A Conversation with William P. Lauder, Executive Chair, The Estée Lauder Companies
Vats of indelible ink have been used to question and revise the future of retail, including our interviews with key industry figures.
William P. Lauder, executive chairman of The Estée Lauder Companies, offers his own unique perspective. His ideas about what’s working for the cosmetics industry are widely applicable to other retail sectors, including embattled brick-and-mortar stores. William’s vision at first sounds familiar: malls and mid-priced retailers will struggle as consumer power continues to grow.
“There are too many stores, so mediocre regional malls will eventually go away or be repurposed, and we’ll be left with fewer, better stores,” he said. “The consumer has become so powerful. She doesn’t want to buy her winter clothing when it’s the middle of the summer. She wants to buy closer to the season. She sees H&M and Forever 21 offering fast fashion at disposable prices. So the mid-priced retailer becomes obsolete.”
What will the remaining — and thriving — retailers look like? “The enterprises that will survive will be those that are most capable of adapting,” he said, taking a page from Darwin’s work. “Industries often move in lockstep, because they’re looking at the same data and landscape. In contrast, successful retailers will experiment and adapt, becoming more narrowly defined and nimble.”
In this future landscape of long tail and niche retailers, William believes offering diversion will be more vital. “Retailers will have to define themselves as places of entertainment,” he said. “It’s got to be fun and exciting and put a smile on the consumer’s face. Not a gray, drab environment. Consumers have a lot of choices of what to do with their finite amount of disposable income and time. They can go to Macy’s, to Cheesecake Factory, to Disney World. If it’s a chore, or boring, or a pain, they won’t go to the mall.”
William says that the entertainment experience is currently coming to life in specialty multi-brand cosmetic stores like Sephora and Ulta. “Consumers are finding the specialty multi-experience preferable to the mass experience of ‘blister pack and pegboard in aisle four’ or the perceived hard sell experience of prestige,” he said. “At Ulta, millennials see a mass brand at $8 and a prestige brand across the aisle is $12, and there’s an expert there who will help them choose. Suddenly the jump or conversion from mass to prestige isn’t so big. So the girl who’s buying her prom dress at Macy’s might also buy Clinique because she recognizes it from Ulta. It’s entertainment, it’s fun, it’s approachable. It’s an experience, not just an act of consumption.”
The benefits of a good experience are amplified thanks to consumers’ (and increasingly, brands’) new weapon: social media. “It’s driving awareness in a new way,” he said. “We no longer have just externally appointed authorities. You have self-appointed authorities or people trying to be authorities, posting their opinions on YouTube. And people tell their friends about it. You don’t have to be an editor of Vogue to have a following. Today everyone’s an editor.”
One of the benefits of specialty-multi retailers is that brands can pick the best retail partners for their needs, and vice versa. William said a combination of these partnership strategies and brand-owned channels—complete with experiential elements like Aveda’s salons—will help modern brands reach and serve consumers through myriad interactions.
“We are not in service to one class of trade, but to the consumer,” he said. “And every class of trade for us is either a vessel for the consumer or they don’t reach our consumer. Everything is DTC. The question is, do we go directly or through another retailer? There’s a triangular relationship. Consumers, retailers and brands. We love certain retailers because of the consumers they bring to us. The consumers love certain retailers because of the brands they carry. And we love certain consumers. We’re all dependent on each other.”
No matter what happens to retailing by 2026, there’s little doubt that relationships, partnerships and collaborations will exist in some form or another. And as consumers gain even more power, retailers and brands will be wise to connect to serve this increasingly demanding force. If not, they will fail to adapt and become extinct.