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The Estée Lauder Companies (ELC) and Microsoft have teamed up to open an artificial intelligence innovation lab designed to use generative AI across ELC’s more than 20 beauty brands, including Clinique, Mac Cosmetics and namesake Estée Lauder.
The core goals are to develop tools that help internal teams more quickly identify and respond to trends and to use that data to inform product development and improve customer experiences.
Projects in development already include an internal chatbot that enables brands to pull authorised product claims; this means that when a marketer wants to quickly respond to a trend or need, such as “fine lines and wrinkles”, they can search a database that surfaces the areas that certain products are proven to legally and scientifically address. The hope is that this will ultimately enable brands to more quickly launch more effective campaigns that align with localised, emerging trends, according to a company spokesperson.
Additionally, the lab is working on ways to use generative AI to help scientists more quickly respond to emerging product and ingredient trends, with the aim of faster product research and development.
The virtual lab is a joint partnership with Microsoft, with whom ELC has worked since 2019. Existing employees from both companies will work in the lab, with some upskilling of ELC employees. The specific tech used will include Microsoft’s Azure OpenAI Service, which enables developers to integrate OpenAI models into their applications to create custom experiences, such as better bots, recapping call centre conversations, creating personalised ad copy and automating claims processing.
These tools are especially compelling for the beauty industry, due to the speed of change in customer expectations and preferences, says Shelley Bransten, corporate VP of global industry solutions at Microsoft. She says that an IDC study, commissioned by Microsoft, found that for every $1 a retail and consumer packaged goods company invests in AI, it sees a return of $3.45.
ELC has been exploring uses of generative AI for the past couple years, and has developed a set of standards that serve as a guideline for how the company structures its initiatives. In 2023, it hosted its first company-wide “AI Ideathon” for global employees to imagine AI-powered solutions. It also used Microsoft tech to build a Voice-enabled Makeup Assistant (VMA) mobile app to help visually impaired people apply makeup. ELC also used Google’s large language model Palm2 to categorise customer care calls, generate text that is optimised for SEO, length or tone, and explore how generative AI can create online services that mimic beauty advisors and beauty artists.
The lab is one of the earliest examples of a fashion or beauty incubator specifically focused on AI, especially since the recent generative AI boom. It is led by Jane Lauder, EVP, enterprise marketing and chief data officer of The Estée Lauder Companies, who in 2020 became the first person to hold the CDO title at ELC; her mission is to lead the company’s analysis and use of its data across marketing and creative teams. “With over 75 years of data, AI has given legacy companies like The Estée Lauder Companies a competitive advantage,” Lauder says, adding that the partnership with Microsoft helps it to use that data to make more personalised experiences, speed to market and relevance.
AI startups and tools are a hot topic among fashion and beauty brands and are key themes among recent fashion and luxury incubators. Five of the six startups chosen for the latest cohort of the New York Fashion Tech Lab are centred around AI, and this year’s LVMH Innovation Prize will include a special award for a startup with the most innovative solution in data, AI and generative AI. During this week’s annual general meeting, Kering chairman and CEO François-Henri Pinault told shareholders that the company is organising a trip focused on generative AI in July.
Big tech companies are also angling to step up to the plate. In addition to Microsoft, which has invested heavily in ChatGPT parent company Open AI, Google has numerous new tools that enable functions (such as text-to-image tool Imagen and Vertex AI for retailers to build AI apps and models), and Meta has introduced tools to help advertisers edit images and text using generative AI. Both Salesforce and Adobe have also recently released tools specifically designed for retail and creative industry applications.
“Generative AI represents a significant opportunity for the beauty industry,” Microsoft’s Bransten says. There is an opportunity for “creating more engaging customer experiences, getting products into the hands of consumers faster, developing new products more efficiently and sustainably and much more”.
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