.

We are also seeing changes in makeup trends with growth in cheek blushers, many proposals in the market promoting easy usage to create a happy, healthy face. The head spa concept, which started in salons, has expanded to mass and even selective markets, reaching out to women with appealing concepts full of pleasure.

Are some products made specifically for the Japanese market? Do you have a big R&D operation in Japan?

To meet the Japanese cosmetic market needs, specific product categories such as cosmetic waters, milky lotions, cleansing oils, powder foundation, whitening are developed in Japan.

L’Oréal Group was founded 100 years ago by a chemist, Eugène Schueller. Innovation is in the company’s DNA and is the key pillar of our business driver by realizing technology breakthroughs that offer the best of cosmetics in terms of quality, efficacy and safety.

Within the group, Japan is a unique and strategic market positioned as one of the three creative centers alongside France & the U.S. Our Research & Innovation Center in Japan has been operating for nearly 30 years. Currently there are over 200 researchers working in skincare, make-up and hair care labs.

Strong investment continues toward Japan’s research & innovation as a source of innovations, ideas, technologies that brings added value to L’Oréal Group’s business growth. From 2005 to 2011, we increased investment in Japan by 70%. In 2010, Japan’s R&I Center expanded its role as innovation hub for Asia. Our new strategic mission is to further identify ideas, business opportunities for Japan, Asia and global markets.

How big is the skin care market in Japan? Is it the largest in the world?

Japan is the 2nd largest cosmetics market in the world & No.1 skincare market, and the No.1 aging society. Japanese consumers are the world’s most “mature beauty experts” with unique beauty routines, strong sensitivity to beauty, and a benchmark for L’Oréal.

What are your distribution channels?

We do business in diverse channels from department stores, GMS, drugstores, variety stores to hair salons. Our multi-channel distribution system enables consumers to have a diverse opportunity to access and purchase our products.

How fierce is the competition for department store space?

Department stores are an important and unique distribution channel for us. For our luxury brands, department stores enable us to offer our consumers a special experience with high quality service, counseling and novel merchandizing such as new counter look.

They are also an effective communication point. Through counseling by our beauty advisors, we can listen, learn the consumer’s needs and preferences through their feedback.  

Are direct online sales a growing part of the business?

E-commerce attracts a growing number of consumers by offering products whenever and wherever they want. In Japan, e-commerce has been launched for our luxury brands and La Roche-Posay (sensitive skincare brand recommended by dermatologists).

And as I said earlier, e-commerce proved to be a crisis-resistant channel achieving positive growth in March after the disaster. But at the same time, e-commerce will be positioned as complementary to our existing department store distribution channels, since consumers continue to have great faith in receiving reliable top quality counseling from beauty advisors.

What are the main ways you get feedback from customers?

One of the activities is consumer home visits. For anti-aging, the visits are done once in two months and we ask consumers about their beauty routines, needs, their impression of our products. Then we call back after the launch of products to see how they like it.

We also have a consumer panel to see the evolution of the purchasing in each category and conduct usage and attitude studies, for example, about BB cream to see how consumers use it.

As president, in what areas are you hands-on and in what areas do you prefer to delegate to your team?

Clarifying our strategy and brand equity are key areas in which I need to be hands on, as are organizational change management, talent development and coaching/mentoring of our teams. But the art of execution is fully in the hand of my teams. They are perfect.

What CSR activities is Nihon L’Oréal involved in?

L’Oréal Group puts importance on sustainable contribution to the society. Nihon L’Oréal’s CSR activities are in line with L’Oréal Group’s three pillars, “Science,” “Education” and “Solidarity”.

SCIENCE: We established the “For Women in Science Japan Fellowships” in 2005 with the support of the Japanese National Commission for UNESCO. The fellowships support doctorate level women scientists in material and life sciences field and offer 1 million grants to four women scientists (two from each field). As of 2011, 24 fellows have been awarded.

EDUCATION: In 2008, launched “HAIRDRESSERS AGAINST AIDS” with the support of the Japanese National Commission for UNESCO. The aim is to educate hairdressers with correct knowledge about the prevention of HIV/AIDS, and raise awareness among their customers. In 2010, 180 hair salons participated in the World’s AIDS Day campaign.

SOLIDARITY: In 2009 L’Oréal Group celebrated its centenary. The main initiative was to create a local CSR project in each country. Japan developed the “100 LOVE HANDS” project which offers hand massages to women cancer patients and mothers with rare diseases. Since 2009, over 300 employees have participated as volunteers and over 1,420 patients have experienced our hand massages.

Following the March 11 earthquake and tsunami, we launched the Tohoku Restoration Project with the aim to restore Tohoku on a long-term basis. Its key projects are:

Community café “HANA-SO” project, opening in early November. It will serve as a communication hub for people from mothers to children from the affected areas where they can gather and develop their community, as well as boost local employment.  

Beauty Bus “Hairdressers for Hope/Coiffeurs de l’Espoir” project: Led by Japan’s Professional Products Division, a special beauty bus will visit the affected areas and offer haircut and hair color services. It also will support local employment by hiring hairdressers affected. From this fall, the bus will visit Miyagi and Iwate prefectures with a target to reach out to over 15,000 people in a year.

When you are not working, how do you like to relax?

Going to the movies. I am discovering Japanese movies. I like running, car racing, skiing, reading … and eating sushi with good friends.

There has been so much bad news in Japan this year with disasters, politics, the strong yen, etc. Are you personally optimistic about the future of the Japanese economy?

I am very optimistic for Japan, a country that is so innovative. Talking to our new grads makes me confident. I have seen a lot of strength and vision in them.

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