Augmented Reality: L'Oreal's bold move

It is rather safe to say that the era of selling things, touchable and concrete things that is, exclusively in brick-and-mortar places is over. Or at least, it is no more the only way for businesses can become hugely successful. And in reality, the world of retail has been steering in this direction for a while now. But what has really changed in the last couple of years is how these businesses associate to their tangible goods more virtual and digital experiences, in order to create a successful mix that can enhance the appeal of a product. And that’s easy recognisable, for example, in the taking over of influencers marketing as key in brand’s digital strategy, or in the use of the latest tech innovations to improve product offerings.

L'Oréal is perhaps one of the most fitting examples in that sense. Here, this extremely popular company – or more precisely, this multinational that bills $28 billion in yearly sales, is very much of a product business,  but does not shy away from what technology and the world of digital has to offer. On the opposite, L’Oréal rather uses it to place itself as a key player in its sector. This shows in the confident and spot-on ownership of its social strategy, a living proof of which are 250 million followers across their social networks collected along the way. And it also shows in their internal talent strategy, with the hires of 2,000 employees to boost their digital team, as well as the implementation of training courses for those existing employees who had not already joined the tech wagon.

Besides all of this, L'Oréal recognition of the importance of innovation got marked earlier in May this year, when it acquired its first start-up to join the group. This was the Canadian gem Modiface, the small company behind many augmented reality beauty experiences. The acquisition was a moment of utter pride and of strategic importance for the L’Oréal, whose Chief Digital Officer Lubomira Rochet in an interview with Forbes stated, “We acquired Modiface because we absolutely believe that services are the future of beauty.” The acquisition of Modiface is the pinnacle of the group engagement with the start-up world, which started already last year with the support of Station F, the biggest start-up campus worldwide.

This type of acquisitions gives a new, tech spin to corporate venturing, in particular when happening within a sector like beauty, whose core is the quality of their (physical) products. The involvement with tech and innovative start-ups begins with the recognition that the separation between digital and physical is not so clear-cut anymore. On the opposite, one works to enhance the other, with the potential of bringing the business to new heights. And this is true for both parties involved. For big companies like L’Oréal, tapping into the world of start-ups means having access to the so coveted innovation and flexibility factor. Indeed, where a big and established company feels held back and stifled, these vibrant start-ups like Modiface swiftly make their way through the market with previously intact ideas. But it is also true that start-ups can leverage their position as part of a big group, as this means getting access to a number of resources, support and visibility that would not have been otherwise possible, or at least more difficult to achieve.

L’Oréal acquisition of Modiface will perhaps mark the beginning of a longer series of start-up acquisitions within the French group and others. For the talented minds behind the young businesses, this could mean the opening up of fascinating opportunities, but it poses as well a challenge to the maintenance of that start-up feel that makes them so attractive. But for now, the popular trend in the industry seems to be: small is the new big.