The American cosmetics manufacturer has developed a two-year recovery plan from the pandemic, including store closures and the development of the online sphere.
Estée Lauder has announced the creation of the "Business Acceleration Program", which includes a series of steps to overcome the crisis caused by the pandemic. In particular, it was announced that 10% to 15% Estée Lauder stores will be closed as part of the program. Most of the outlets that will close in the near future are located in North America and Europe. It is also reported that the retailer will cut about 3% of its workforce worldwide, which equates to roughly 1,500-2,000 jobs.
In addition to stand-alone brand stores, the functioning of retail outlets in large department stores will also be analyzed and reviewed. The least productive ones will close. It is expected that in this way it will be possible to achieve annual savings of 300 to 400 million dollars. And the savings from store closures will be redirected to strengthen the brand's online presence and a variety of digital initiatives.
Restructuring physical stores and increasing investment in online sales will be a priority for the company over the next few years. The refocusing of efforts on the online sphere reflects the company's desire to respond to changing consumer behavior.
Due to the pandemic, there is a sharp increase in online sales, the company reports a 70% sales jump in the second quarter in North America. At the same time, Internet sales amount to about 60% of the total volume. Not only the way in which purchases are made is also changing significantly, there are changes in the value system and motivation of buyers, as well as their ways of interacting with brands.