This month L’Oréal announced its largest acquisition to date: it signed an agreement to purchase Australian brand Aesop from Natura & Co for the sum of £2 billion (USD$2.5 billion), reportedly outbidding LVMH, Shiseido and Clarins in the process. The cash acquisition, which remains subject to regulatory approvals, is expected to close in the third quarter of 2023.
Founded in 1987, Aesop is an aspirational luxury brand that has become widely known for its skin, hair and body products (including a premium hand soap which retails for £31). Nicolas Hieronimus, CEO of L’Oréal, describes the brand as the ‘epitome of avant-garde beauty’. In recent years, its minimalist aesthetic and vegan philosophy have gained a cult following, culminating in sales growing from $28 million in 2012 to $537 million in 2022. The 2022 sales figures represented a 21% increase in constant currency from the year prior.
Natura & Co, a Brazilian cosmetics company, acquired a majority stake in Aesop in 2012 for $68 million before taking full ownership of the brand in 2016. Under Natura’s ownership, Aesop increased its physical presence from 60 to nearly 400 stores globally. Aesop also recently opened its first store in mainland China. Mr Hieronimus commented that the acquisition of Aesop by L’Oréal will help the brand capitalise on its ‘massive growth potential, notably in China’.
AI is seemingly everywhere. The past few months of the news cycle have been dominated by the accelerating development of ChatGPT and other intelligent chatbots. The retail industry is also being impacted by, and taking advantage of, this emerging technology. As the sector is the UK's biggest employer, this could have far-reaching consequences.
Consumers will be used to the increasing presence of AI-powered self-checkout systems in many stores – in fact, the majority of sales in most UK supermarkets are now done this way (although Amazon are, so far, the only ones to implement fully check-out free stores).
Many retailers are also experimenting with other technologies: Marks & Spencer trialled an AI-powered system to spot gaps on its shelves; Very has unveiled a new AI product discovery experience that will involve new tools on its website and app to provide faster and more personalised results; and IKEA has expanded its drone fleet for inventory operations. Meanwhile, Sports Direct recently launched an AI campaign to predict how human feet will change in the future and design trainers for them.
AI-led technology could fundamentally change retail businesses, including how companies interact with customers, manage inventory, and make buying decisions. Some retailers - including Asos, Boohoo and Amazon - have recently closed some of their warehouses, partly due to more efficient technology meaning less space is needed.
Some estimate that automation and AI will replace one in five UK retail jobs by 2024, and that over 85 million jobs may be displaced by machines by 2025. However, automation doesn’t necessarily mean job losses. Another study predicted that by 2025, 97 million new roles may emerge to reflect the new division of labour between humans, machines and algorithms. The future may see retailers fighting for supremacy in the AI race in order to remain relevant to consumers.
Supermarkets continue to embrace AI in their operations. From April 2023, Asda customers can have their shopping delivered by a self-driving vehicle as part of the UK's largest autonomous grocery delivery trial. Asda has partnered with Wayve, an AI software developer specialising in driverless vehicles, to begin making deliveries using self-driving Jaguar I-Pace electric vehicles, which will join Asda’s existing fleet at its Park Royal store in west London.
Simon Gregg, vice-president of e-commerce at Asda said: ‘We believe autonomous technology is an exciting opportunity to shape the future of delivery, not only at our Park Royal store but throughout our nationwide operation.’
Wayve’s AV 2.0 system uses machine learning to train its AI software to drive in any environment without explicit programming. It is also working in partnership with Ocado Group, which invested £10 million in the start-up.
Co-op has similarly embraced autonomous grocery delivery. Partnering with Starship Technologies and Trafford Council, as of March 2023, residents in Greater Manchester can have their shopping delivered via a delivery robot, which are already familiar to residents in Milton Keynes, Northampton, Bedford, Cambridge and Leeds.