Estée Lauder’s Digital Makeover: How CEO Stéphane de La Faverie Is Redrawing The Beauty Map!

In a bid to reverse years of sales declines and modernize its brand for the digital age, Estée Lauder (NYSE:EL) has embarked on an aggressive digital transformation strategy under the leadership of its new CEO, Stéphane de La Faverie. Since assuming the role in January 2025, de La Faverie has wasted no time unveiling the "Beauty Reimagined" strategic framework, which places digital acceleration, artificial intelligence, and consumer-centric innovation at the forefront of the company’s revival plan. Among the most notable changes is the hiring of Nestlé’s former global CMO, Aude Gandon, to serve as Estée Lauder’s first-ever Chief Digital and Marketing Officer. The move signals a pivotal shift for the prestige beauty giant, long criticized for being late to embrace online retail and digital channels like Amazon and TikTok Shop. Now, with de La Faverie at the helm, the company is recalibrating its operating model and retail strategy to meet consumers where they are—online, mobile-first, and increasingly influenced by data-driven personalization.

Years Of Underperformance & Lag In Digital Adoption

Estée Lauder’s slow pivot to digital channels has cost it dearly in recent years. With high-end brands such as La Mer, Tom Ford, and Clinique under its umbrella, the company historically emphasized exclusivity through in-store retail experiences. However, that strategy began to unravel post-pandemic as consumer behaviors shifted decisively toward e-commerce, mobile platforms, and social commerce. The absence of a comprehensive digital roadmap meant Estée Lauder lagged behind competitors in capturing online market share, especially among younger consumers. By the time the company began onboarding select brands to platforms like Amazon in the U.S. and Shopee in Southeast Asia, it had already lost significant ground. Compounding the issue was a pronounced sales decline due to falling consumer confidence in China—historically one of the company’s strongest growth markets—and an overreliance on volatile travel retail channels. De La Faverie acknowledged that the organization had been too slow to follow prestige consumers to new digital touchpoints. The strategic correction under his leadership is a direct response to this historic inertia. Beauty Reimagined explicitly states that there will no longer be any debate about where to follow consumers—if they are on TikTok, Amazon, or a local e-commerce app, the brands will follow. The digital transformation strategy is designed to remedy this oversight by aggressively ramping up direct-to-consumer capabilities, launching brand storefronts on high-traffic digital platforms, and mining online consumer behavior data to inform product development. This foundational reset is not merely about catching up; it's about embedding digital-first thinking into the company's DNA.

Rise Of AI & The Need For Hyper-Personalization

One of the central pillars of Estée Lauder’s transformation is its use of artificial intelligence to enhance personalization and drive consumer engagement across both digital and physical channels. Stéphane de La Faverie believes that AI is fundamentally reshaping how beauty consumers discover, evaluate, and purchase products. Estée Lauder has partnered with Microsoft to create proprietary tools—ConsumerIQ and Trend Studio—that monitor consumer sentiment and beauty trends in real-time. These tools aggregate data from across the internet, including social media, online reviews, and sales metrics, and then match it against Estée Lauder’s internal data from over 79 years of operations. The result is a feedback loop that allows the company to rapidly respond to changing consumer preferences and localize its marketing campaigns for specific geographies. For example, a lipstick shade gaining traction on Chinese social media can be marketed with targeted creative in Mandarin and backed by inventory relocation powered by AI. The company has already applied this system to deploy new messaging and inventory for brands like MAC and Too Faced. Moreover, AI is being used to shorten creative development cycles. The launch campaign for Too Faced’s Ribbon Lash Mascara, which previously would have taken six months to produce, was completed in just 16 days using AI-generated content. AI also plays a role in supply chain optimization. Digital twins of factories allow Estée Lauder to model production in real time and redistribute manufacturing loads across its nine global sites based on anticipated demand spikes. The integration of AI across marketing, logistics, and customer experience positions the company to better capture conversion opportunities and reduce waste.

Structural Reforms To Drive Agility & Speed

A digital strategy alone is insufficient without the organizational agility to implement it. Recognizing this, de La Faverie has launched a structural overhaul aimed at removing internal bottlenecks and increasing decision-making speed. Central to this transformation is the Profit Recovery and Growth Plan (PRGP), initiated in late 2023. The plan aims to reduce fixed costs and make the cost base more variable and scalable. As of April 2025, Estée Lauder had already eliminated over 2,600 positions, including a 20% reduction in middle management and a 30% cut in the executive team, making the organization flatter and faster. The CEO also implemented a shift in P&L ownership from brand to region, meaning financial accountability now sits with teams closest to the customer. This decentralization is expected to enhance responsiveness to market trends and consumer needs. Functions like marketing, supply chain, and finance are being restructured to become enablers rather than gatekeepers, aligning with the broader goal of becoming the world’s most consumer-centric prestige beauty company. The creation of a dedicated digital and marketing officer role and the deployment of agile cross-functional teams show a deliberate move away from traditional hierarchical structures. The company is also rethinking its global distribution strategy. It has expanded its fulfillment centers, especially in China and Southeast Asia, to enable faster delivery for e-commerce orders. By combining operational flexibility with digital expansion, Estée Lauder aims to reduce latency between consumer demand and product availability. These internal reforms are as vital as the external-facing digital investments because they provide the operational muscle required to scale digital initiatives effectively and sustainably.

Rebalancing Growth Across Channels & Geographies

Historically, Estée Lauder’s growth was overly concentrated in travel retail and China. Both have seen significant volatility over the last two years, compelling the company to rebalance its growth strategy across new geographies and digital channels. Under de La Faverie’s leadership, the company has moved to reduce travel retail’s share of total sales from the mid-20s to the low teens, lowering exposure to channel-specific risks. At the same time, Estée Lauder has aggressively expanded into the U.S., Japan, and emerging markets like Southeast Asia, where consumers are increasingly making beauty purchases on platforms like TikTok Shop and Shopee. To support this, Estée Lauder has opened nearly a dozen new freestanding stores globally, but more importantly, it has launched brand storefronts across Amazon Premium Beauty, JD.com, Notino, and Zalando. The company’s global retail sales outside of travel retail grew in Q3 2025, with brands like Clinique, The Ordinary, and Bumble and bumble driving share gains in North America. In China, La Mer and Tom Ford recorded double-digit organic sales growth due to targeted product launches and AI-powered campaigns. The company has also created a dedicated Emerging Markets division within its regional structure, signaling a longer-term commitment to geographies like India, Turkey, and the Middle East. These changes are aimed at capturing a broader spectrum of global consumers across price points—from ultra-premium buyers of Le Labo to mass-affluent users of Clinique and The Ordinary. By diversifying growth sources, Estée Lauder is attempting to hedge against localized economic shocks while also embedding digital transformation into markets that are mobile-first by default.

Final Thoughts

Source: Yahoo Finance

While Estée Lauder’s digital transformation strategy under Stéphane de La Faverie is yet to show concrete results, the stock has been doing well since April 2025 and has already risen to a new 6-month high. We believe that this new approach represents a bold departure from the company’s traditional business model. The pivot toward e-commerce platforms, AI-driven personalization, and organizational agility aims to future-proof the brand amid shifting consumer behavior and economic headwinds. However, this transformation is not without trade-offs. The restructuring process has involved significant workforce reductions and upfront investments in technology and operations. Moreover, global uncertainty—especially around tariffs, geopolitical volatility, and consumer sentiment in key markets like China and the U.S.—continues to pose risks. While early signs such as share gains in core markets and gross margin recovery are encouraging, the success of this transformation hinges on Estée Lauder’s ability to consistently execute its digital-first vision across regions and categories. The coming fiscal year will be a critical test of whether the company’s new strategy can drive sustained growth and profitability.