The Estee Lauder Cos. (ELC) and Microsoft Corp. announced plans to work together on a generative artificial intelligence (AI) project through their AI Innovation Lab. The companies will work on generative AI solutions to increase speed to market and consumer connections with Estee Lauder’s more than 20 beauty brands, they said in a combined statement.

The AI Innovation Lab will use Microsoft’s Azure OpenAI Service. 

“At ELC, technology is always in support of our enduring strengths of high-quality products and high-touch consumer experiences,” said Jane Lauder, executive vice president, enterprise marketing, and chief data officer at Estée Lauder. “With Microsoft’s generative AI tools and extensive expertise, we are able to leverage ELC’s tremendous data to create more personalized consumer experiences and faster insights to action resulting in increased speed to market and stronger local relevancy. We look forward to continuing our close and collaborative partnership with Microsoft.”

Estee Lauder ranks No. 41 in the Top 1000, Digital Commerce 360’s database of the largest North American e-retailers by online sales. It operates cosmetics brands including La Mer, MAC, Too Faced and others.

How Estee Lauder will use generative AI

Estee Lauder shared two specific ways it will use Microsoft’s technology.

First, it worked with Microsoft to create an internal chatbot that uses AI to improve marketing campaigns. The chatbot uses conversational AI to consult Estee Lauder’s database of products and information. Then, marketers can use that data to quickly create new marketing campaigns relevant to different locales, Estee Lauder said.

Estee Lauder is also using Microsoft generative AI in product development and research. The retailer says the technology allows scientists and development specialists to respond to product and ingredient trends more quickly.

“Generative AI represents a significant opportunity for the beauty industry — creating more engaging customer experiences, getting products into the hands of consumers faster, developing new products more efficiently and sustainably, and much more,” said Shelley Bransten, corporate vice president of Global Industry Solutions at Microsoft. “We’re proud to collaborate with The Estée Lauder Companies to provide not only a platform for AI innovation, but also deep partnership to bring these new innovations to life.”

Estee Lauder’s history with AI

The cosmetics retailer isn’t new to AI. Estee Lauder has worked with Microsoft since 2017, it said. In early 2023, it used Microsoft Azure AI to create an AI-powered mobile app for visually impaired consumers.  

The Voice-Enabled Makeup Assistant (VMA) helps visually impaired users apply makeup using voice instruction technology. The AI identifies how makeup is applied based on uniformity and coverage. Then it gives feedback on lipstick, foundation and eyeshadow application with advice on where touch-ups are required. The app is available on Android and iOS in The U.S., U.K. and Ireland, with more markets planned, the retailer said.

Later in 2023, Estee Lauder also worked with Google Cloud on another generative AI venture. The two companies planned to “collaboratively explore AI-powered solutions to better understand consumer sentiment, inform R&D efforts, and translate the magic of prestige beauty brands into best-in-class, high-touch digital experiences,” they said in a statement at the time.

It also used Google large language model (LLM) PaLM 2 to gather data on consumer sentiment through social media and call center operations.

Estee Lauder revenue

Estee Lauder reported net sales grew 5% to $3.94  billion in its second fiscal quarter ended March 31.

Skin care made up the largest portion of sales, accounting for $2.06 billion in the quarter. That was an increase of 8% from $1.92 billion in the year-ago period. Makeup sales also grew, up 3% year over year to $1.14 billion. Fragrance sales remained nearly flat at $575 million. Meanwhile, hair care sales declined 3% to $143 million.

Estee Lauder cited success from Clinique’s debut on the U.S. Amazon Premium Beauty Store, which “greatly exceeded our retail sales expectations,” it said in a press release.

In the preceding quarter, the retailer announced it would lay off 3% to 5% of its global workforce this year. Those job cuts impacted up to 3,100 of the beauty retailer’s 62,000 employees.

Layoffs are part of a multi-year plan to rebuild profit margins in 2025 and 2026, Estee Lauder said. 

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