Mark Loomis
President
Estee Lauder KK

Beauty and the best

By Chris Betros

TOKYO —

Times may be tough for the economy in Japan but women still want to look their best. One company helping them to do that is multibrand cosmetics powerhouse Estee Lauder KK, which has had a presence in Japan for 42 years. Estee Lauder markets several brands in Japan, focusing on makeup, skin care fragrance and hair care. These include Estee Lauder, Aramis, Clinique, Origins, MAC, De La Mer, Bobbi Brown and Aveda.

The company was launched in 1946 when Joseph Lauder and wife Estee began producing cosmetics in New York City. Today, the company is still controlled by the Lauder family, which has about 70% of voting shares. In 2008, worldwide sales were nearly $8 billion, with the fast-growing Asia-Pacific region surpassing $1 billion. Japan remains the company’s second largest market.

Heading up the Japan office is Mark Loomis, who has been president of Estee Lauder KK for four years. Born in New York, Loomis has been in the cosmetics industry for 25 years, the last 13 with Estee Lauder.

Japan Today editor Chris Betros visits Loomis at the Estee Lauder office in Nagata-cho to hear more.

What is Estee Lauder’s image in Japan?

The various brands are probably better known than the name of Estee Lauder itself. We have nine different business units targeting different consumers. Each of our brands has a different market niche, but our strongest trait as a company is that we really understand building powerful brands and allowing them to create their own identity and culture. The one consistent image across all our brands is prestige. To that end, we have limited distribution; we are not in every drugstore but only in the finest stores.

How do you market the brands?

Advertising is not the primary driver of the brands. The No. 1 method is people, such as our make-up artists who meet customers. Our biggest investment is in those people: across Japan, we have 2,500 staff members representing our brands. After that, word of mouth, PR and corporate social responsibility (CSR) activities, such as the Pink Ribbon breast cancer awareness campaign.

How’s business in Japan?

We had a banner year last fiscal year (ending June 30, 2008). Last July-September was pretty consistent, but the 2nd quarter was a bit slower. Cosmetics tend to be more recession-resistant because consumers are more emotionally committed to the category. However, it’s getting more difficult because consumer mindset has become negative since February.

What trends have you seen amid the economic downturn?

Because many customers register with us, we are able to match about 85% of them with a transaction. Whereas 20-30% of business each month used to be new customers, it is getting more difficult to maintain that new customer share. On the other hand, loyal customers are staying with us.

What is your best-selling brand?

Clinique, a skin care brand which has been in the market for 30 years, is our No. 1 seller in Japan. That is the brand that really created the cosmetic business in department stores.

Who are your core customers?

We have two make-up artist brands, one called MAC, which is primarily for women in their 20s and bit younger. We have another makeup brand, Bobbi Brown, which is targeted at women in their 20s and 30s. Clinique has a wider demographic. Estee Lauder is more for women in their mid 30s, 40s and 50s. Overall, I’d say the average age of women coming to our counters in department stores would be in their 40s.

How big is the skin care market?

Japan is the largest skin care product market in the world, larger than the U.S. Japanese are the highest spenders per capita on skin care, 50% more than the next market, France, and four times more than in the U.S. Japanese women use on average about seven skin care products 4-5 days a week and about 8 make-up products a week. This is one area where women in their 40s-60s are willing to try new brands. Anti-aging cosmetics is a fast-growing segment, too. Women start using them in their mid-30s.

Do you manufacture products specifically for Japan?

Yes. We have an R&D facility in Japan, and two years ago, we set up a skin research institute in Kobe. We customize about one-quarter of our products for Japan and other Asian markets. Japanese skin is different in terms of how it ages and it is thinner. Japanese women tend to have less issue with wrinkles but more issue with evenness of skin tone, age spots. Fifteen years ago, the customer might have adapted to the foreign prestige brand. Today, we have to adapt to the customer.

Where do you sell your products?

Primarily in department stores and high-end salons. We have the largest market share in department stores and are the most important player. Our strategy is to be very careful with distribution of our brands, so that we can give a measure of exclusivity that Japanese brands don’t give.

How about online sales?

You can order online through department store catalogues and we are looking at direct online sales for the future.

What are some unique characteristic so the Japanese market?

The market is much more driven by fashion, trends and innovation. There is also a seasonality to it, particularly in color. With some of our brands, like MAC, we have a counter activity almost every two weeks. In skin care, some of the most innovative ideas are coming out of Japan. Whitening, which is unique to Asia, comes from here. In other areas, cultural differences, such as sensitivity to scent, are much more pronounced. The detail and care taken in packaging is another unique factor.

How do you keep your finger on the pulse of all the trends?

The greatest learning method is going out into the marketplace and talking to customers. We touch people every day. Today, for example, we’ll touch 15,000 consumers in stores. So we get a lot of feedback. For the rest, I have good people around me who can provide the expertise.

How do you get feedback from customers?

We have a consumer communications department which gets thousands of calls, mostly inquiries, and a few complaints. The main method, though, as I mentioned earlier, is through a lot of interaction between our sales staff and customers at stores.

Once a year, we do a mystery shopping program. We hire a third-party company and they canvas 50 stores, shopping at our counters and those of our competitors. They then provide an analysis and some recommendations. It’s something we take very seriously.

What social activities is Estee Lauder involved in?

We have a number of global initiatives. We are very much involved with breast cancer awareness and prevention. The pink ribbon campaign was started by our company in the early 1990s. In October, we light up Tokyo Tower in pink and do a lot of activities that month at our department store counters to raise money. Our MAC brand has been at the forefront of raising money for AIDS prevention.

What is a typical day for you?

I show up here between 7:30 and 8 a.m. I try to spend a day or two during the week in the marketplace. I like visiting department stores to meet with store management or check out the competition. Other days, I visit our R&D facilities. Some conference calls with New York are done late at night or early in the morning.

What is your management style?

I like to have one-on-one meetings and build a consensus before getting to a big meeting. I am very hands on in the distribution side and the kinds of decisions we make in terms of how our brands are positioned in the stores.

Do you travel much?

I visit our regional headquarters in Hong Kong once a quarter and New York twice a year. My trusty Blackberry goes with me everywhere.

How do you like to relax?

I ran in the Tokyo Marathon for the first time this year and finished in just under 4 1/2 hours. Besides that, I go to the gym and play tennis or ski whenever I can.

What frustrates you about doing business in Japan?

It doesn’t really frustrate me, but there is never a direct route to getting things done in Japan. You just have to have patience. On the plus side, though, once a decision has been made, the execution is swift and there are a lot of rewards.

For more information, visit http://www.estee.co.jp

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Latest 15 of 17 Total Comments Show All

LoveUSA at 01:29 AM JST - 24th April

Japanese skin is different in terms of how it ages and it is thinner.

Is this true and what does this mean? does that mean that the products in Japan are different than abroad and they affect the skin in different way?

Mark, is it ok for foreign women to use Japanese skin products? Aren't they harmful if they use too much whitening? Thanks please explain.
seesaw at 01:50 PM JST - 24th April

Many women emphasis on expensive cosmetics to look good. I'm only using Shiseido the cheapest range. And yet people always say my skin looks good. I don't mean to offend Estee Lauder, but beauty secrets are not only in cosmetics. It's plenty of sleep, rest and always find a way to let out the stress.....:)
LoveUSA at 02:09 PM JST - 24th April

I think most women in Japan spent 40,000 per month on comsetice. Seesaw, could you tell me what product do you excatly use? thanks
cleo at 02:59 PM JST - 24th April

I think most women in Japan spent 40,000 per month on comsetice

I think that's the figure the Pola lady tells you so that you won't feel guilty about taking out a neverending, revolving loan that costs 35,000 a month for Pola products.

I spend maybe 10~15,000 yen every two or three months. I may splurge out on the occasional lipstick or eye shadow on top of that. I have better skin than most women ten or 15 years younger, and the Pola lady gave up when I let her do a 'skin test' and the results came back that my skin scored 97 out of a hundred - most 30-somethings are doing well if they score in the 70s.

Keep the skin clean and moisturise, moisturise, moisturise.

And choose vegetarian, cruelty-free products because you can't have inner beauty with blood smeared on your face.
ZazoomZa at 04:52 PM JST - 24th April

"Keep the skin clean and moisturise" "It's plenty of sleep, rest and always find a way to let out the stress"

I agree. Cosmetics = chemicals so that can't be good to the skin.
seesaw at 03:17 PM JST - 25th April

LoveUSA: I'm using Shiseido Elixir range, the cheaper version. You could buy them at Matsumoto Kiyoshi at discounted prices.
womanforwomen at 03:45 PM JST - 25th April

yes we foreigners look much much better and healthier than our Jsisters 'cos we are sensible in our spending among many other things.
seesaw at 03:53 PM JST - 25th April

...and I bet we will look much better than them too when we turned 40, 50...They are spending loads of money now to catch the right fish to live happily ever after..i.e. to live up to the society's expectation...:)
aikisako at 07:56 PM JST - 25th April

I liked Pola but now I think the product I used is from Pdc now. 2 in one.
Sarge at 08:33 PM JST - 25th April

"skin care fragrance"

I wish people, both men and women, would refrain from splashing stinky perfume on themselves.
LoveUSA at 09:59 PM JST - 25th April

I love perfumes, also it is nice to pass by a man who smells of nice masculine perfume.
LoveUSA at 09:59 PM JST - 25th April

thanks seasaw for the recommendation.
seesaw at 12:49 PM JST - 27th April

You are welcome LoveUSA! Happy GW holidays!
Smythe at 10:45 AM JST - 30th April

Plastic surgery is big money & taking over due to the perfection in the eyes of the women. The cosmetics would be used as an afterthought.
LoveUSA at 11:06 AM JST - 30th April

Plastic surgery is big money & taking over due to the perfection in the eyes of the women. The cosmetics would be used as an afterthought.

Afterthought? not in Japan.