A sales assistant arranges lipsticks at an Estee Lauder Companies Inc. store in the Raffles City shopping mall in Shanghai, China (Photographer: Qilai Shen/Bloomberg)  

L'Oreal Acquires App Provider That Gives Virtual Makeovers

(Bloomberg) -- L’Oreal SA is set to acquire the Canadian beauty tech company ModiFace, gaining tools for customers to test make-up and lipstick online.

ModiFace’s augmented reality technology has been widely adopted by cosmetics makers since the company was founded in 2006 and helps power the mobile apps of LVMH’s Sephora and Estee Lauder. 

The Maybelline maker has built a stable of more than 30 of the world’s biggest beauty brands by acquiring names like Kiehl’s, but this is the first time the company has added a tech company to its roster. L’Oreal had dabbled in augmented reality with projects including the “Makeup Genius” app, which has been downloaded more than 20 million times.

L’Oreal will acquire ModiFace, which has more than 70 employees, for an undisclosed sum, the Paris-based cosmetics maker said in a statement Friday.

Modiface’s software allows users to see their faces transformed in real time as they experiment combining blushes and eyeshadow, turning smartphone cameras into mirrors to predict how products will look on their own skin. The company has worked with L’Oreal to make the “Style My Hair” app that allows a user to upload a picture and try out various colors and hair-dos, as well as search for salons and the latest hair trends.

“The way our consumers are searching for, discovering and trying products is really changing, and we wanted to incorporate that more deeply,” L’Oreal Chief Digital Officer Lubomira Rochet said in a phone interview.

L’Oreal sold more than 2 billion euros of its products online last year, contributing 8 percent to total revenue. Close ties with beauty bloggers on Instagram and YouTube have helped fuel a boom in make-up sales to younger consumers who want to stay selfie-ready. They are trying to replicate that success in men’s grooming by tapping the models who sport some of social media’s finest beards to promote a new brand created in partnership with David Beckham.

The next phase of L’Oreal’s digital strategy will be about making sure its brands like Lancome and YSL all have the tools to provide digital experiences to consumers, Rochet said.

L’Oreal has been racing to keep up with the rapid shift to e-commerce in key growth markets like China. Chief Executive Officer Jean-Paul Agon said last year that the company had added more than 1,700 staff to work on digital issues in the previous four years. The company has also partnered with French telecommunications entrepreneur Xavier Niel to create an accelerator for beauty-tech firms.

ModiFace will strengthen L’Oreal’s “cutting-edge position in digital,” wrote Raymond James analyst Marion Boucheron.

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