Unlocking the value in a heritage brand requires walking the tenuous line of being true to the DNA of the brand while evolving it to be relevant and appeal to what consumers want today. Legacy can be a liability or a unique differentiator; there is no one-size-fits-all strategy when it comes to unlocking the value in a brand’s heritage. Every business has a different history.
In this age of digital consumption and short attention spans, there is an unquenchable desire for fresh, exciting products with substance. Heritage brands that have something to say in the future have a leg up on start-ups because collective memories are long and authenticity is a powerful currency.
In the final part of a three-part series, we talked to Charles Denton, Chairman and CEO who acquired the 92-year-old Erno Laszlo brand in 2011 and has spent the past eight years unlocking the value in the brand of Audrey Hepburn and Marilyn Monroe. He shares the path of discovery and decisions that have breathed new life into the brand, turning a declining business into a brand that is once again relevant and on a path to double in size every 2-3 years.
Does every heritage brand have value to unlock if you look hard enough? Or are there some heritage brands that have simply run their course?
I believe any brand that has formed a strong and emotional bond with their consumers has demonstrated an ability to connect beyond the utilitarian issues of product and price. However, what attracted consumers in the past may not be relevant today. The conversation is shifting towards values and the brand’s point of view. If a brand can express these openly and honestly and if they are relevant to their target consumer, then that brand can continue to evolve and grow. It’s less about the heritage or even the product and much more about being invited into the consumer’s social life because you share the same values.
What was the value you saw in Erno Laszlo when you decided to acquire the brand in 2011 with private equity investment? Was it obvious to you or did you have to dig to find it?
On the surface it was quite obvious. Laszlo has always focused on building up the self-esteem of its consumers by addressing their skincare concerns. It’s a simple idea: give them control over their skin by adopting a 360-degree approach to addressing the contributors to healthy skin and they will feel confident as a result. This is a very progressive philosophy, or certainly one that resonates today more than ever. At first, I was too obsessed with the products, their efficacy, and the image of the brand. Sure, these are really important, but it took a while to appreciate where the true value of our brand resided. Celebrating the individual and empowering them to live whatever lives they choose is where our strength is. This has been our mantra from the outset and it’s our guiding principle. The power of owning your own truth is truly powerful and inspiring for all.
With heritage brands the beauty industry mirrors consumer experience in some respects. I would imagine millennials (buyers, editors etc.) may be discovering Erno Laszlo for the first time, while senior leadership may have an impression of the brand that is decades old. How do you navigate industry memory of what a brand was vs. what it is today?
That’s exactly how I would frame the challenge we have had to overcome. Everyone is trying to evolve their models and proposition to align on a new growth story, and it’s quite understandable that many buyers are seeking to champion the new brands—after all, that’s what they believe their consumers want. And that may be true in many instances. But we see a different picture, one where quite a few consumers are gravitating towards brands that are tried and tested, those that truly deliver on their promises. And what’s exciting is that they’re finding out about these brands through their social networks. If you look at the way our fans talk about Erno Laszlo and their experiences, it paints a picture of a relevant brand that is delivering and engaging with a young and passionate consumer. Ultimately, we lead by example and let the data speak for itself. The average age of our consumer today is 31 years old, and we have a repeat purchase rate far higher than most, signaling a great level of loyalty, and this year we’ll grow at over 40%. Not bad for a brand that once was.
In today’s digital world, attention spans are short but collective memories are long. Interesting heritage brands have an analog history, robust archives of content and client memories. How have you leveraged these assets to create a digital footprint of the Erno Laszlo history that resonates with how today’s consumers discover, research, and engage with brands?
We focus on three priorities. The first is to give our loyal consumers a voice. No one tells your story better than your fans. They share real-life experiences of how they discovered our brand and how the results were life changing. This conversation typically resides on Facebook, Instagram, or WeChat. But this is not enough, especially in such a crowded space with the information overload we all have to deal with. So, secondly, we try to stand out by partnering with passionate influencers and KOLs who can help us relate our brand to their audience’s lifestyles. These are content creators in their own right, and the more original, personal, and authentic the stories they tell, the better. We offer up our analog archive and allow them to mash up as they see fit. It doesn’t really matter which storyline they adopt, as long as it’s engaging and relevant. And third, we’re now talking less and less about our heritage, allowing this to be unraveled as a consumer delves further into our brand. We’re more interested in leading with our values, identifying ways to communicate them and then going deep with consumers that find them resonating. It’s a “less is more” approach.
DTC digitally native brands are having a moment and undergoing an interesting evolution, realizing growth in many cases also requires an offline strategy. Are the “moments of truth” for a heritage brand in the consumer’s path to purchase different than those of the DTC digital native brands?
It was easier in the past to identity the key moment of truth for a brand. For premium skincare, the beauty counter was often where a consumer discovered a brand, engaged with the consultant, formed their opinions and made a decision to purchase. Today there are so many ways for a customer to come into contact with your brand, and impressions are often made without much direct influence from the brand. And that’s truly disruptive—heritage brands have lost control of the dialogue. It’s a consumer-centric world, where the consumer reigns supreme. This brings with it many challenges for brands, especially those that are trying to craft a specific image and positioning. Opening a physical space allows brands to take back control of their personality and identity. If you like, make that moment of interaction more brand truthful. I also think DTC brands are looking offline to gain access to richer data, increase loyalty and widen the experience of their brands. We’re hardwired to touch, taste, and sample as we gather our basic needs. There’s a great sense of pleasure to be had from discovering a new product while browsing in a physical space. Add in the human element and there’s an opportunity to congregate as a community, develop connections and friendships with other shoppers and staff—to become part of something bigger.
Is it possible for heritage brands to compete with the hot DTC digitally native brands that are scaling at warp speed? Are there competitive advantages that are unique to heritage brands that can be unlocked?
Heritage brands typically reside inside larger groups, and they have access through their infrastructure to so much consumer insight it’s truly an unfair advantage. The challenge is adapting their structures so they can act on the information quickly. Just imagine if a beauty adviser on the counter could fast-track a new product into development because the majority of her customers were asking for it. That’s what DTC brands do very well, but their insights are not as rich and multidimensional as having direct and lengthy conversations with the consumers. If heritage brands can connect their decision makers directly with the consumers through a physical interface, then they can fight back in a big way. DTC brands have the freedom to try anything new, and if it fails, so what, they simply move on. Their investors want them to think differently, that’s the only way they can discover the next new model or idea. It’s not so easy for heritage brands; the acceptance of failure is not part of their corporate culture, it’s a risk-adverse industry that spends years perfecting products to ensure they deliver while avoiding costly mistakes and failures. This thwarts true innovation, as it takes a back seat to what has worked well for so long. Change the culture and heritage brands can free themselves up to compete with the new breed who think breaking rules is a badge of honor, not a reason to be fired.
The intrigue of heritage brands are the history and the stories, but these can also be the downfall. Growth requires looking to the future while leveraging the past to evolve. How have you walked this fine line in your successful turnaround of the Erno Laszlo business?
I don’t believe it’s about looking to the future, but more about looking to your consumers. They’re already living in the future. Our approach is to own our truth, tell our story in a way that resonates today. A good example would be our well-known association with Marilyn Monroe. In the past Erno Laszlo may have promoted her physical beauty as motivation to buy into our brand. “Use the skincare preferred by Marilyn” was a reason to believe. Today we’re more interested in talking about the woman beneath the surface. Showcasing Marilyn’s journey, her challenges, and accomplishments as an inspiring story for other women to feel empowered to pursue their dreams, no matter how difficult they may appear. It’s the same story in terms of our celebrating Marilyn Monroe, but with a different and more relevant emphasis.
Laszlo is a 92-year-old brand that over the years pioneered modern skincare, introducing innovative products that were way ahead of the industry when they launched. Many products like the “black soap” and the “pink mask” have reached cult status. How do you keep the product assortment relevant as trends come and go?
The more we understand our consumers, the more we invite them into the brand, the more ownership they take, the more they dictate the products we introduce. This keeps us on point. We have two approaches. The first is to continue reimagining the hero products in ways that keeps them relevant. They have existed for so long because they deliver great results, and still there are few other delivery systems that can match their performance. Trends often move in cycles, and what goes around comes around, often much faster than it did a few years ago. For example, our double cleansing ritual featuring “the black soap and oil” became hugely popular again as the K wave hit the US. The other direction is to be open to the unknown. What’s interesting here are the influences. Before they were more category or ingredient driven, but now they’re coming from all walks of life—food, art, travel and so much more. Technology is of course playing a huge role. We have undertaken some futurist exercises listening to the trend makers to imagine what lives will be like in 20 years and consequently what beauty needs our consumer might have. We have some pretty crazy ideas bubbling away.
Millennials—every brand is scrambling to capture their attention, some through desperate pandering that comes at the expense of other cohorts. Attracting younger consumers can be a significant hurdle for heritage brands, but growth requires an inherent ability to effectively market across generations. How have you respected the legacy of the Erno Laszlo consumer while appealing to millennials and Gen Z?
Kristy, our CMO, is always banging on about avoiding the urge to chase cool. And she’s so right. First of all, it’s the fastest way to lose respect. Millennial consumers might not get into you, but that doesn’t prevent them from maintaining a healthy respect for what you stand for. But if you try and get down with the kids, exchanging your DNA for some short-term social media wins, they’ll ultimately despise you. I call it the Lolita Syndrome—best not go there in the first place. Once you accept that you can’t authentically appeal to everyone, you become empowered to be more honest about who and what you are. We’re all employing similar tools to reach a new audience—the difference will be the message. For Erno Laszlo, we expect that many millennials (and Gen Z) will engage and are engaging more and more if our values and point of view resonates with theirs. The biggest difference in reaching this new audience can be seen in how our tone of voice has shifted from being the authority to more a partner for life, sharing in the hopes and dreams of our consumers. We’re also working hard to counter what we see as a dangerous trend towards promoting low esteem through the overuse of social “comparison” platforms. At Erno Laszlo we believe society’s values regarding beauty must change, from this relentless focus on our outer appearance to prioritizing self-confidence through developing an inner sense of self. Our role is to inspire each and every person to live their best life by their own definition. It’s so important to be inclusive and accepting of the individual. In my experience, “really beautiful people glow from the inside,” and I think this resonates with our younger audience more and more.
Laszlo, like many of the best heritage brands, has a rich history of storytelling, loyal customers who spread the love through generations by word of mouth and, in your case, iconic A-list clientele such as Marilyn Monroe and Audrey Hepburn. How does this translate in today’s world of influencer marketing in an authentic way that remains true to the brand?
I have yet to meet a modern-day influencer who lacks admiration or some level of interest in the lives of Marilyn and Audrey. Often the most potent storytelling happens when you combine these present-day influencers with their take on these inspiring ladies. Their journey was in some way lighting the path ahead; having to overcome society’s obstacles, navigating a male-dominated film industry and world at large, making choices that often went against conventional thinking and certainly challenged what was deemed appropriate or acceptable behavior for a woman. Fast-forward to today and, unfortunately, many of these challenges still exist for women all over the world. When we give a new voice to these icons through the platforms of modern influencers, their message resonates, perhaps even more loudly given the context. Much has been achieved since these ladies trailblazed their way into history, but there’s still a long way to go. At Laszlo we have a responsibility to use the platform we have as a brand to continue the dialogue and fly the flag on behalf of all women.
You are a bit of heritage brand whisperer. You successfully turned the Molton Brown business around and are well on your way to repeating that success with Erno Laszlo. Looking into your crystal ball, are there any brands in today’s indie beauty landscape that are potential heritage brands in the making?
That’s a funny description, and for the record, my success with these brands is largely down to the extraordinary teams I had the pleasure of working with. Hard to say which indies will become heritage brands in the future, or even if that description will even exist. We mentioned earlier the staying power of the Hollywood stars of the fifties and sixties—have they been surpassed since, has anyone taken their place? Maybe we just moved on to frame things differently. They had certain qualities and were born out of a unique, almost naïve era that we shall never revisit. They’re a moment in time that has been captured and will never be replicated. I suspect that in contrast to the heritage brands, those emerging today will be more fluid and shape shift, evolving and adapting more quickly than those that went before. The environment is far more dynamic and unpredictable. You could imagine them disrupting themselves on purpose to seek a new lease of life every few years. One thing is for sure—beauty will not be about lotions and potions in bottles and jars, there’s a whole new world looming large on the horizon. And we intend to be part of it.