What’s the secret behind Erno Laszlo’s longevity? The 96-year-old brand is not simply surviving—it's thriving in a difficult environment. According to Charles Denton, Chairman and CEO, the recipe for success is: think and behave like a start-up, leverage the brand DNA, build a culture where failure is a growth tool, then sprinkle on a little secret sauce.
Denton chalked up Erno Laszlo’s triumph, in part, to the brand’s genes. “The brand has very strong DNA,” he said. “It’s almost indestructible.” The brand is blessed with good genes, but that’s not all it has going for it. Surviving for nearly 100 years in the beauty industry, and under multiple owners, is no mean feat. “Also, the brand is based on a true story and a kept promise,” Denton said.
“The two constants that have guided the brand over the last 96 years,” Denton added, “is the philosophy of the founder, Dr. Erno Laszlo. The other is the scientific theory behind the products. There was a real Dr. Laszlo and he believed the skin and the mind are one and should be treated such. The other is the scientific theory that's behind our products, which ensures we deliver clinically proven results.”
How to explain why Erno Laszlo is extremely sought after in China, where its TikTok holds the number 2 slot for beauty, behind only Lancôme. A fiercely competitive territory with major cultural differences, and where North American and European brands are all trying to gain a foothold, the most popular skin care brands in China include Dabao, La Roche-Posay, and Vichy. Those brands cater to different skin types and have been widely available in stores and online in China.
China is the world’s third-largest market for skincare products with an estimated $16.79 billion in sales in 2023. It’s expected to reach 393.63 billion yuan or $58.1 billion by 2025, representing an 8.78% compound annual growth rate for 2021-2025. By comparison, the number-one global market, the US, is expected to generate $21.1 billion in 2023 and grow to $49 billion at a 3.42% CAGR from 2023-2027.
“They’re all trying to leverage skin efficacy,” said Denton of the competition. “We chose a huge space to focus on, which was largely overlooked by prestige brands, and that is the masking category. When we entered the market in China, masks were a commodity, a $2 and $3 commodity.”
“There are hundreds of millions of masks [in China], but it’s been a mass category,” Denton said. “We invented a prestige category, if you like, and concentrated the majority of our resources on winning with one storekeeping unit, which was our mixed activated treatment mask, which carried an $80 purchase price.”
Erno Laszlo entered China, where Korean face masks are highly visible in the mass market, by introducing a prestige product that was potentially 10 times more expensive than existing face masks on the market. “[Our product] had very strong pinnacles that proved every one of the claims that we made,” Denton said.
The Laszlo mask is designed to be a multitasking product. “We won,” Denton said. “We created an entire category, and now, there are other brands chasing the category. But if you look at TikTok, we're still the number-one prestige masking brand on TikTok.”
Chinese consumers buy different masks for different skin concerns. Sometimes a consumer will use seven or eight masks at different times of the year. “It’s an interesting category," said Denton. “There are very few brands that are able to have the power within the prestige market segment. We're one of the few and we'll continue to drive that positioning for Erno Laszlo. It's a good marketplace for us to be in.”
Denton also cited Erno Laszlo’s local team on the ground in China as a contributing factor to the brand's success. "We can move very fast, which is more competitive, and I would say China is competitive because it’s very fast moving. The speed of change is extraordinary. What happens in one year in China, might take three years in North America, and it might take five years in Europe.”
“Think about TikTok, two years ago,” he continued. “TikTok wasn't really an ecommerce platform for beauty in China. We went on TikTok 18 months before other Western brands. That first advantage was one of the reasons that we’ve been so successful. We went from 0 to a $50 million business in less than 18 months. I don't know of a market you can point at anywhere in the world that moves that fast.”
“We were able to quickly explore different business models and key drivers of Tiktok commerce, from targeting our consumers based on platform insights, creating highly engaging content, and establishing high-quality and highly visible brand exposure,” Denton said. “We developed both KOL livestreaming and self-run livestream to meet the content needs of consumers and also build exposure during daily and high-volume promotion periods. Within one year we had adapted our business models from traditional shelf ecommerce to live ecommerce, which is now delivering a very positive impact on all our channels.”
Calling the Chinese market “extraordinary,” Denton said it's more competitive and harder to break into China than ever before. Not only is it much harder, the barrier to entry is “much higher than it ever was. You've got to have deep pockets, and you've got to have a strong point of difference,” Denton said. “You have to have proven efficacy. Mission brands will struggle because they can’t deliver results.
“If you think about Korea, and think about Japan, both markets are dominated by local brands,” says Denton. “In China, the market is dominated by international brands, Western brands. It doesn't take you that long to imagine a market that's become a level playing field with local brands. Some time in the future, local brands will eventually dominate the market. So we've worked very hard to localize our brand.”
An unwavering focus on its employees, its consumers, and its products has helped Erno Laszlo stay in the fast lane. “Being very clear on these areas allows us to move exceptionally fast— and that doesn't mean being rigid,” Denton said. “We're very nimble, we try new things all the time. Ultimately, a brand must remain true to itself. It's all too easy to get drawn into the next trend or fad. It's very tiring always chasing others; It’s better to take a position, have a point of view and try to lead.”
With a broad age range that he contends spans 18 years to 80 years, Denton said Erno Laszlo is on a journey together with its customers, many of whom discover the brand as 20-somethings. “It's a commitment for life,” he said. “We may lose some along the way, but we're always there for them if they decide to come home, and many do, especially in the last three years.
Along with proven formulas and having an early advantage over Western and European brands, Denton pointed to Erno Laszlo’s culture of testing and learning. “The last five years were very much about trying different things, failing and learning, and growing,” he said. “That's one of the things that makes us unique. We embrace the sense of failure and we risk taking it.
“It's very important if you want to innovate,” Denton added. “We've built the culture around this idea that it's okay to fail, that it's important that you try new things, and you learn as a result of it, and grow. Your vision grows, and you grow as a brand. You have to be focused. You find something that really works, and you're scrambling. You're on your hands and knees and then you find a path where you can run.
“Sometimes, we run as fast as we can until we get to a place where we're on our hands and knees again,” Denton added. “That's pretty much how we built the business. It's almost like a startup in a way. We look at the heritage and the strong DNA, but you could almost say Erno Laszlo is moving, it's very high energy and performance driven. It’s very much like a start up.”
Denton said the journey is almost as important as the financial results. “The future is even more exciting in a way because we were working very hard to gain traction, and now, to feel the traction, you could argue that the last five years were about establishing proof of concept, and we've done that.”
In the end, it all comes back to one word, Denton said, and that is “trust.” “We’ve built relationships with our consumers based upon trust,” he said. “We're very transparent. Every claim we make is backed up by clinical studies, and we explain the science and prove the efficacy. We're not looking for their faith in miracles, just trust in the science. Our consumers respect this and reward us with incredible loyalty.”
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