The Estee Lauder Cos. (ELC) and Microsoft Corp. announced plans to work together on a generative artificial intelligence (AI) project through their AI Innovation Lab. The businesses will work on generative AI solutions to extend speed to market and consumer connections with Estee Lauder’s greater than 20 beauty brands, they said in a combined statement.
The AI Innovation Lab will use Microsoft’s Azure OpenAI Service.
“At ELC, technology is at all times in support of our enduring strengths of high-quality products and high-touch consumer experiences,” said Jane Lauder, executive vice chairman, enterprise marketing, and chief data officer at Estée Lauder. “With Microsoft’s generative AI tools and extensive expertise, we’re in a position to leverage ELC’s tremendous data to create more personalized consumer experiences and faster insights to motion leading to increased speed to market and stronger local relevancy. We sit up for continuing our close and collaborative partnership with Microsoft.”
Estee Lauder ranks No. 41 within the Top 1000, Digital Commerce 360’s database of the most important North American e-retailers by online sales. It operates cosmetics brands including La Mer, MAC, Too Faced and others.
How Estee Lauder will use generative AI
Estee Lauder shared two specific ways it is going to use Microsoft’s technology.
First, it worked with Microsoft to create an internal chatbot that uses AI to enhance marketing campaigns. The chatbot uses conversational AI to seek the advice of Estee Lauder’s database of products and knowledge. Then, marketers can use that data to quickly create latest marketing campaigns relevant to different locales, Estee Lauder said.
Estee Lauder can also be using Microsoft generative AI in product development and research. The retailer says the technology allows scientists and development specialists to reply to product and ingredient trends more quickly.
“Generative AI represents a major opportunity for the sweetness industry — creating more engaging customer experiences, getting products into the hands of consumers faster, developing latest products more efficiently and sustainably, and far more,” said Shelley Bransten, corporate vice chairman of Global Industry Solutions at Microsoft. “We’re proud to collaborate with The Estée Lauder Firms to offer not only a platform for AI innovation, but additionally deep partnership to bring these latest innovations to life.”
Estee Lauder’s history with AI
The cosmetics retailer isn’t latest to AI. Estee Lauder has worked with Microsoft since 2017, it said. In early 2023, it used Microsoft Azure AI to create an AI-powered mobile app for visually impaired consumers.
The Voice-Enabled Makeup Assistant (VMA) helps visually impaired users apply makeup using voice instruction technology. The AI identifies how makeup is applied based on uniformity and coverage. Then it gives feedback on lipstick, foundation and eyeshadow application with advice on where touch-ups are required. The app is out there on Android and iOS in The U.S., U.K. and Ireland, with more markets planned, the retailer said.
Later in 2023, Estee Lauder also worked with Google Cloud on one other generative AI enterprise. The 2 firms planned to “collaboratively explore AI-powered solutions to higher understand consumer sentiment, inform R&D efforts, and translate the magic of prestige beauty brands into best-in-class, high-touch digital experiences,” they said in a press release on the time.
It also used Google large language model (LLM) PaLM 2 to collect data on consumer sentiment through social media and call center operations.
Estee Lauder revenue
Estee Lauder reported net sales grew 5% to $3.94 billion in its second fiscal quarter ended March 31.
Skincare made up the most important portion of sales, accounting for $2.06 billion within the quarter. That was a rise of 8% from $1.92 billion within the year-ago period. Makeup sales also grew, up 3% 12 months over 12 months to $1.14 billion. Fragrance sales remained nearly flat at $575 million. Meanwhile, hair care sales declined 3% to $143 million.
Estee Lauder cited success from Clinique’s debut on the U.S. Amazon Premium Beauty Store, which “greatly exceeded our retail sales expectations,” it said in a press release.
Within the preceding quarter, the retailer announced it might lay off 3% to five% of its global workforce this 12 months. Those job cuts impacted as much as 3,100 of the sweetness retailer’s 62,000 employees.
Layoffs are a part of a multi-year plan to rebuild profit margins in 2025 and 2026, Estee Lauder said.
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