Sign Up For Free To Keep Reading
In 2025, Estée Lauder, long considered a laggard in digital adoption, has launched a sweeping transformation under its new CEO Stéphane de La Faverie. Faced with a prolonged sales slump, especially in North America and China, and a changing beauty industry where digital and physical touchpoints increasingly merge, de La Faverie introduced a bold vision called “Beauty Reimagined.” This strategy pivots the 80-year-old prestige beauty company toward becoming more agile, consumer-centric, and digitally empowered. Key hires, such as Nestlé’s Aude Gandon as the company’s first Chief Digital and Marketing Officer, signal a full commitment to modernize operations and leverage AI, data analytics, and omnichannel retailing. Estée Lauder is now investing in high-ROI digital platforms, including Amazon, TikTok Shop, and Shopee, while also retooling its supply chain, marketing model, and brand innovation framework to match consumer preferences across price tiers and geographies. Here’s a closer look at what is driving this transformation and how it is expected to reshape the company’s future.
Changing Consumer Behavior & The Urgency To Meet Shoppers Where They Are
The primary driver behind Estée Lauder’s digital overhaul is a fundamental shift in global consumer behavior. Post-COVID, consumers worldwide have increasingly turned to digital channels for discovering, evaluating, and purchasing beauty products. Social media platforms like TikTok and Instagram, along with e-commerce giants such as Amazon and Shopee, are now essential consumer touchpoints. Estée Lauder had historically been slow to adapt, wary of diluting its high-end brand perception by selling through mass platforms. However, under de La Faverie’s leadership, the company acknowledged that prestige must follow the consumer, regardless of platform. Estée Lauder has since expanded to 12 brands on Amazon U.S., partnered globally with TikTok Shop, and rapidly onboarded platforms across Southeast Asia. The strategy also extends to omnichannel experiences—where a consumer may discover a product online and buy in-store, or vice versa. The company’s consumer coverage pillar now mandates that every brand be accessible through the platforms most frequented by their audience, regardless of whether those platforms are traditionally prestige-aligned. This shift is not just about channel presence but about optimizing for trial, replenishment, and experience across digital and physical channels alike. The decision is further validated by recent results: online sales grew mid-single digits in Q3 FY2025, with Amazon Premium Beauty, JD.com, Notino, and Tmall showing strong performance. By acknowledging that consumers now drive brand relevance and not the other way around, Estée Lauder is restructuring its go-to-market approach in an effort to reverse its multi-year sales decline and maintain competitiveness in an increasingly fragmented and dynamic marketplace.
AI & Data-Led Innovation As Catalysts For Product & Marketing Efficiency
Another major force behind Estée Lauder’s digital shift is the opportunity to leverage artificial intelligence and proprietary consumer data to make faster, more informed decisions in product development, inventory management, and marketing personalization. Under the Beauty Reimagined strategy, de La Faverie has emphasized real-time responsiveness as critical to success. Estée Lauder has developed proprietary tools in partnership with Microsoft—Trend Studio and ConsumerIQ—that combine external consumer conversations with internal historical data to forecast emerging preferences. This integration allows the company to create and launch new products with agility, targeting exact consumer demands. For example, innovations like Too Faced’s Ribbon Lash mascara were conceptualized, developed, and launched in just 16 days using AI-driven creative workflows, compressing what was traditionally a 6-month process. The company is also employing AI for predictive demand planning and automatic inventory deployment based on real-time trends. Digital twins of its nine manufacturing sites enable dynamic production reallocation to mitigate supply disruptions or tariff impacts. From marketing to supply chain to product ideation, AI is being hardwired into every operational layer to improve speed, reduce waste, and enhance ROI. This has already started reflecting in reduced obsolescence costs and better gross margin performance. By using AI not as an add-on but as a core strategic pillar, Estée Lauder aims to reduce its reliance on intuition and pivot toward data-informed precision, hoping to enhance both customer retention and new user acquisition, especially among digitally native younger demographics.
Restructuring The Organization For Agility & Consumer-Centric Execution
A crucial driver of Estée Lauder’s digital strategy is the internal reorganization necessary to execute with speed, clarity, and accountability. Historically, the company had a multi-layered structure with unclear roles between brands, regions, and corporate functions, which often delayed decision-making and hindered innovation. Under de La Faverie’s leadership, Estée Lauder has undergone a structural transformation that flattens the hierarchy and places profit-and-loss accountability directly with regional teams, allowing them to respond faster to local market dynamics. Brands are now focused solely on long-term innovation and desirability, while regions and affiliates handle go-to-market execution, tailored messaging, and consumer engagement. Functions like HR, finance, and supply chain are being streamlined or outsourced, freeing up resources for consumer-facing activities. As of April 2025, Estée Lauder reduced its executive team expenses by 30%, cut 2,600 net positions, and reduced middle management by 20%. It also launched a major procurement transformation to simplify vendor relationships and reduce costs. The operating model’s new design reflects the belief that in a fast-evolving global market, centralized command is less effective than region-led adaptability. This structural clarity is particularly valuable in balancing global brand consistency with local relevance—a key requirement in digital marketing and social commerce. Moreover, the PRGP (Profit Recovery and Growth Plan) has given the company room to reinvest efficiency savings into high-ROI digital and physical growth channels, aiming to sustain margin improvement while pursuing top-line recovery. This agile operating model is now being rigorously applied to expand presence in underperforming markets like the U.K. and emerging economies such as India and Southeast Asia.
Repositioning The Brand Portfolio To Capture The Digital Consumer Across Price Points
The final driver behind Estée Lauder’s digital transformation is its recognition that digital platforms are not just marketing channels but revenue-driving ecosystems that demand portfolio versatility. Consumers across all price tiers are now shopping online, and the company has taken strategic steps to align its brand offerings accordingly. Innovations are being developed to capture both ends of the prestige spectrum—such as Clinique’s Moisture Surge Active Glow Serum, priced to attract value-conscious consumers, and La Mer’s Night Recovery Concentrate, aimed at the luxury segment. Estée Lauder is also leveraging The Ordinary’s entry-level pricing and wide appeal to aggressively grow in markets like China, where it became the 17th brand in the company’s portfolio. The brand was recently launched on TikTok Shop and Amazon Premium Beauty to great success. At the same time, hero products like Estée Lauder’s Double Wear foundation and MAC’s Studio Fix are being repriced and remarketed for accessibility and relevance, particularly in the U.S. and U.K. For luxury consumers, Jo Malone and TOM FORD are expanding through digital-first product drops and social media-focused campaigns. The company is also testing brand incubation in real time via its DECIEM incubator, with new digital-native concepts like LOoPHA. By tailoring pricing, communication, and product positioning across platforms and geographies, Estée Lauder is attempting to serve both Gen Z TikTok shoppers and mature luxury customers. This strategic flexibility across the portfolio enables the company to acquire new consumers, respond to pricing pressures, and remain competitive against indie and local brands that dominate online marketplaces.
Key Takeaways
Estée Lauder’s digital transformation strategy under CEO Stéphane de La Faverie represents a comprehensive rethinking of the company’s structure, market approach, and operational model in response to long-standing performance issues and evolving consumer habits. By aggressively pursuing digital expansion, embedding AI into core processes, decentralizing execution to regional markets, and repositioning its diverse brand portfolio for omnichannel success, the company is seeking to reverse years of underperformance. However, the strategy is not without challenges. Execution risk remains high in emerging markets, travel retail volatility persists, and macroeconomic uncertainty—including tariff exposure—adds complexity. While initial gains in market share across the U.S., China, and Japan suggest early traction, the durability of this turnaround will depend on consistent performance across more geographies, continued organizational alignment, and the ability to manage costs while growing consumer-facing investments. As Estée Lauder attempts to reinvent itself for the digital age, its success will be determined not just by bold vision but by disciplined, data-led execution in an increasingly competitive beauty landscape.
