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The pioneer of door-to-door selling is betting on technology and a new digital team to bolster its business in hard times.

LONDON, United Kingdom — When the concept of social selling emerged as a way for housewives to earn money by selling everything from cosmetics to homewares, you could rely on the Avon lady — consumer-entrepreneurs who sold beauty products door-to-door to other consumers — to come knocking. The first Avon lady, Persis Foster Eames Albee of Winchester, New Hampshire, sold fragrances to her friends and neighbours, before recruiting a sales force of women, coiffed and coloured in Avon products, keen to make their beauty secrets attainable to the dowdiest of housewives.

But Avon ladies have changed since those early days. Today, they’re using WhatsApp and digital brochures to sell to customers, some of whom they have never met in person. Indeed, gone are the days when sales representatives would rely on their immediate circle of family and friends. Social media platforms and other technology, such as improved credit care payment services, customer relationship management (CRM) tools and sales force automation (SFA) software, have enabled sellers to more easily maintain a far greater number of “weak ties,” significantly extending their reach.

Yet, in recent years, Avon has struggled. Sales have declined, profit margins are being squeezed and scores of employees are being let go. Part of the 132-year-old company's struggle has been connecting with today's Instagram-obsessed young consumers, who buy their makeup from specialist retailers like Sephora, big-box stores like Walmart or online. Many take their makeup cues from social media rather than door-to-door sellers. It's also facing competition from a range of beauty companies, such as Beautycounter and Glossier, which also rely on a peer-to-peer sales network but are more modern in their approach. Avon’s share of the global beauty and personal care market fell to 1.5 percent in 2017 from 1.8 percent two years earlier, according to research firm Euromonitor.

“We’re an iconic business that’s in trouble,” Avon’s chief executive Jan Zijderveld told BoF. For the Unilever veteran, who succeeded former CEO Sheri McCoy in February, the cosmetics maker’s biggest challenge has been “a real commitment from the top,” he said. “There has always been a fear of change.” Investors are losing faith. Since 2013, Avon’s stock has been constantly depreciating in value, despite that neither the $440 billion global beauty industry or direct selling businesses, currently boosted by a growing ‘gig’ economy worldwide, are in decline. Since Zijderveld took over, Avon shares have lost an additional third of their value.

But the executive is determined to turn things around. “We’re going to become a digital-first, social selling, fast-beauty brand,” he told BoF. Having recently split off Avon’s declining US business and moved its headquarters from New York to London — the shift was aimed at helping the company focus on international markets, where it sees brighter prospects for its business model, after struggling to keep pace with American women — the next step of Avon’s transformation plan is re-energising its 6 million representatives, who form a key factor of the direct-selling operator’s success.

Some critics have attributed Avon’s recent dismal earnings, where both top and bottom lines lagged estimates, to soft representatives growth. “The most important issue today is retaining our representatives, because for a number of reasons they are not happy about the experience with us [and] the lack of digital tools is one [reason]," agreed Benedetto Conversano, one of Zijderveld’s key hires, who stepped into the newly created position of chief digital and information technology officer in September.

While door-to-door will continue to be how people think of Avon, the company’s biggest opportunity is online, said Conversano. Representatives across 20 countries — and soon, more — now have the option to launch a unique digital storefront on Avon’s website, where customers can shop any of brand’s products and get it delivered to their home.

Representatives are also starting to use technology to provide a better experience for customers. In October, Avon launched a personalised beauty app, which uses a colour algorithm to match makeup for varying skin tones, letting advisors give tailored personalised advice for their clients. It also recently launched a digital brochure across 12 countries that representatives can send to their clients via mobile messaging apps. (According to Avon, which currently has over 1 billion active customers, the e-brochure had 500,000 users in the first 48 hours.)

Avon has also deployed a new machine-learning model, which lets both the company and its representatives plan and react more quickly and efficiently to trends, forecast consumer demand, strategically allocate resourcing and make delivery more efficient. So far, the machine-learning model has gone live in three of Avon’s top 10 markets — the UK, Russia and Mexico — and will be rolled out in 15 geographies by early 2019, beginning with Brazil.

According to Conversano, who is focused on building up a new digital board comprised of business leaders from inside and outside the company, more developments like these are in the pipeline. “Today, as we speak, our online sales is negligible,” he said, but hoped that e-commerce sales would eventually account for 10 percent of the business. “We believe that is the minimum industry benchmark in beauty.”

Another focus of Zijderveld’s strategy is speeding up product development. Borrowing a page from the playbook of fast-fashion retailers such as Zara, which rushes new clothing styles from runway to shop floors in a matter of weeks, Avon can take a cosmetics product to market in as little as 20 weeks, down from two years. “We’re creating 300 more products in the fourth quarter this year than we did last. This is to make Avon a more on-trend, aspirational beauty brand,” he said.

“It’s a revolution the whole beauty industry is going through,” said Louise Scott, Avon’s chief scientific officer. “We keep a close eye on trends, but there’s no point if you don’t bring something to the market on time.” However, she noted that shortening innovation cycles has its challenges. “Niche brands can afford to move very quickly because they are flying below the radar of the regulatory scrutiny many of the bigger players are exposed to.” Instead of opening new factories for product development and manufacturing, Avon has turned to open innovation and collaborating with third parties.

Meanwhile, to refresh the company’s fusty image, Zijderveld has introduced more contemporary marketing, including a recent video campaign in Brazil, Avon’s biggest market, which features drag queens and transsexual models. In Mexico, Avon collaborated with influencer and transgender activist Victoria Volkova to launch the brand’s new fragrance, Aura.

Pricing is another area that will also see change. According to the executive, “the core price will go up a bit” but “they are still significantly lower than your typical prestige brands.” A recently launched K-beauty range is selling “for five to 10 times higher than existing skincare,” he said. “The consumer still gets a good deal and our ladies can earn a bit more money.”

But trendy products and campaigns may not be enough. For Chelsea Gross, associate director of client strategy at Gartner L2, Avon’s real challenge is further engaging top-of-funnel consumers. “The brand faces low unbranded search visibility against top colour cosmetics and skincare terms and low engagement on Instagram, both which are critical to drive credibility for beauty brands in a digital ecosystem,” she said.

Analysts at Zacks, an investment research firm, are more optimistic. “Avon has churned handsome returns in the last three months, outperforming the industry, courtesy of its progress on the transformation plans that mainly focuses on its representatives’ growth,” according to its latest report on the cosmetics maker. Avon, which last issued its earnings results on November 1, had revenue of $1.42 billion during the quarter, beating analyst estimates of $1.32 billion and up five percent on a year-over-year basis. While Zacks forecast “modest improvement” in revenue in the second half of 2018, it also said “there is a lot of work to be done to restore the business to top-line growth.”

Ultimately, Zijderveld believes that product quality will win over critics and consumers. (By not spending on advertising or retail space, everything is invested into product, he said.) “What we offer is the quality of prestige products at half the price. If you’re smart, you buy Avon. Why pay 80 bucks for a fragrance when we sell it for 20?” he said. "It’s already a very personal business. What we’re doing is adding technology. That’s our vision for the future. We’re going to be high-touch and high-tech business that’s touching people’s lives.”

The fashion designer called for French President Emmanuel Macron to help release the ceo of Renault, detained in Japan on tax-evasion charges.

PARIS — Fashion designer Rabih Kayrouz has pleaded with French President Emmanuel Macron to request the liberation of Carlos Ghosn, the chief executive officer of Renault and chairman of the Renault-Nissan-Mitsubishi Alliance, who was arrested in Tokyo on Nov. 19 following accusations of tax evasion.

Ghosn, 64, is being held at a detention center in Kosuge until Nov. 30 while the Japanese justice system examines the claims made against him.

“A week ago we all discovered that this man has been arrested in a very brutal and unjust way,” Kayrouz wrote on Instagram on Sunday evening.

“Why? What did he do? After saving a company (and) a country is this a way to thank him? Is this the way to honor a genius? A hard-working man? A husband? A friend?” he added.

The designer, who dressed Ghosn’s wife Carole Nahas at the couple’s wedding held at the Chateau de Versailles in 2016, appealed to Macron to “save your citizen, the head of one of the most prestigious company [sic].” He ended his post with the hashtag #freecarlosghosn.

Kayrouz was not immediately available for additional comment.

On Nov. 22, Nissan said Ghosn no longer held the position of chairman of that company. Mitsubishi Motors followed suit on Monday.

On Nov. 21, Renault called in Thierry Bolloré and Philippe Lagayette as temporary replacements for Ghosn, sparking speculation about his possible exit from the company. The French government owns 15 percent of Renault.

Speaking on French television channel BFM TV on Sunday, French finance minister Bruno Le Maire said the state had no elements of proof regarding the accusations against Ghosn. “As long as we don’t have tangible charges, there is no reason to question his presumption of innocence,” he said.

Mother-Daughter Brand MaisonCléo Debuts Capsule With Opening Ceremony

FAMILY AFFAIR — MaisonCléo, the French ready-to-wear brand born on Instagram, is teaming with Opening Ceremony for a capsule collection.

US corporate bond market has entered a bear market after hitting a peak in February, Morgan Stanley warned on Monday.

Analysts at the investment bank said 2017 proved to be the “Goldilocks” year for the credit market, as economic growth expectations brightened and investors looked forward to US tax cuts and a relatively accommodative Federal Reserve. But technical challenges began to appear in 2018 with the Fed “stepping harder on the brakes,” chasing more investors away from the US bond market.

Market fundamentals are expected to worsen next year. Morgan Stanley’s analysts noted that monetary policy has turned hawkish and should near “restrictive territory” for the first time in this cycle. Also, tailwinds from a booming US economy are beginning to dissipate while earnings growth slows, they said.

“We believe the credit bear market, which likely began when [investment grade] spreads hit cycle tights in February 2018, will continue in 2019,” strategists led by Adam Richmond wrote in a note to clients, adding that high-yield debt will probably underperform.

Morgan Stanley advised buying higher-quality bonds. It also said it prefers short-duration high-yield bonds and US over European banks.

Mr Richmond offered a silver lining for investors: the market is less complacent, and the recent sell-off has softened valuations in some corners. These two factors “help at the margin,” he said.

“While we certainly do not think the consensus has embraced the idea that end-of-cycle risks are rising notably, at the least, sentiment is much less uniformly bullish than it was at the beginning of 2018,” Mr Richmond wrote.

“That said, we very much stick to our bigger picture view that the credit bear market has started, and until valuations have truly priced in long-term fundamental risks, investors should use rallies to move up-in-quality.”

Mario Draghi has insisted that the European Central Bank still plans to halt its €2.6tn stimulus programme at the end of this year, arguing that inflation is set to increase despite recent disappointing economic data.

Appearing before the European Parliament, the ECB president said the final decision to end the asset purchase programme would be taken next month “subject to” data confirming the bank’s prediction that inflation was going to “gradually rise”.

Mr Draghi’s comments came after signs of weakening business confidence, notably a slide in the eurozone purchasing managers’ index to a four-year low. The region also grew by only 0.2 per cent in the third quarter, compared with 0.4 per cent in the first half of the year.

But the ECB president argues that the slowdown was in large part a return to normal levels of growth after the eurozone outperformed in 2017.

Mr Draghi pointed to the lowest level of unemployment since 2008 and the “rising profitability” of companies as evidence of what he characterised as the solid underpinnings of the euro area recovery.

He said that while growth numbers had been “somewhat weaker than expected”, the bank remained confident that the stimulus programme — a vital component of the recovery since its introduction in 2015 — could be safely withdrawn.

“Generally, there is good reason to be confident that underlying inflation will gradually rise in the period ahead”, Mr Draghi added, noting that “wages are rising as labour markets continue to improve and labour supply shortages become increasingly binding in some countries”.

The ECB is at present buying €15bn of mostly government bonds every month under the quantitative easing programme, which stimulates the economy by putting money into the financial system and keeping interest rates low.

Mr Draghi told MEPs on Monday that, even once the ECB stops buying bonds, it will continue to provide “a significant degree of monetary policy stimulus.”

The bank will “reinvest” the money from bonds that come due “for an extended period of time”, he said, adding that the ECB’s policy of providing “forward guidance” on its interest-rate decisions would also help.

Mr Draghi also urged governments to press ahead with plans to strengthen the euro area, including plans for a “fiscal instrument” — for example a rainy-day fund— to help countries in the bloc cope with shocks, and moves to complete its “banking union” system for dealing with financial crises.

EU leaders are set to take a first set of decisions on reforms to the currency bloc at a summit next month.

The idea of a fiscal instrument is strongly advocated by France’s president, Emmanuel Macron. Mr Draghi said it would “contribute to macroeconomic stability both at the euro area level and, crucially, in each of its member states”, reducing the need for costly sovereign bailouts.

Net long positions also shrink dramatically as crude’s price tumbles from October peak

Hedge funds have more than tripled their bets against the oil price since the beginning of October, amassing the largest short position against crude in more than a year as prices have tumbled.

The data, compiled from regulators and exchange operators, shows investors have been adding big bets against crude as it slid from $86 a barrel in early October to below $60 a barrel last week, likely extending oil’s fall as traders sold barrels.

Bets against the main oil benchmarks in London and New York are now at the highest level in at least 16 months, while net long positions — the difference between bets on rising and falling prices — have also shrunk dramatically.

That could add to price volatility ahead of meetings between Opec and allied producers including Russia next week, said traders, with Saudi Arabia said to be keen to agree an output cut to help prop up the market despite opposition from the US, its chief western ally. Brent prices stabilised above $60 a barrel on Monday, rebounding 3 per cent after losing 12 per cent last week.

“Until the next Opec conference the question is how the market will behave,” said Tamas Varga at oil brokerage PVM in London. “We should never underestimate the power of speculative forces.”

The oil market has been roiled in the past two months by signs that supplies have risen much faster than demand, with US output soaring while Saudi Arabia and Russia have hiked production, moving to forestall any supply shortfall as Washington reimposed sanctions on Iran’s energy exports.

But with the US announcing more waivers than anticipated for Iran’s customers, oil prices have tumbled, with fears also mounting of a slowdown in the broader economy.

Hedge fund short positions in Brent crude oil and US benchmark West Texas Intermediate now stand at the equivalent of more than 200m barrels, up from around 60m in early October.

Saudi Arabia’s oil production reached a record 11m-plus barrels a day — more than 1m b/d higher than its output this spring — at the end of November, newswires reported on Monday, with Opec’s largest producer responding to stronger demand from customers ahead of the US sanctions on Iran.

Analysts have said the fundamentals of the oil market suggest Saudi Arabia now needs to lower output otherwise prices will fall further.

“We believe doing nothing at the Opec meeting is simply not an option, as it could easily result in prices dropping to the $40s,” said Amrita Sen at Energy Aspects.

Saudi Arabia’s decision-making has been complicated, however, by Donald Trump’s vocal support for lower oil prices.

The US president has maintained backing for Saudi Arabia’s Mohammed bin Salman despite questions about the crown prince’s knowledge of the killing of dissident journalist Jamal Khashoggi.

The leaders of the US, Saudi Arabia and Russia will be at the G20 meeting in Argentina this week before the Opec talks. The energy ministers of Saudi Arabia and Russia will also attend the G20, suggesting talks about the oil price are likely.

The ceo is doubling down on digital initiatives and China to reinforce the company's position as the largest beauty firm in the world.

Forty years after joining L’Oréal, Jean-Paul Agon makes for an unlikely revolutionary.

Yet the chairman and chief executive officer of the world’s biggest beauty company is more bent on change than perhaps at any other time in his storied career, which has seen him methodically rise from product manager to strategic visionary. “I have tried to completely transform L’Oréal to adapt it to what I thought would be the world of tomorrow,” said Agon, whose key accomplishments include catching the digital wave early, pioneering record-producing programs in sustainability and social responsibility and driving growth in key emerging channels, including Asia and travel retail.

Despite his long tenure, Agon shows no signs of slowing down — or resting on his laurels. “If I have one obsession, it is to try to adapt L’Oréal to the evolution of the world, the evolution of consumers, of what they want, what they need, what they desire, in order to permanently be ahead of the game,” he said during an exclusive interview in the company’s expansive New York headquarters in Hudson Yards.

The fixation on being number one is not new to Agon — his successor as ceo and chairman, Sir Lindsay Owen-Jones, was known for driving quarter after quarter of double-digit profit growth. But the complexion of the business, which had revenues of 26.02 billion euros in 2017, is gaining a new accent as the world shifts eastward.

“Asia-Pacific will become the number-one [sales] zone of L’Oréal in 2019 or 2020 at the latest,” Agon declared, noting the region will be the source of the company’s future growth. “It is there that you have the largest population, the largest demography, and also the most dynamic part of the economy of the world.”

For L’Oréal, the Asia-Pacific zone comprises 10 countries, including China, Japan, Korea, India, Malaysia and Indonesia; the region is projected to exceed North America in sales by the end of this year and Western Europe in 2019. Perhaps just as important, the rise of Asia gives L’Oréal a second engine of competitive aspiration and development in the world.

“Asia, and especially China, is becoming the new most competitive market in the world,” Agon said. “Definitely the U.S. is still a very competitive and forward-moving market. In the past, there was probably only one pole of development and competitiveness in the world, which was the U.S. Now we will have a second pole in Asia. It’s good, because it’s even more stimulating for the company.”

At the end of September, Asia-Pacific accounted for 27 percent of L’Oréal’s global business, running slightly behind North America — 27 percent versus 27.1 percent — a difference of 40 million euros.

Soon, it will grow to more than 30 percent. “It’s going to be one-third of L’Oréal,” Agon said, noting that over the next 10 to 20 years, countries including China, India, Indonesia, Malaysia and Vietnam will continue to explode in importance.

He hastened to add that L’Oréal expects to continue reaping market-share gains from established markets as well. “Our ambition is to grow in every part of the world,” he said. “We are growing and gaining share in North America, we are absolutely committed to keep growing and gaining share even in Western Europe.”

Looking around the globe, Agon predicted that Africa will one day be an important beauty market, too. “African women are among the most motivated in the world for beauty,” he said. “They are passionate about beauty…they are the only women in the world who change their hairstyle on average 10 or 11 times a year.”

Agon foresees the day when he taps a rising young executive to “go and create Africa,” much as Owen-Jones sent him to Asia in 1997 to develop the market there. “I’m afraid I won’t be able to finish that in the next two years,” he said with a smile. “That’s going to be a great mission for my successor.”

Despite Agon ceding the development of Africa to the next generation, this is not the modus operandi of a man winding down after 12 years as ceo and seven as chairman. At age 62, his ardor has not cooled, nor has his globe-trotting through L’Oréal’s network of 150 markets slowed.

All of that momentum has paid off. The recent third-quarter figures were L’Oréal’s best quarterly results since 2007, before the Great Recession. Sales reached 6.47 billion euros, up 6.2 percent in reported terms, and 7.5 percent on a like-for-like basis, broadly beating financial analysts’ expectations. The surge was pushed by sales of the Luxe and the Active Cosmetics divisions.

Indeed, the word “retirement” does not dwell comfortably in Agon’s vocabulary. Asked when he will name a successor, since he had previously stated his intention to remain ceo until he turns 65 in 2021, France’s statutory limit and L’Oréal’s traditional retirement age, the ceo dismissed the question with a broad smile and a breezy answer: “When it will be the time for that.”

However, it has been long speculated in and out of the company that Nicolas Hieronimus, deputy ceo, has been chosen as Agon’s successor. There has been no comment from the company or any of its executives.

In the meantime, the present L’Oréal chief has plenty to do and shows no inclination of slowing down. He is “obsessed” with modernizing and arming L’Oréal to be the champion of what is yet to come. Agon is driven by change, which he sees everywhere. “The world and L’Oréal have changed more in the past four years than in the previous 36,” he remarked.

Agon recently began talking up his results in leading a trifecta of seismic “revolutions” — putting L’Oréal in the forefront of the digital, sustainability and corporate responsibility movements, including gender equality and closing the pay gap to 1 to 3 percent. “Our intention is to eliminate completely any gap in the very near future,” Agon asserted.

The transformation that has received the most attention from outside the company is L’Oréal’s role in the forefront of the digital revolution in beauty, dating back to 2010, which Agon branded “the year of digital.”

“Undoubtedly, Agon’s greatest achievement was the early realization that a digital ‘tsunami’ was about to hit the industry,” said Eva Quiroga, an analyst at Deutsche Bank, “and the unwavering investment in ensuring that L’Oréal would remain at the very forefront of that.”

As a measure of its quick start and determination, L’Oréal has dominated the Enterprise ratings of the Gartner L2 annual digital rankings by finishing number one every year since 2013. For 2018, however, the company ended up sharing the top spot in U.S. beauty with Estée Lauder Cos. Inc. Both giants scored 113 digital IQ points when the respective portfolios were judged on a consistent and like-for-like basis without including recent acquisitions. Four of L’Oréal’s brands finished in L2’s top 10 genius rankings — the most of any group — with Maybelline claiming the number two spot in Genius territory for the second year in a row. The company also had a second Genius brand, number three NYX.

For Agon, the goal is not just to inject digital thinking into all areas of L’Oréal — it is to use digital to transform the very nature of the company itself. “My ambition for L’Oréal,” he said, “is to become the beauty tech company of tomorrow.”

While Agon is credited with spearheading the big transformations, he always gives credit to the organization for its ability to change. “L’Oréal has a kind of magic capacity to regenerate itself, both because we are leading the way, but also because all the teams are really participating in this regeneration,” he said.

The latest among these mini-revolutions is a far-reaching internal program that is being designed in-house to produce a more nimble, agile and responsive organization that empowers the staff, particularly middle management. Agon described the program, which is called Simplicity and is still in development, as a “cultural revolution” that aims to “change [the atmosphere] to a collective, cooperative and collaborative behavior and spirit within L’Oréal.”

That is a feat for a company that has 82,600 employees spread around the world, and has sometimes been associated with hierarchical tendencies.

“This cultural revolution is a very important one,” Agon said, leaping up from his seat to grab a chart set up like a tic-tac-toe board that contains the new mantras of the corporate culture, such as “teams are the new heroes,” “cooperation is the new confrontation,” “empowerment is the new management,” “problem-solving is the new meeting behavior.”

Part of the change has centered around opening up L’Oréal’s male-dominated hierarchy to more women. Agon recounted a 2002 Cosmetic Executive Women speech, during which he was asked if L’Oréal was still “a boys’ club.” He clearly relishes his track record in promoting more women to senior ranks, noting that almost half of the group’s board is female, and that L’Oréal was the number-one company for gender equality, according to a 2017 survey of 3,000 companies worldwide. “That’s a revolution,” he said, “a revolution and an adaptation to the world.”

Agon credits the organization with being willing to change. “When you explain to them why we had to reinvent ourselves, and transform the way we work, they are extremely positive.” But it starts with the ceo, his vision, passion and constant sense of purpose, said those in the company.

“His energy, his fantastic leadership — he puts it all behind his priorities,” said Frédéric Rozé, president and ceo of L’Oréal USA. “Traveling, meeting the teams, showing how convinced [he is], involved, committed behind those priorities. It’s quite impressive. It’s pretty clear for everyone in the company that this impulse starts with him.”

Rozé observed that Agon brought in a “more direct, simpler” style of managing and interacting with people than his “impressive” predecessor.

Among those who agree that Agon has succeeded in his main goal of equipping L’Oréal to deal with the world of this century is Javier Escalante, equity research analyst at Evercore ISI. He pointed out that Agon not only expanded L’Oréal’s global footprint, with the market business growing from 27.1 percent of total global sales in 2006, the year Agon became ceo, to 40.5 percent in 2017, but that he also made it more profitable by building localized supply chains with factories and infrastructure in the emerging markets. Normally the profitability is higher in a company’s core business than in the new territories.

“The expansion in [L’Oréal’s] emerging markets has been very profitable, which is something that companies like Procter & Gamble and Unilever haven’t been able to do,” Escalante said, adding that last year, L’Oréal’s new markets edged out North America in profit margin by more than a percentage point and trailed Western Europe, the home zone, by less than three points.

According to L’Oréal’s 2017 annual report, new markets posted an operating margin of 20.3 percent, versus 19.2 percent for North America and 22.9 percent for Western Europe. “That is quite an accomplishment,” Escalante said.

A prime example of L’Oréal’s penchant for investing in emerging markets lies in the Asia Zone, which only had 10 employees working out of an apartment in 1997 when Owen-Jones told Agon to go east and organize a zone out of L’Oréal’s small, scattered operations across the region, building a meaningful business, practically from scratch. It is a story that Agon loves telling.

“We were very small in Asia [in 1997], less than 5 percent of the sales of the group,” he recalled. “But thank god, at that time [Owen-Jones] realized, and we realized together, that it was urgent to build a business in that continent.”

Twenty-one years later, a managing director runs a headquarters based in Hong Kong, overseeing operations in 10 countries and research and innovation labs in Japan, Shanghai and Mumbai.

“We have factories all over the zone in Japan, in China, in Indonesia, in India,” Agon said. “We have everything it takes to grow the business there.”

The company is certainly reaping the reward of being early to China. “L’Oréal is the number-one beauty company in Asia,” Agon declared, “total Asia, total Asia-Pacific, ahead of all the international companies that started much before us. We’re also ahead of Japanese or Korean companies in the region.

“In China, [it’s the] same story,” he continued. “We have become the number-one player there, and we are number one on all fronts. We are number one in luxury, number one in skin care, number one in men’s care, makeup, professional, pharmacy active cosmetics,” he enumerated. “And it’s just the beginning of the story.”

When reminded that Procter & Gamble is number one in hair care, Agon objected. “We didn’t miss it because we didn’t want to tackle it,” he said. “That’s because P&G had built a very strong fortress on its hair-care brands in China.”

He said L’Oréal’s hair-care strategy in China was analogous to one that the company had employed elsewhere. “In the U.S., we waited 20 or 30 years before launching a hair care line. It was Fructis, which was pretty successful, but it was [launched] only 20 years or 30 years after having established a subsidiary in the U.S. It was attacking some very strong competitors on their main categories, so we kept that for the end. It’s going to be the same for China,” he concluded.

Agon is clearly focused on China as the heart of the Asia-Pacific zone. “In terms of dynamism of the market, in terms of modernity, speed of transformation and evolution, this is definitely the big part of the region.”

He is looking to compete with locally relevant brands, as well as international ones. In addition to owning Shu Uemura in Japan, L’Oréal bought Magic Holdings in 2014, which has a mask business that Agon wants to further strengthen in the treatment market.

Referring to Magic’s Mei Ji skin-care brand, Agon said, “[the name] means ‘Immediate Beauty.’ “It has the potential to become a larger skin-care brand on the Chinese market.”

In May, L’Oréal bought Nanda Co. Ltd., the South Korean lifestyle, fashion and makeup company, which includes the 3CE color cosmetics brand.

“Now we have one Korean brand, one Chinese brand and one Japanese brand,” Agon said. “It’s a nice portfolio to play with and we don’t exclude other acquisitions in the future.”

Agon has already gotten into the Asia rhythm, plugging it into his voracious travel schedule. In a two-week period, he was in Shanghai twice, first as a member of Mayor Ying Yong’s advisory board, then to attend the opening of CIIE, China’s inaugural China International Import Expo, which was spearheaded by Chinese President Xi Jinping.

While it was gaining ground in Asia, L’Oréal was also aggressively increasing its digital capabilities, acquiring such digitally savvy beauty brands as NYX and Urban Decay, and technology plays like Modiface, a leader in augmented reality. Escalante gives Agon and L’Oréal high marks for looking beyond e-commerce and realizing the power of social media. “The brilliance has to do with realizing that e-commerce is not a channel, that digital is content. It is how you elicit desire and close transactions with consumers. That requires a new kind of capability that is not necessarily easy to find and to work with in a creative environment. That makes [Agon] an even more formidable competitor.”

One key move is L’Oréal’s work on programmatic advertising, which individually reaches consumers with a product pitch they may be interested in, increasing chances of a sale. “That is all artificial intelligence, knowing who is interested so he gets the conversion. This is what L’Oréal is investing in,” said Escalante.

A key differentiator of L’Oréal’s digital strategy is that the company has embedded digital into every aspect of the organization, rather than segregating technology into its own silo. Agon believes that by using a decentralized test-and-learn strategy, L’Oréal can effectively harness and cascade key learnings across the organization. “We are not a big boat — we are a flotilla of large, medium and small vessels. This decentralization is key, because digital is still at the stage of test and learn,” he said. “The idea that you can decentralize everything, that every brand in every country can test and then everyone can learn from this, allows us to cross-fertilize across brands.”

Agon wins kudos for hiring Lubomira Rochet, L’Oréal’s chief digital officer, in 2014, and allowing her the freedom to implement her digital vision.”Not only was she hired as a younger person, but put onto the executive committee of the company right away reporting to Jean-Paul,” pointed out Mark Astrachan, managing director of Stifel Financial Corp. “He understood the importance of what the future held and he wasn’t afraid to step on people’s toes. Overall she had a strategy, and he had a lot of trust in her to do it.”

Rather than focus on the e-commerce aspect of the opportunity, Agon believes the true value of digital lies in its recasting of the consumer relationship. “The e-commerce part isn’t our number-one priority,” he said, noting that e-commerce, about 10 percent of sales, is growing 38 percent (for the year-to-date at the end of September) and represents 50 percent of the company’s sales growth. “The number one thing is the new relationship with the consumer.”

That closeness to the consumer has enabled L’Oréal to reignite growth in its heritage brands, making them more relevant for Millennial consumers around the globe. L’Oréal’s luxury division, consisting of power names like Lancôme, Giorgio Armani and Yves Saint Laurent, is up in the double digits. “Digital isn’t the end of the big brands,” Agon said. “It’s completely the opposite. Lancôme, Giorgio Armani, Kiehl’s — all are having their best years ever,” he continued, ticking off the gains: Lancôme, up almost 15 percent; Yves Saint Laurent Beauté, up 14 percent; Armani, up 21 percent, and Kiehl’s, up 24 percent.

L’Oréal’s leadership in sustainability has been another key focus. Five years ago, Agon created the Sharing Beauty With All program, to ensure the group is at the forefront of sustainability in terms of manufacturing and materials. Agon said L’Oréal is already ahead of its 2020 goals for key benchmarks like its carbon footprint, and Newsweek named it the number-one company in the magazine’s annual green ranking. In 2025, 100 percent of the group’s plastic packaging will be refillable, reusable, recyclable or compostable. “We are really ahead in this field,” said Agon, “and we keep pushing.”

But there are challenges, too. The Consumer Products business, L’Oréal’s mass-market arm, has slowed. Maybelline New York and L’Oréal Paris both posted gains “of almost 5 percent” for the third quarter, but the Consumer Products and Professional divisions posted lower single digits in the quarter. Agon himself is relatively sanguine about this. “I’m not worried. In my 40 years, we have seen there are cycles and I’m pretty sure the mass market will accelerate again,” he said — but some analysts said it is a pain point. A recent Euromonitor report noted that L’Oréal is facing increased pressure “from local players developing competitive solutions, and trendy Western brands which are very digitally savvy.”

But in the overall scope of things, Agon’s tenure is a win. The company has had only four long-serving ceos (plus Charles Zviak who died in 1989 after being named president and ceo in 1984) in its 109-year history, and Agon has clearly made his mark despite following a legendary leader who built the global L’Oréal.

“Agon truly made global work,” said Carol Hamilton, group president in charge of acquisitions at L’Oréal USA. “Owen-Jones declared the importance of global for the group and actually started the focus on all things global, but Jean-Paul has really realized it,” she said. “It was Jean-Paul who has made it functional and optimized that way of working. We have become a truly global power.”

In addition, “he was an early adopter of all things digital. He embraced the reality and opportunity of social media in the early stages,” she continued. “He was motivated by the incredible prowess of social media, both at Urban Decay and NYX.”

Shifting to a larger picture, Hamilton said, “He is very keen on changing the culture of the company, simplifying the decision-making process and empowering employees. He really does want to leave a company that is more agile and modern.”

Agon sees his legacy as transforming the company and adapting it for the 21st century. “It’s what every ceo of L’Oréal has to do regularly and probably there will be another episode of reinvention in 10 or 20 years,” he said. “I’m very grateful to the L’Oréal teams because they are able and willing to reinvent themselves.”

But Quiroga of Deutsche Bank sees other factors. In addition to Agon’s digital awakening — his biggest achievement in her view — Agon also built on the accomplishments of his predecessors with a focus on top line organic growth while letting margins widen and adding consumers by shifting the sales mix into faster growing emerging markets.

Then there’s something else that was also true of other ceo’s: “And that will take some time to assess — who he will appoint as his successor,” Quiroga said. “Part of François Dalle’s legacy was the appointment of a very young Owen-Jones at the head of L’Oréal,” she said, referring to L’Oréal’s second ceo following founder Eugène Schueller. “And part of Owen-Jones’ legacy was to have identified Jean-Paul Agon, who was exactly what the company needed at that point in time.

“When I recently talked to Agon about his thoughts on succession,” she concluded, “his comment was, ‘I have been thinking about it since my first day on the job.’”

L'Oreal Data - before & after Agon