Estée Lauder

American businesswoman

• Born: July 1, 1908
• Birthplace: Queens, New York
• Died: April 24, 2004
• Place of death: New York, New York

Lauder’s Fortune 500 company had annual revenues in the billions of dollars and set standards for the cosmetic and business industries. Lauder’s nose for fragrance was much admired by those in the cosmetics industry, and her company’s name is intimately associated with its winning perfumes. She pioneered the use of samples to lure potential customers in department stores, and was the first to offer gifts with purchases.

Early Life

Estée Lauder (EHS-tay LAW-dur) was born in Queens, New York, to Max and Rose (Schotz) Mentzer. Named Josephine Esther Mentzer at birth and called Esty for her Hungarian aunt, she gained her first experience in sales in her father’s hardware store. She and her siblings worked in the family business and helped arrange merchandise and window displays. When World War I broke out, her mother’s brother, John Schotz, came to live with the family. Schotz was a chemist who set up a laboratory in a stable at the back of the family’s home, where he concocted secret formulas for skin-care products. Mesmerized by her uncle’s manufacture of the creams, Lauder’s entrepreneurial spirit manifested as early as high school, when she convinced her friends to try her uncle’s wares.

In January, 1930, Lauder married Joseph H. Lauter, a businessman working with silks in the garment district. They adopted the traditional Austrian spelling of Lauter’s surname, which was Lauder. Their first son, Leonard, was born in 1933. By 1939 the marriage was strained because of her business aspirations, and she and Joseph divorced. She moved to Miami, Florida, and developed an extensive network among the city’s wealthy population. At the end of 1942, Lauder and her husband reconciled, remarried, and devoted their energies to founding a cosmetics company. Two years later Lauder took a break from daily work upon the birth of her second son, Ronald.

Life’s Work

In 1946, Lauder started selling skin creams created by her uncle to resorts and beauty shops. Though an excellent salesperson, it was Lauder’s determination, ambition, and creativity in marketing her products that brought them to the counters at Saks Fifth Avenue in 1948. Her initial line included four skin-care products as well as a few basic cosmetic items such as face powder and lipstick. Her trademark color, lavender blue, was chosen to complement bathroom decor. Initially taking her cues from the “waspy restraint” of Elizabeth Arden, the glamour of Revlon’s Charles Revson, and from Helena Rubinstein, Lauder promoted a timeless, traditional image to her customers. Her own conservative, feminine style translated into her company’s image of quality and style.

Selective in courting her customer base, Lauder gravitated toward the upper echelon and used her social connections with friends such as the duchess of Windsor, Princess Grace (Grace Kelly), Nancy Reagan, and the Begum Aga Khan (Gabriele Thyssen) to sell her products. Until her last years Lauder made personal appearances at stores all over the world, and her flawless complexion belied her age and was a testament to the power real or imagined of her skin-care line. Customers relished the high level of personal service they received at the hands of her counter staff. Lauder personally selected and trained each woman who sold her products, thus ensuring a continuity of service and image, along with the free gift customers received for purchasing products. Lauder developed the idea of a “free gift with product purchase” after facing an unpromising New Year’s counter opening at Neiman Marcus. The free gift promotion remains a standard offering within the industry. To promote her line, Lauder traveled across the United States and, later, the globe to attend each inaugural counter at a department store. When visiting department stores, she cultivated good will and referrals by sharing product samples and style tips with salesclerks in other sections.

In 1953, Youth Dew, Lauder’s first, and most successful, fragrance, was brought to the market. It was a bath oil that women used in lieu of fragrance. That year Lauder sold fifty thousand bottles of the bath oil, and 150 million bottles were sold by 1984. Lauder opened her first counter at Harrod’s, the famous London department store, in 1960. That decade saw the expansion of her counters across Europe, and by the 1970’s women and men in more than seventy countries could make selections and buy from Lauder’s line.

Lauder’s son, Leonard, was named chief executive officer of the company in 1972, but he worked full time for the company beginning in 1958 and worked for his mother as early as 1943 by collecting money from the beauty salons who bought Lauder’s products. Evelyn Lauder, Leonard’s wife, was responsible for new fragrances such as White Linen and Beautiful when they debuted a decade later. Lauder’s second son, Ronald, headed the company’s international business, which expanded to eighty countries.

Lauder launched the first men’s skin treatment line, Aramis, in 1964. First marketed as a men’s fragrance, Aramis was not immediately successful. Lauder learned from her mistakes, studied the market, and approached it from another angle. Her competitors rarely experienced success by employing her marketing tactics, however, and Revlon was a notable failure when it tried to match her launch of Aramis, and later Clinique, with its own versions.

Initially, Clinique, too, was a money-loser. Introduced across department-store cosmetics counters in 1968, the line was the first allergy-tested, fragrance-free, and dermatologist-approved product of its kind. Clinique lost $20 million over four years before breaking even and later realizing a profit. It accounted for one third of the company’s revenue in 1980; five years later, its sales were in excess of $200 million.

By 1982, Estée Lauder Companies was the largest privately held cosmetics company in the world. The company made this gain in an age when companies such as Elizabeth Arden, Helena Rubinstein, and Max Factor were swallowed by conglomerates and reduced to nothing. When these cosmetics companies branched out and made their products available in drugstores, Lauder resisted the expansion because her service component could not extend to that setting. Lauder’s exclusivity, offering a top-quality product to the best department stores, worked. Headquartered in New York on Fifth Avenue, it boasted annual sales in excess of $1 billion and had ten thousand employees internationally. The next year Lauder lost her husband of many years with whom she founded the company and guided its finances and manufacturing until son Leonard took on those roles in the 1970’s.

Lauder retired from her company in 1994, approximately ten years before her death, but she carried on her company’s standard of personally appearing at new store openings and events. She left a legacy for her children and grandchildren, who all joined in the family company by assuming prominent roles in its administration.

Significance

Lauder excelled at anticipating trends within the industry. Years before it became common across cosmetic counters, she innovated the practice of letting customers sample Estée Lauder creams and lotions on their hands and faces. Her personalized approach to selling cosmetics added to her company’s reputation.

Lauder was the only woman to make Time magazine’s 1998 list of the twenty most influential business geniuses of the twentieth century. That same year her eponymous cosmetics company controlled 45 percent of the cosmetics market in American department stores.

Estée Lauder Companies includes not only the Estée Lauder line, but other well-known lines such as Clinique, Aveda, Aramis, and Prescriptives. Combined, these companies likely spent more advertising dollars than any other cosmetics company. At the time of her death in 2004 her cosmetics empire was worth ten billion dollars.

The former head of Bloomingdale’s, Marvin Traub, considered Lauder a cosmetics industry revolutionary and “the world’s greatest saleswoman.” In the years since her death, Lauder’s company remained not only intact but also thriving, unusual for an American cosmetics company surviving the death of its founder. Lauder’s rags-to-riches tale epitomizes the American Dream. The success of Estée Lauder Companies can be attributed to its founder’s ingenuity and business acumen.

Bibliography

Bender, Marilyn. At the Top. New York: Doubleday, 1975. Written in 1973 and based on a story written for The New York Times, this essay focuses on the stewardship of Lauder’s company, its product development and marketing, and rivalries within the cosmetics industry.

Buchholz, Todd. New Ideas from Dead CEO’s: Lasting Lessons from the Corner Office. New York: Collins, 2007. An examination of remarkable company leaders whose methods remain effective for sales success in their respective industries. Includes chapters on Lauder.

Evans, Harold, with Gail Buckland and David Lefer. They Made America: From the Steam Engine to the Search Engine, Two Centuries of Innovators. New York: Little, Brown, 2004. Lauder is one of seventy American inventors and entrepreneurs who are profiled in this book.

Israel, Lee. Estée Lauder: An Unauthorized Biography. New York: Macmillan, 1985. An investigative biography filled with details of Lauder’s struggle at the top as she pursued excellence and innovation in her industry. Explores her business philosophy along with history and trends of the cosmetics industry. Places Lauder in the context of her time. Author’s notes provide information on sources, including printed materials and interview details.

Lauder, Estée. Estée: A Success Story. New York: Random House, 1985. A candid autobiography revealing the subject’s personal life and containing photographs from her personal collection. Lauder shares her secrets of business and good living as well of her philosophy of beauty and how it commands attention. She narrates the story of balancing her life between personal and private and concludes with tips for entertaining.