Denton Sets Course For Erno Laszlo
is the new owner of Erno Laszlo, which is celebrating its 85th anniversary this year. Beauty Fashion sat down with Mr. Denton to
discuss his plans for the brand and how he will build on its heritage.
: How did your career path lead to your acquisition of the Erno Laszlo brand?
: I never intended to be in the beauty industry; I’m just attracted to brands that have a good story to tell. I became involved in the beauty business when I joined Molton Brown as Sales and Marketing Consultant in 1989. At that time, Molton Brown had a limited line of hair care and color products, but a great following amongst an international clientele. The line had been introduced at Barneys New York by and a few years before.
I worked with a wonderful team led by my great mentor and our Chairman,, and a fantastic Technical Director, . The three of us formed a partnership that was chemistry in the truest sense; we complemented each other’s skills. We often joked that Dale formulated the products; I marketed them and Michael made sure there was a profit in the middle.
When we took over the company, it was in receivership. We built an extraordinary organization, which was acquired by the Kao Corporation in 2005. It was at that point that I retired from the commercial world to volunteer as the Executive Director of Great Ormond Street Children’s Hospital in London. I only recently stepped down from my role there, since I can’t give the amount time required, although, I am hoping to do a bit more of philanthropic work in the United States.
My re-introduction to Erno Laszlo occurred during a luncheon with an ex-employee Sarah Rotheram, who is the CEO of Cradle Holdings, the group that previously owned Erno Laszlo. She was very animated about her plans for L’Artisan Parfumeur and Penhaligon’s but touched just briefly on Erno Laszlo. It was clear to me that there wasn’t a great deal of investment going into Erno Laszlo; it was seen more as a cash cow, generating good profits off a very loyal following. I asked a question that I hope I shall never regret: “Do you think they will ever sell the business?”
A month later, Sarah asked me to make an offer for Erno Laszlo, which was accepted. RBS Equity Finance in
London agreed to support me, so I found myself back in the beauty industry.
: What was the status of the Erno Laszlo brand when you acquired it?
: Erno Laszlo has an extraordinarily loyal following with great distribution across the US of about 150 doors, including Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman and Nordstrom. While we have enjoyed these relationships for many years—at Saks since 1957—the brand wasn’t particularly growing.
We had a very solid business in Italy with about 120 doors; in Germany, Switzerland and Austria with combination of about 110 doors and a very strong business in Hong Kong where we have four stand-alone shops.
I could see a much younger Erno Laszlo customer in the Hong Kong market, and this was also reflected at Holt Renfrew in Canada where we have been exclusive for many years. The average age of a Holt Renfrew customer in Vancouver is 32, whereas the average age of the American customer is 43. There had been very limited innovation in the brand for many years, which communicated to clients that Erno Laszlo was not progressing.
There were 127 SKUs, and most of the products were packaged in white and black, which, at point-of-sale, was confusing to the customer. In the environments where we didn’t have dedicated Erno Laszlo Specialists, it was difficult for the customer to understand which products were right for them.
: Please describe what has guided your selection of product and presentation. Has R&D updated and/or reformulated the Erno Laszlo products? Have new ingredients been sourced that were not available to Dr. Laszlo?
: Bringing in new products to the range is very important to me, and we plan many innovations over the coming years. I was guided by the philosophy of Erno Laszlo in the reinvention of the line. The products we are introducing reinforce his beliefs, and those that don’t are being deleted. Product selection and presentation have been guided by the desire to make it easier to access the range in a more consumer-friendly way. The new packaging makes it much easier to navigate and self-prescribe.
In the past, you were deterred from buying any product until you had gone through a full consultation. While important, this can also be alien to the way people shop today; and it’s intimidating. Customers like to edit their skincare regimes in a much different way; they want the best-in-class and immediate gratification. This is often driven by recommendations from Beauty Editors and bloggers, so it’s important to tease out the hero story behind each product. Too many products, and you can lose your authority.
Cleansing and toning are still important, and we want to drive our strategy around them. However, rather than religiously go through the steps one, two, three and four, we look at cleansing and toning and then at the customer’s concern. It’s a small change but an important one.
We have not compromised our philosophy and values, but Erno Laszlo has to meet the changes in lifestyle with a range of more user-friendly products that meets those needs, presented in a way people can easily understand.
A good example is our vitamin C-10, which has been in the range for many years. It was lost without a story to support it. It’s a great product and now resides under our new Luminous range that focuses on skin radiance. Anti-wrinkle regimes are a big and growing category, so these are now placed under our TRANSpHUSE range, and finally the Firmarine collection, our firming line, which represents about 19% of our revenues, is for people seeking to address the early stages of aging.
There are some other influences that have driven the re-launch strategy. We have to be aware that our customers are exposed to negative information about some ingredients, more now than ever with the availability of information through the Internet. A good example is parabens. From the evidence that I have studied, the science that supports the scare stories about parabens is very suspect. However, the consumer’s opinion of parabens is negative, so we have to respect that by reformulating our new products without parabens.
: Who is the target customer for Erno Laszlo products?
: While we don’t really target customer groups or a particular age category, there are patterns that form. Certain groups gravitate to different products. Our Firmarine line probably talks to 25-35 year olds; TRANSpHUSE, our anti-wrinkle line, appeals more to the 40-45 year old. The cleansing system can be for a client as young as 14. A lot of teenagers come to the line because they have problems with blemished skin; however, this is not necessarily a youth phenomenon. We also treat many adult clients in their forties and fifties with breakouts.
Dr. Laszlo recognized that skin has its own personality and that the physiology of the skin can be informed by the psychology of the individual. It can be programmed and educated. It is interesting that skin doesn’t necessarily have to reflect your age. Our philosophy is to work in synergy with the skin, mimic its behavior and tell it to behave in a different way. This drives our ingredient selection and product formulation philosophy.
Our whole range is a tailored approach to a multitude of different skin types. The concerns may vary in different countries, and our products are driven by those concerns. Of course, people have different needs at different times.
: What is the appropriate distribution for Erno Laszlo products?
: We have a good platform of retail partners such as Saks Fifth Avenue and Holt Renfrew, so we’re not a brand that is going to have a footprint of 1,000 doors. To support our bricks-and-mortar distribution, we are instead partnering with the department stores’ own Internet sites, and already this is a fast-growing channel for us. The retailers’ online business gives us an opportunity to reach the vast expanse of land between the East and West Coasts where we have no department store representation.
I really like the department store environment; it’s great for providing good advice, but they and we need to evolve. Service must remain the most important differentiator, and I would like to see more theater and entertainment. If the retailers or the brands intimidate and are arrogant to the customer, they have the choice to shop online or anywhere else. Nothing can be taken for granted anymore.
In the owner-occupied perfumeries in Europe, there is still the passion, knowledge, expertise and commitment to the customer. This encourages loyalty, and that is why they continue to survive. If we don’t focus on those values, I worry about the future of department store trading.
BF: What qualities should a Beauty Consultant have to represent the Erno Laszlo brand? How are they trained?
: I like the maturity of Beauty Consultants who have been in the industry for 20 or 30 years and really understand what they are talking about. For Erno Laszlo to remain an authority in skincare, an advisor needs to understand trends in the marketplace, what other brands offer and, more importantly, see people as individuals. It’s only after you’ve seen clients for 5, 10 or 15 years that you truly understand their skin and what you are dealing with. You start to recognize signs and conditions. You learn how to communicate sensitive information in a way that resonates with a client. I have people who have worked for Erno Laszlo 30-40 years, and to me, they are the most valuable people in our organization.
In an ideal world, I would like to have fully-trained Beauty Consultants in every door, and we will be moving toward that goal. We now have a full-time team of trainers who are in the field, and we’re putting a lot of effort into our e-learning. We are rewriting and updating all of our training materials for all markets. I want our Beauty Consultants to communicate a consistent message about Erno Laszlo and focus on the clients’ needs to prescribe the right products no matter where they shop in the world.
: How will your installation at-counter communicate the message of the brand?
: We’ve totally changed our installations at-counter and are introducing a new tester display unit, which will be in the market next month. The unit will tell the story of Erno Laszlo in three tiers. This is a big departure from the past where we took the client through cleansing, toning, moisturizing and on to finishing. This is the Timeless Skin Ritual, and we have those steps, but we are not leading with that message. It’s part of our DNA but not our vision of the future.
We will tell the story about our leadership in the cleansing [category] and the need for balancing the skin through toning. Then, we will focus on the clients’ individual concerns about treatments and hydration.
In my early meetings with our department store partners, I felt a universal sense of warmth and respect for the Erno Laszlo brand and its heritage. However, as it was explained on more than one occasion, the retailers have the responsibility of growing their businesses, and they want to partner with brands that have energy, vision and the capability to support it with investment. We have been able to convey to the retailers that we are that brand with the new installations and range re-launch that will communicate a new direction for Erno Laszlo.
Thus far we’ve had a wonderful response from the retailers, such as Saks Fifth Avenue, an extremely important partner, which is adding 9 more stores for a total of 12 later this year. Holt Renfrew has also confirmed that they will be opening more doors.
: How will you use social media to promote the Erno Laszlo brand? What other plans do you have to promote your products?
: Social media provides an opportunity for us to tell the story of our 85-year-old heritage. I am always surprised by the passionate following among our customers. I recently travelled America visiting doors, and people kept coming up and telling me their Erno Laszlo stories. We decided to capture these on film, and we are going to add them to our Web site. Our social media strategy is to give our devotees a platform so they can tell their stories about how Erno Laszlo’s products have improved their lives. It’s not what we say about ourselves; it’s what our clients are saying about their experiences with Erno Laszlo. We call it social proof, and there’s nothing more powerful because it’s based on truth.
: What do you see as the global potential for your company?
: When I first came to the brand, I heard about “the Laszlo look.” The Laszlo look is evidence that the products work. When you meet Erno Laszlo clients, they are proud to admit they are 50-something because their friends say, “Oh, you don’t look a day over 40. What is your secret?” If you are able to achieve these results with women all over the world, the market size for your products is unlimited.
Already, Erno Laszlo has an international following. For instance, in Hong Kong our approach to a ritual and regimen appeals to the way clients like to engage with products. They are also impressed with the science to support the claims. We are seeking to build on this success by partnering with retailers across Asia. In the People’s Republic of China and in Taiwan, we are planning to open with various retailers from Hong Kong, Malaysia and Japan. So, for the moment, our biggest focus is Asia. Having said that, we’ve just launched exclusively in Harrods London. This is important because it will grow our following in other markets, as their customer is truly international and discerning.
There is always going to be a client out there who wants the very best skincare they can get and is drawn to brands that have a proven efficacy. Erno Laszlo has 85 years of kept promises. BF