Alex Davison, CEO of L’Oréal Groupe in ANZ, talks with Tom Raynel about L’Oréal's new distribution centre opening later this year. Video / Tom Raynel
L’Oréal Groupe’s New Zealand operation is set for significant expansion when it officially opens its new distribution centre in South Auckland.
Built in partnership with the James Kirkpatrick Group, L’Oréal Groupe is investing $6 million in its new facility, which spans 13,583sq m.
The distribution centre makes use of 100%renewable energy, reclaimed water and solar infrastructure, lending to a green star standard certification.
With space for 15,000 stock keeping units in the new facility, the project is set to consolidate all of L’Oréal’s operations into a single, streamlined outfit.
In L’Oréal Groupe’s first interview with New Zealand media, its chief executive for Australia and New Zealand, Alex Davison, explained that the beauty market is always growing - hence the need for expansion.
Part of L’Oréal Groupe's new distribution centre is a massive 16.8m tall bunker to contain hazardous materials.
Davison has been in charge of the Australia and New Zealand operations since September 2023, formerly running the group’s subsidiary in Greece.
There, he claims to have delivered three years of double-digit growth, winning market share in every business channel.
Now he’s in charge of L’Oréal Groupe here, where the portfolio of 32 brands commands 26% of New Zealand’s beauty market, earning $180m in sales in 2024.
Among those 32 are brands most people wouldn’t associate with the name of L’Oréal, including Garnier, CeraVe, Kiehl’s, Aesop, as well as luxury brands including Prada, Armani and Ralph Lauren.
With over 12 million products sold in NZ in 2024, 150 employees and over 300 local supplier partners, L’Oréal Groupe‘s operations rely on efficiency across the board.
“The founder of the company, Eugène Schueller, used to say that a company is not machines and walls, it’s people, people, people.
“Fundamentally, we’ve got over 150 people here in New Zealand and they’re terrific and they’ve been outperforming the market. They can do even more in the future, but we’ve got to get the brakes off.”
Davison said there are a number of upgrades that have been completed or are being worked on to digitally transform the business.
This includes a new HR system which went live just two to three weeks ago, and the beginning of next year will see the introduction of new software for its systems, applications and products (SAP).
Davison was particularly passionate when it came to maintaining the business’ RoSPA Gold award for occupational health and safety.
“We take safety super seriously. Of course with a bigger distribution centre there’s more space for the team to operate, we want to make sure we can retain that cross-industry distinction into the future as well.”
L’Oréal Groupe's new distribution centre is 13,583sq m, nearly double the size of the business' current location.
L’Oréal New Zealand’s distribution centre manager Immanuel Rathnam said the current distribution centre has been in operation since 2010.
The refurbishment began last September and six-storey tall shelving is almost fully installed.
Outside, a 16.8m tall “bunker” has been added to handle hazardous materials like aerosols.
Rathnam said that the new warehouse management system, Manhattan Active, is currently used in its existing distribution centre with limited functionality, but full functionality will be turned on in the new site.
As for the automation, the Proximity Assist system and new safety technology used on the material handling fleet will be launched in the new facility.
The combination of modern technology will help streamline between the two centres which will operate in tandem.
The business of beauty
Davison said that the beauty market is dynamic, with almost all of L’Oréal‘s business sold through retailers across the country.
Given how challenged the retail industry has been over the past few years, he understands the pain that retailers are feeling, but believes beauty can be a catalyst.
“What we do is we’re very transparent, saying these are our launches in the year ahead, how do we partner, how do we grow together, there’s always opportunity in beauty.”
L’Oréal Groupe's current distribution centre has been operating since 2010, but now that the amount of stock being stored has grown beyond capacity, the time to upgrade became necessary.
Something that lends to that idea is called “The Lipstick Effect”.
Davison explained that in times of economic depression or challenge, such as the ongoing cost of living crisis, beauty and lipsticks always tend to perform well, noting that it “feeds basic human traits”.
Whether that’s self-expression, self-identity or something as simple as grooming, Davison said it can take you out of the moment.
Tapping into that growth is critical for the business, and the use of new technologies like artificial intelligence is something L’Oréal is already using.
“There’s a statistic I found out recently that really surprised me. I think it was like 69% of consumers felt overwhelmed by the choice in beauty. AI has a role in helping solve for that.”
Davison said L’Oréal is already using technology, including Kscan from Kérastase, which recommends products based on a scan of your scalp and hair.
Another is the new Spotscan+ by La Roche-Posay, which detects the quality of your skin and by utilising machine learning, it pulls from over 500 references from dermatologists and tens of thousands of different pictures of skin conditions to recommend coaching plans for how to treat it.
Davison believes the beauty industry is rapidly changing, both in terms of how customers interact with brands as well as how the business needs to respond.
“We’re in a race to grow capability, whether it’s how you execute media or how you work with customers or how you develop content that can work in new formats on TikTok or Instagram. It’s how you invent new retail experiences.
“We have three weeks in a year dedicated to training. There’s a learning week coming up in two weeks, and we’ll have 50 people flying over to Melbourne to have classroom training and connections there.
“We spend $300,000 a year on training for the teams here. So it’s not just about tools and kits and DCs [distribution centres], it’s the constant upskilling.”
Tom Raynel is a multimedia business journalist for the Herald, covering small business, retail and tourism.
