How have you responded to the situation with Covid-19 from a personal and professional perspective?
Reaction has happened both professionally and on the personal side.
During mid-March, we begun to close all of our Brick and mortar doors. Estée Lauder is a retail business, our people operate 24 / 7. Agreeing with our retailers to close doors was a big decision. Some wanted to remain open, but to us, we needed to agree on the best moment considering the most important variable was the health of our employees and, of course, our consumers. Estée Lauder as a company is very mindful of its people, it walks the talk in that sense. We ensured that we could continue to operate with everybody working from home.
The next most important subject, after employee health, was converting our business to become an online business. The dot-com side of the business was representing a small % of the company in Mexico. In some of the retailers, it grew by ten times or more during the lockdown. That did not cover all our revenues. We also had to review every line in our P&L and protected our cash flow. We negotiated everything that we could so that we would be able to reduce the usage of cash flow and mainly focus our resources on being able to continue paying our people. Protect the long term.
As such, the company was able to sustain all of our employees throughout the pandemic. We refocused the roles and responsibilities of everyone to be able to support the dot-com business. The dot-com side of the business is going to be a big focus of ours for the future.
What do you consider were the top three leadership challenges during the Coronavirus pandemic?
We have had to reinvent ourselves in many ways. If you think of visiting an Estée Lauder counter, we touch your face. That’s a big part of our business when you are talking about skincare, make-up, haircare, or even fragrance to a certain degree. When consumers come to us, we give them advice and, in many cases, we give them a personal service, and this is something that we aim to continue to offer. So, we have had to reinvent ourselves at the point-of-sale because currently, we cannot “touch” consumers.
As a result, a major change, is that we have added technology to our point-of-sale. If you want to go and look for lipstick and you want a different tone, a different colour, you want to try it on, but you cannot. We now have what we call a ‘virtual try-on’. We have iPads at the point-of-sale, or if you visit our website, you can try it on in your computer as you visit our MACcosmetics.com.mx.
The process of the sale is going to be very interesting as the stores reopen. We are seeing a shift, and this was a trend that was happening anyway, but Coronavirus accelerated all trends. Consumers will have different habits now. In Mexico, and probably all of Latin America, the make-up business was bigger than the skincare business, but now skincare has overtaken make-up in terms of the size of the business.
For instance, facemasks will reduce products designed for your lips, but you will look to do more with your eyes. I think there is a change of habits coming our way, and we have to be aware of that.
We are also going to need to be flexible, and we have to be willing to reinvent ourselves as things change. In the past, we used to say that this was ‘the world where the strongest survive’. Now I believe it’s going to be the world of the one who adapts better and can reinvent themselves and be creative in how to do business.
Another point is that we must ensure that everybody can work from home. We still need to motivate our people; we need to still be as efficient and be able to work without seeing each other. We have done this very successfully until now, but as the businesses are re-opening, the challenge will be being able to manage both the online and the bricks-and-mortar side of the businesses. We must continue to be close to the point-of-sale.
Did you draw inspiration from any other corporations’ responses to COVID-19?
We were very inquisitive of what was going on around us and what ideas could be implemented. For instance, we collaborated with delivery companies. As an example, in Mother’s Day, and through last mile delivery, we can take orders for Mother’s Day gifts and have them delivered to your house.
Additionally, we are also working on ‘social selling’. Once we have established contact with a consumer, they stablish communication with their Beauty Advisor – for example, through WhatsApp, and the Beauty Advisor can advise and sell products to them. The ability to maximize communication with our consumers is key, it has to be leveraged in the best way possible.
Social media, online masterclasses for consumers are other more relevant tools today. They deliver their online master class and that’s another way we can generate traffic and drive the sales that we need.
Some of our retailers have what they call a concierge service, and through that concierge service, we are also aiming to achieve more sales. There are many tools around us that are not your usual way of working, but, if you do not adapt, you will lose.
These days, you have to be aware of what’s happening all over the world, going to conferences, understanding what other companies are doing. You have to study, and you have to be aware of the solutions that are happening in other companies and how you’re able to utilize them in your industry.
How have you been keeping your employees motivated?
The name of the game with our teams has been communication. We used to meet four times a year with all the company. During this pandemic, we are doing this practically every two weeks. Communication is something that has to be a part of the culture, the vision, and the mission that a company has.
As a result of this increased communication, everybody noticed the huge amount of support that the company was giving to all of its employees. During the pandemic, sadly, we could see other companies going broke, laying off staff, or reducing expenses to a much higher level. Our company has been able to show a huge amount of support to its employees.
The role of our leaders is vital, more than ever, because we are now depend on each of our leaders to ensure that they lead their teams and maintain their motivation and avoid any unnecessary distractions. Estée Lauder has made a huge commitment to ensuring that we collaborate in the best way possible and continue to achieve positive results.
How are you managing your management teams throughout this?
We are continuously reviewing our priorities and reviewing what’s changing. Everything has become more analytical. Objective is to detect as many trends as possible and trying to review what will give us an advantage and change as fast as possible.
Today, we have just reopened some doors, we are monitoring what’s happening in all of our stores. As I said before, you are seeing changes, different consumer behaviour. Consumers want to live in smaller cities.
Is there anything else that you’re doing in terms of preparing for the future that you hadn’t been doing previously?
A focus for us is accelerating the use of technology and the capability of our online business.
Do you have any advice for other business leaders?
My advice is to go into a much closer one-on-one communication with all of your team. This is a virus that is affecting all of us, but in different ways. You have to be very sensitive to your people.
You need to ensure that you support in different levels as context will be different to all. Think of a working mother who has children, she must do home-schooling and at the same time be in a meeting. To some, it’s an advantage to be at home. Some working mothers are telling us that they want to stay at home rather than come back to the office because they’re more efficient at home.
Ensure that your team is being as productive as in the past, give them new tools and new skills to work even better within this new environment.