In Europe alone, more than 9,600 small and medium-sized enterprises (SMEs) operate in the cosmetics market, which represents 104 billion euros according to the professional association Cosmetics Europe. The number of startups is booming, with more than 2,000 beauty startups in France and more than 1,000 in the United Kingdom.
But what is the real importance of these startups in the beauty market? And what interest do large cosmetics groups have in the ideas and innovations coming from these smaller teams?
Two of the largest cosmetics companies in the world, L’Oreal Group et Estée Lauder Companiesaddressed this subject during the Cosmetic 360 show which was held last month in Paris. They detailed the operation of their acceleration and support programs, designed to integrate ideas, talents and innovative products. According to the leaders of these two companies, startups and entrepreneurs are essential to the future of the beauty sector.
A landscape in full transformation
Adonis Bouzid, Global Director Open Innovation for Digital & Marketing at L’Oréal Groupeemphasizes that the cosmetics giant is constantly looking for innovative startups to collaborate with. Station F Beauty Tech, L’Oréal’s startup accelerator, was created in 2018 to allow the group to stay at the cutting edge of technology. Since then, he has supported 88 startups around the world and invested approximately $260 million in these companies.
“The mission of the L’Oréal Station F Beauty Tech accelerator is to identify possible partners, particularly startups that may be financially fragile but have strong potential,” he told Cosmetic 360 attendees. These startups are then onboarded for six months to work on product development and pilot projects, to determine whether a long-term collaboration is relevant for both parties.
The L’Oréal group looks for very specific characteristics when analyzing the market to identify eligible startupsin particular resilience, speed of execution and ability to adapt, insists Adonis Bouzid to Premium Beauty News.
According to him, “we live in an era where the digital and marketing fields are experiencing multiple transformations.” AI is developing rapidly, and amid ongoing global political tensions, access to capital is increasingly difficult. Therefore, the ability to stay on course, have a clear vision and meet expectations is paramount.
Furthermore, the ability to obtain rapid results “counts enormously”, given the strong competition that reigns today in the beauty startup sector, underlines Adonis Bouzid. “And then (…) because of this need to stay the course and quickly reach the goal, the manager of the startup must be a particularly brilliant person, particularly in the field of marketing. I would say that founders making multiple strategic adjustments within a six-month execution program are increasingly becoming the norm.”
Money, time and energy
Pour Lucas Nanini, Vice President of Fragrance Innovation at The Estée Lauder Companiesstart-ups wishing to collaborate with major players in the sector must take into account two key priorities: money and time.
“In reality, the number one priority is to make money and the second is to save time,” Nanini told participants. So, when a large cosmetics company integrates a startup or wishes to invest in a new idea, it must be financially promising, save time or optimize resources.
According to Lucas Nanini, startups are generally characterized by great agility and short implementation times, unlike large companies in the beauty sector which have a more rigid structure, with quarterly or even annual objectives.
Under these conditions, he believes that the success of partnerships relies a lot on energy: from the energy deployed to present a project to that necessary to activate and integrate the new tool or new idea internally.
A point of view shared by Adonis Bouzid, who emphasizes that the success of collaborations is based on good management of time, money and energy.
Startups, he adds, are pushed, even forced, to act quickly because of the expectations of venture capitalists. However, large companies in the beauty sector cannot always respond quickly, as validation can sometimes take weeks rather than a few days. This is why “creating a bridge between the large enterprise and the young agile startup” is crucial for better management of deadlines and cash flow.
