Per reporter: Ding Zhouyang Du Wei Per editor: Dong Xingsheng
When Peter Harf, the current chairman of the Coty Group's board, approached Sue Y. Nabi, the century-old global beauty giant was in a domestic and external dilemma. Before Nabi, coty group had replaced four CEOs in five years and had not been able to get the company out of the quagmire of four consecutive fiscal years of losses.
For Nabi, coty group has high hopes. Peter Harf describes her as "the rock star of beauty." ”
In the beauty industry, Nabi's experience is legendary enough. With an educational background in environmental engineering, she joined L'Oréal in 1993 and in 20 years grew from an ordinary sales representative to the youngest president in the group's history. The most familiar communication idea of "L'Oréal Paris, you deserve it" that Chinese consumers are most familiar with is what she made when she was in office. In 2009, Nabi took over as President of Lancôme Group and expanded the turnover of the faltering Lancôme brand to more than 3.2 billion euros in three years.
Nabi Image source: Courtesy of Coty Group
If it's just a commercial glamorous resume, Nabi isn't enough to be called a "rock star in beauty." She is a transgender person who has pushed Lancôme Group to the peak and founded her personal skincare brand Orveda, completely abandoning the "big star, big advertising" marketing strategy that was successfully used in large groups in the past.
She once said that she was tired of creating business miracles in multinational companies, and now the multinational company Coty Group is in a moment when she is desperately needing her to lead the team to create business miracles. What are the plans of the CEO, who just took office in September 2020? A few days ago, Sue Y. Nabi, CEO of Coty Group, accepted an exclusive interview with the reporter of the Daily Economic News.
<h2>How to get out of the losing mud? </h2>
In the history of world beauty, the 117-year-old Coty Group has always enjoyed a pivotal position, from a French family business to a US-listed company with industry influence, covering luxury goods, professional beauty and mass beauty.
However, the beauty market is unpredictable, and although it has many skin care and beauty products across luxury brands and mass brands such as Gucci, Burberry, Adidas, Max Buddha, Rui Mi, etc., coty Group is still difficult to withstand the downturn in recent years. In addition, six years ago, coty group swallowed 43 brands of procter & Gamble group at a high price of $12.5 billion, which has always put the company in a state of "indigestion".
Coty Group's latest financial report shows that in the second fiscal quarter of fiscal 2021, the group's revenue fell 16% year-on-year to $1.416 billion, and net profit fell 11% year-on-year to $90.4 million. Its total revenue for the full year of fiscal 2020 fell 25% year-on-year to $4.718 billion, and its net profit increased by 73.23% year-on-year, but it still lost $1.013 billion.
According to the statistics of each reporter, after the listing in 2013, in 2017, the Coty Group fell into a loss quagmire. From FY2017 to FY2020, the Group's net profit was -US$422 million, -US$169 million, -US$3.784 billion and -US$1.013 billion, respectively.
When to turn a profit is the most concerned about investors.
"Our previous poor performance was due to some mistakes made by the company in running the brand." For the loss of consecutive years, Nabi did not shy away from it, she told every reporter bluntly, "Although we are a beauty company, many times in the operation of related businesses, there is no use of professional beauty talents." ”
Nabi believes that the beauty industry is extremely professional, and the trends in the entire industry, including consumer preferences, change very quickly. "Therefore, the lack of respect for some details, the lack of understanding of beauty in the specific execution link, it is easy to get into operational difficulties as we did before." However, we are confident in turning a profit, and the confidence stems from the fact that our brand is still attractive to consumers. ”
"We expect demand for beauty products to rebound as the covid-19 restrictions ease, driven by luxury, pure, Chinese and skincare businesses." Nabi told every reporter that the Coty Group will reverse the performance through several major initiatives.
"First, strengthen the Volkswagen beauty and mass perfume business. We will redesign the product concepts and marketing methods of several key brands such as COVERGIRL, Rui Mi, Max Buddha and Adidas according to the current preferences of young consumers, so as to gain higher market share and seize new growth opportunities. In the future, Adidas can also develop into a star product containing skin care concepts. ”
Image source: Coty Group official website
In the luxury business, "Gucci and Burberry are currently the most well-known, and other luxury brands' skin care products are relatively weak." Next, we will vigorously promote brands such as Lancasting, and will open the first store in Hainan, China in May."
"In the past, we did not directly face consumers, hoping to strengthen and accelerate the layout of the e-commerce field, so that our brands can directly talk to consumers." Nabi further said, "In addition, we will use the concept of sustainable development to drive product innovation and grasp the current trend of consumers pursuing clean and green beauty products." ”
<h2>The 5th successor to frequent personnel changes</h2>
"L'Oréal Paris, you deserve it." This catchy advertising slogan spoken by Gong Li made the brand image of L'Oréal Paris, which entered the Chinese market in 1997, deeply rooted in the hearts of the people.
This classic marketing case in the beauty industry is from Nabi. During her tenure at L'Oréal, she established an inclusive communications strategy, signing 68-year-old Hollywood star Jane Fonda as a spokesperson, inspiring the beauty community, which was accustomed to young spokespeople at the time. In addition to breaking the age boundary, Nabi also broke the boundary of skin color and gender, and stars such as Gong Li, Penelope Cruz, and Pierce Brosnan were included in the ranks of spokespeople.
Big stars, big ads, fierce sales competition, this was once the survival of a large beauty group that Nabi knew well. And when she decided to be her own skincare brand, she completely abandoned these strategies... So when coty group found Nabi, what attracted her to turn around again and return to the big beauty company that fights marketing and performance?
"There's a premise about whether I'll ever go back to a big company — unless I can be the leader of the company, my decisions can have a profound impact on the company's growth." Nabi said.
And when Peter Harf finds Nabi, she's surprised at Coty's current situation. "Why is a company with a strong portfolio of Gucci, Burberry, Tiffany, Chloé, CK, etc., in trouble? If I bring my more than two decades of experience in the beauty industry to Coty, it means that my ideas and ideas can be put to fruition on so many different brands, and it's the perfect time for me to join Coty. ”
Stabilizing the military and reshaping the team is an important task for Nabi after joining Coty.
"Coty's personnel changes have been frequent in recent years, precisely because there are some key positions where people may not be from the beauty industry or lack certain professionalism." Nabi said she helped Coty recruit many beauty talents, such as the chief commercial officer of the luxury beauty division of the Coty Group, who has been in the beauty industry for more than 30 years and has a lot of experience in the Chinese market. "To be a good beauty company, you need to have a talent team that is really passionate and experienced in this business."
Persistence and love, which are vividly reflected in Nabi herself. "When I was a teenager, I was always obsessed with light. For me, a beautiful person has an inner light, an inner light. Nabi said in a 2018 interview with women's business outlet TOP HER, "When I arrived at L'Oréal in 1993, I was Youcef and I was wearing a suit. "10 years later, the new Nabi is wearing makeup, long hair shawl, and women's clothes." I told my father that I was a mix of people he knew and who I wanted to be, and I was happy. I am neither hidden nor proud, I am who I am, and that's it. ”
<h2>"Heavy position" in the Chinese market</h2>
As the first market to recover from the epidemic, China's performance of Coty Group is very obvious.
Coty Group's second quarter report for fiscal 2021 showed a 16% decline in overall sales, but operating profit increased by 7% year-on-year. Nabi pointed out that this was due to the continued strong performance of the Group's high-end beauty business in the Chinese market during the period. "Especially the Gucci and Burberry brands. In the second quarter of fiscal 2021, Gucci's retail sales in China alone increased by more than 400%, and Burberry's beauty China business also surged by 48%. ”
"In the past 20 years, the growth of Chinese consumers' knowledge of skin care and beauty is the most obvious." Nabi told reporters that she was pleased to find that compared with consumers in other countries, Chinese consumers have a very in-depth understanding of beauty ingredients and other aspects. "Simply put, Chinese consumers know a lot about beauty. Therefore, being able to talk to people who understand very well and develop products for the Chinese market is a very happy and dream thing for beauty practitioners. ”
A beauty shop in Sanlitun, Beijing Image source: Per the infographic
Nabi is also keenly aware that "perfume brands such as Chloé, BV and Tiffany can also gain huge growth opportunities in the Chinese market." Therefore, Coty Group will adjust the channel layout of its brands and comprehensively "reposition" the Chinese market. "Our goal is to increase skincare revenue from 6% to more than 10% of total revenue by fiscal 2025, of which business revenue in China can triple to more than 10% of the company's total revenue."
China's beauty market has a vast blue ocean, and Zhiyan Consulting expects that the scale of China's cosmetics market will exceed 500 billion yuan in 2021. But at the moment when all resources are converging to the head, the hegemonic battle of the beauty group has entered a white-hot stage.
One of coty group's biggest competitors, L'Oréal, is also betting heavily on the Chinese market. In early April, L'Oréal China CEO Faubri said it was only a matter of time before China became L'Oréal's largest market.
But not all luxury giants can do a good job in the beauty business in China. Not long ago, THE BEAUTY BRAND OF LVMH GROUP AND THE 14-YEAR ENTRY INTO THE CHINESE MARKET FOR A LARGE-SCALE WITHDRAWAL OF STORES IN THE MAINLAND MARKET, WHICH CAUSED WIDESPREAD CONCERN. At that time, every reporter learned from Pei Lingfei that as of April 9, the brand's stores in Chinese mainland had dropped sharply to 8.
At the same time, the domestic beauty "back wave" is also accelerating to catch up, and the share of international big brands is being eroded by domestic beauty.
Domestic beauty brands such as Yu Ni Fang, Bai Que Ling, Nature Hall, Perfect Diary, and Hua XiZi have risen rapidly. Perfect Diary's parent company, Yixian E-commerce, only landed in the U.S. stock market in November last year, and its market value as of April 28 was $7.65 billion, which is inseparable from the $7.84 billion Coty Group. Everbright Securities Research Report pointed out that the average cosmetic consumption of Chinese is only one-seventh of the world's major cosmetics market, and if Chinese brands can make breakthroughs in product research and development and technological innovation, they are expected to replace some foreign brands between 2025 and 2030.
Image source: Photo.com
Therefore, it is not easy for Coty Group to attack the city and gain a larger share in the Chinese market.
"First of all, we will bring some of the brands that are most attractive to Chinese consumers to China." Nabi told every reporter, "I will pay frequent attention to China's consumer trends, and every week I will learn about the latest changes in the beauty industry in the Chinese market and what new brands have emerged." ”
"Coty Group will do targeted tests in advance to study in depth whether the products and concepts of beauty brands are suitable for the Chinese market. Hopefully, every product we release in China will have an advantage over our competitors. ”
<h1>Nabi Q&A:</h1>
<h2>"We are committed to closing the gender pay gap at work by 2025"</h2>
Daily Economic News (hereinafter referred to as NBD): As can be seen from the financial report of the Coty Group, the company relies heavily on the licensing of the Coty Group to develop and sell their brand beauty products, such as Kering Group and LVMH Group. Brand licensing has a number of years, how will you strengthen and maintain the licensing relationship of these key brands?
Nabi: One of the first things I did when I became CEO of cotti group was to go to Milan, meet with the CEO of Gucci, and exchange views with him regularly afterwards. Including the cooperation with Burberry and Chloé, we have been partners for many years and will often discuss the brand's creativity and the future direction of the brand. It is necessary to be very sincere and trusting with authorized partners and brands.
NBD: In response to coty group's announcement last year to acquire part of the cosmetics brand equity of the "super internet celebrity" Kardashian family, some analysts believe that coty's acquisition of Kylie Cosmetics and KKW Beauty is at risk of overvaluation. Both brands are highly dependent on Kylie Jenner and Kim Kardashian personally, and will also ripple into the brand if the influencer's personal influence declines or there is a credibility crisis. What do you think of this view? What is Coty Group's vision for the future of these two brands?
Nabi: Whether it's Kylie or KKW, they're already very strong brands in their own right. For example, the two of them have reached the same social media as brands like Nike and Starbucks, so even if they are only personal brands, they have a unique and huge influence.
For Coty, we're working on products with Kylie and Kim. Under the premise of their personal influence and beauty strength, they also use Coty's resources and professionalism to assist in product development. We want consumers to really love these products because of their quality after using them. Consumers may have bought the product because they liked Kylie and Kim, but they would buy it back again because it was a good product.
NBD: The COVID-19 pandemic has had an impact on the global beauty market, how is the recovery of the industry progressing so far? What changes has the pandemic brought to the industry?
Nabi: In recent years, China's digital economy and e-commerce industry have risen rapidly, and the epidemic has accelerated this trend for about three years. This shift can be seen in Coty's recent results, where the company's e-commerce accelerated by around 40% in the second fiscal quarter of 2021, which is encouraging, but we still have a lot of potential to increase the digitalization of the entire company.
Selling unscented luxury perfumes on the Internet has long been considered the biggest challenge for digital sales. But our recent live-streamed Gucci beauty campaign with Lu Han and Li Jiaqi was a huge success in just a few minutes. In addition, through our research, we found that in the first wave of the new crown epidemic, 70% of women and 79% of men chose to buy perfume online.
NBD: You are one of the few female CEOs in the global beauty giant, what will a female CEO bring to the industry?
Nabi: I hope to see that women leading beauty companies will no longer be seen as an unusual thing, and that day will mean that we have made real progress.
I want to see a truly inclusive industry. At Coty, we defend society through our business, our brand and our people, diversity is our strength, it allows us to better serve consumers, which is not only the right thing to do, but also has full commercial significance.
As CEO, I'm proud that coty's current board and executive committee are mostly women, and these amazing leaders are gradually taking the company to the next level, and we're committed to closing the gender pay gap at all jobs by 2025 and achieving pay equality in positions and performance by 2022, regardless of gender.
Daily economic news