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Strategy
Pure genius: How L’Oréal is helping customers solve their own problems
Companies cannot just claim to be customer-focused – they need to act on it. Goutam Challagalla outlines how L’Oréal used augmented reality (AR) and agentic AI to lead the way.
Rapid read:
Customer empowerment through tech: L’Oréal shifted from “beauty for all” to “beauty for each” by leveraging AR and agentic AI tools like Makeup Genius and Beauty Genius, enabling personalized beauty solutions and reducing return rates.
Strategic response to market disruption: Facing competition from smaller, digital-native brands, L’Oréal embraced data-driven personalization and co-creation to maintain growth and relevance in a fragmented market.
Future-ready leadership: By democratizing expertise and prioritizing technological innovation, L’Oréal tops IMD’s Future Readiness Indicator, positioning itself as a leader in customer-centric digital transformation.
Back in 2015, L’Oréal, one of the world’s oldest and largest beauty and cosmetics companies, which owns over three dozen brands including Maybelline, Kiehl’s, and Lancôme, did something revolutionary. It launched Makeup Genius, an augmented reality app that allowed users to try makeup virtually using their phones. It was hugely successful; downloaded millions of times by users across the world.
L’Oréal saw the digital revolution coming and recognized it as the key to engaging younger audiences, who not only feel more comfortable in digital spaces but are also often not given the attention they deserve when they shop in-store. The downside was that online shopping came with exceedingly high return rates, which was not good for the company or the customer experience.
With Makeup Genius, L’Oréal helped customers find makeup that matched their skin type and tone without having to leave the comfort of their home by using AR. This opened them up to greater product selection and helped them gain confidence in their purchases, minimizing return rates.
In doing so, L’Oréal demonstrated that putting your customers first means embracing their data, not just to track but to better understand their needs and solve their problems.
Makeup Genius took away the hassle of the in-store experience and, at the same time, enabled L’Oréal to gather rich insights, including valuable facial data. It also enabled L’Oréal to engage directly with customers, who traditionally had engaged with the retail outlet, not the brand, and cut down on customer returns.
While 50% of all CPG sales growth was attributed to leading brands in 2016, this dropped to 25% by 2020.
Big brands threatened by smaller, more personalized offerings
Fast forward 10 years, and big brands, like those owned by L’Oréal, are under threat from small and medium companies and private label brands, as consumers look to reward brands that feel more personal, ethical, and digitally native.
While 50% of all CPG sales growth was attributed to leading brands in 2016, this dropped to 25% by 2020. The pressure facing CPG brands is evident in a wave of leadership shakeups across the industry. In 2025, Nestlé, Unilever, and Danone replaced their CEOs, with Nestlé chair Paul Bulcke stepping down earlier than planned – highlighting how major players are grappling with sluggish organic growth and searching for fresh strategic direction.
The health and beauty sector has been hit particularly hard. Industry data shows that sales growth attributed to leading brands dropped from 55% in 2016 to 18% in 2020, while small and medium companies went from 29% to 51% and private labels went from 16% to 31%. The impact is evident in Revlon – a company that filed for bankruptcy in 2022 despite being in operation for nearly a century. Over the longer period from 2016 to 2024, L’Oréal’s results show significant sales growth, with reported sales increasing from €25.8bn to €43.5bn – an increase of approximately 68.5%. In 2024, it reported “solid, broad-based growth of 5.1%, once again outperforming the global beauty market.”
One of the reasons for the drop in the share of sales growth for leading brands generally is digital disruption and social media, which have elevated smaller brands through viral trends. Another reason is that influencers and celebrities, once the face of major brands, now realize that it is more lucrative to launch their own. In a digital world, the tools to market and distribute products are now more accessible to everyone and not just the domain of large brands.
L’Oréal has done an exceptional job of thinking through this problem. It’s not that it no longer markets to its customers the way it used to – it still boasts a host of A-list brand ambassadors, including Jane Fonda, Viola Davis, and Kendall Jenner – but it has also relentlessly pursued new ways to embrace customer concerns.
Beauty Genius personalizes skincare routines based on facial scans and customer input and helps users discover their ideal products based on their skin tone, hair type, and individual concerns in a secure conversational interface.
From ‘beauty for all’ to ‘beauty for each’
In 2025, L’Oréal launched Beauty Genius, a 24/7 personal beauty assistant powered by agentic AI and available on WhatsApp, that builds on the knowledge gained through the now-defunct Makeup Genius. Beauty Genius personalizes skincare routines based on facial scans and customer input and helps users discover their ideal products based on their skin tone, hair type, and individual concerns in a secure conversational interface.
Based on decades of beauty expertise built up through its multiple beauty brands, including Lancôme, Garnier, Vichy, and CeraVe, the app puts data straight into the hands of its customers so that they can solve their own problems and learn anything and everything about beauty in a simple, safe, and easy way. This customer empowerment is demonstrative of the brand’s overarching strategic shift from universalization to singularization by providing its customers with personalization it could not offer before – from “beauty for all” to “beauty for each.”
This decision to give data and knowledge back to their customers demonstrates their genuine interest in enabling users to diagnose their own skin problems, figure out their own beauty routines, and co-create the solutions that are right for them. In a world where AI makes knowledge and know-how cheaper and easier to access, those that thrive will be companies like L’Oréal, which are democratizing expertise and enabling value co-creation.
What is clear is that GenAI is shifting value from expertise holders to expertise users. In a world where expertise is no longer scarce, the ability to access it and apply it is the new advantage. Companies that enable customers to tap into this expertise, like L’Oréal, gain trust and loyalty and empower their customers through transparency, access, and co-creation.
L’Oréal tops IMD’s Future Readiness Indicator
It’s little wonder that this consumer packaged goods giant tops IMD’s Future Readiness Indicator for the second consecutive year through its focus on “technological innovation to meet modern consumer needs.” Find out more about how it is leading the way here.
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