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L’Oréal Brandstorm 2015
TRAVEL RETAIL PRE-CASE STUDY TEAM AVANTGARDE
ALINA NISTOR ANA-MARIA DAN ANDREI IONESCU
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ABOUT ME
TRAVEL RETAIL
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BEAUTY AND THE RETAIL BEAST
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THE BIG PLAYERS
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MAPPING THE STARS
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SHOP AROUND THE GLOBE AND AROUND THE CLOCK
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A TASTE OF CHINA
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LOOKING FOR TRENDS
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MAGNET FOR SHOPPERS
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THE TRAVEL RETAIL EXPERIENCE
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UPGRADE MY EXPERIENCE
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LANCÔME
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MEET THE BRAND OF WOMEN
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SWOT IT
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VALUE YOUR STRENGTHS
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IDENTIFY YOUR WEAKNESSES
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KNOW YOUR OPPORTUNITIES
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BEWARE OF THE THREATS
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THE FUTURE
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STROKE OF GENIUS
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A GLIMPSE INTO THE FUTURE
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REFERENCE LIST & APPENDICES
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About me by Charlotte Rose
October 25, 2014
As a beauty editor for the past 10 years, I’ve had the opportunity to travel the world and experience what each culture has to offer. Hours of delayed flights and layovers have translated into a well stocked accessories wall and a vanity filled with a plethora of luxury fragrances and cosmetics. My passion for travel and shopping has found a perfect space to unfold in the many duty-free and down town shops I have visited, fueled by the smiles of the ever helpful assistants. Today, sitting in CDG Airport I’ve realised that I am in an unique position. I can offer an insight both in the vision of the retailers, especially my all time favourite Lancôme, and in the experience of the consumer. So I’ve put electronic pen to digital paper and this is what I came up with.
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TRAVEL RETAIL
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Beauty Hello, world! Now that you all know who I am and why I write this blog, I will quickly introduce you to the Travel Retail universe and then get into the nitty gritty of the beauty world. Travel Retail is a booming market that attracts 50 million shoppers every year, says L’Oréal (2014), one of the biggest players in the industry. Can you guess what fuels such a speedy growth? I’m sure you can – it’s the passenger traffic, which according to Passport (2012) is only expected to grow over the 2011 – 2016 period. As a result, the Travel Retail market is projected to double over the next 10 years judging by L’Oréal’s (2014) estimations. How exciting is that? Just look over the global passenger numbers proposed by Passport (2012) and you’ll see why Travel Retail is the next big thing. It looks like more than 2.5 billion international air travellers have set foot in airports
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and the retail beast by Charlotte Rose
THE 6th CONTINENT BORDERLESS TERRITORY airports, flights, downtown shops, cruises CAPITALS top airports like Dubai, London, Hong Kong or Paris FLOW OF INHABITANTS 2000 flights taking off/minute in 2013
worldwide in 2013 alone (L’Oréal, 2014). With such a powerful engine behind it, it’s no wonder L’Oréal created a division dedicated to this very specific world of Travel Retail. They even gave it a name! It’s called “The 6th Continent” and has its very specific characteristics as you can see on the lefthand side visual. Given its importance, we all need to understand the four key drivers suggested by Passport (2012) that will shape this continent in the future:
PASSENGER
ECONOMY duty free shops POPULATON 2.5 billion international air travellers in 2013 (L’Oréal, 2014)
TRAFFIC
will be the main growth driver for the Travel Retail industry. Moreover, it’s not only the passenger numbers that matter; it’s also the passenger mix. According to L’Oréal (2012), the profile of travellers is changing from the businessman of the West to the Global Shopper. This phenomenon is being underpinned by the democratisation of travelling in emerging economies. I can’t
November 1, 2014
wait to tell you more about Global Shoppers in following articles.
RETAIL SPACE. The trinity: Landlords,
Retailers and Suppliers (Appendix A) in Travel Retail are preparing to welcome the Global Shoppers. Thus, the retail space is changing too. The business model of airports and other duty-free locations is transforming. From a few multi-category stores around the boarding gates, airports are now becoming big shopping malls.
REGULATIONS
on allowances and taxes remain the industry’s greatest concern. Any shift in government policies could have a major impact on the industry.
LUXURY GOODS.
Once duty-free was all about alcohol and tobacco. Not anymore. The total sales of tobacco goods, for example, dropped by 50% between 2004 and 2011 while luxury became more significant.
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This brings us to the part I like the most: Beauty and Personal Care (BPC) industry or, if I am more specific, the Perfumes and Cosmetics (P&C) category (one of the largest and most important categories in Travel Retail). P&C is the historical leading sector of Travel Retail with about 30% of total turnover. It’s expected to hit new records in the following years as it continues to evolve, according to L’Oréal’s (2014) estimations. To understand its importance, just have a look at this diagram showing the category’s growth in relation to other sectors in Travel Retail. For retailers and beauty brands, Travel Retail is thus a dominant generator of increased turnover but also a strategic channel for brand visibility. To succeed, they need to deliver excellence in terms of beauty products, services and retail experience.
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Sourced from Passport (2012)
BEAUTY PRODUCTS.
We all like beauty products, but in Travel Retail, some get more “Likes” than others. Passport (2005) claims that products belonging in categories such as Fragrances, Skin Care and Premium Cosmetics are the most popular in Travel Retail (Appendix B) as opposed to the global retail market for all cosmetics and toiletries’ top three categories that can be seen in Appendix C.
SERVICES. When
it comes to services in Travel Retail, we’ll trust the experts: Nuance (2014) - one of the world’s leading travel retailers. In their vision of Perfumes & Cosmetics, the emphasis is put on luxury, service, convenience, quality, and last but not least value for money.
Services tailored to customers’ national preferences are offered by beauty consultants who speak their language
Specific product lineups that suit their needs
Multilingual support materials
RETAIL EXPERIENCE.
On your right-hand side is what L’Oréal does to meet customer expectations of the Global Shoppers I mentioned earlier. L’Oréal is the historical leader in the beauty category of the Travel Retail market, so we’d be wise to consider their approach to this channel’s ‘tailor-made experience’:
Favourite products for each nationality
Hope this helps to get an overall view of the Travel Retail market and its beauty category. See you soon!
Celebration of key cultural events relevant to different nationalities 13
The big players by Charlotte Rose
November 8, 2014
A few days ago, I was wandering around the duty-free zone of Heathrow looking for a present. It was impossible not to notice the amount of brands fighting for my attention (and my £££) when I got closer to the beauty category. As we established in the last article, luxury is what shoppers love and buy when it comes to beauty in Travel Retail. Passport’s (2013) statistics in the Global Premium Beauty and Personal Care market, gave me the figures to put together the pie chart on your righthand side. As you might expect, in Travel Retail things aren’t much different: L’Oréal, Estée Lauder Companies and LVMH remain the three big players according to a 2012 Generation study quoted by Rozario (2012). Big companies with loved brands in their portfolio. I’m sure you want to know more about them so keep reading the following pages!
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Sourced from Passport (2013)
L’Oréal Group Since its point of departure (1909), L’Oréal Group has devoted itself solely to one business: beauty. This commitment is clearly reflected in their proudest achievement – being the world’s largest cosmetics company. As we all love a bit of luxury, we need to know what high-end brands they own. These are all included in their specific division called L’Oréal Luxe: Lancôme, Giorgio Armani, Yves Saint Laurent Beauté, Biotherm, Kiehl’s, Ralph Lauren, Shu Uemura, Cacharel, Helena Rubinstein, Clarisonic, Diesel, Viktor&Rolf, Yue Sai, Maison Martin Margiela, Urban Decay, Guy Laroche and Paloma Picasso. All these brands contribute to L’Oréal’s mission – “The universalisation of beauty”. This mission is based on their beliefs that beauty is universal and is also a language, a science and a commitment. Besides, the company has high ambitions as it aims to “win over another one billion consumers around the world by creating the cosmetic products that meet the infinite diversity of
their beauty needs and desires”. (L’Oréal) Being the world’s largest cosmetics company is a massive strength in itself. But L’Oréal showed that it is a solid presence on other grounds too. For example, the company invests heavily in R&D and product development, launching products based on innovative technology and design (e.g.: L’Oréal Paris Revitalift Laser X3 is the result of 14 years of research into the novel formulation). The well-segmented brand portfolio is also a strength as it enables the company to have full coverage across the pricing tiers. (Passport, 2014) However, there are a few weaknesses related to L’Oréal’s global performance. While the company focuses on emerging markets, it’s yet to develop a more solid presence in the smaller frontier markets (e.g.: Bangladesh, where incomes are rising, yet competition is low). (Passport, 2014) Eager to know more? Appendix D will show you L’Oréal’s share of each category in the BPC sector in 2013.
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Estée Lauder Companies This big player bears the name of its founder who started the company in 1946. Estée Lauder only operates in the BPC industry and their brand portfolio currently consists of 28 beauty brands. Assuming you are only interested in their premium brands, I made a selection for you: Clinique, Estée Lauder, Mac, Bumble & Bumble, Aveda, La Mer, Aerin Beauty, Darphin Paris, Donna Karan Cosmetics, Ermenegildo Zegna, Marni and Tom Ford. It’s interesting to know that Estée Lauder Companies is guided by three key principles established by its founder since the beginning: creativity, innovation and entrepreneurship. Along with ruling by these principles, the company is also on a mission - “Bringing the best to everyone we touch and being the best in everything we do.” (Estée Lauder Companies) The company’s main strength (globally thinking) is that it operates a clearly segmented brand portfolio. This means they offer different pricing tiers in premium
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categories, their brands cover various market niches (dermatology, natural/organic, high-end retail brands, etc.) and also serve multiple target audiences (e.g.: Estée Lauder targets older women while Clinique is for a younger market). Estée Lauder also has a strong presence in all of the top eight premium BPC markets, with strongest penetration in the US and the UK. In both markets, the company leads thanks to the triumvirate of its flagship brands, Clinique, Estée Lauder and Mac. (Passport, 2014) They also have some weak areas in their worldwide performance. As Passport (2014) claims, even though Estée Lauder prioritises colour cosmetics, it has limited coverage in some subcategories (for example nail care, which is a dynamic subcategory). If you want to find out more about their 2013 presence in the premium BPC market by category and also see some growth prospects covering 2013 to 2018, make sure you check Appendix E.
Moët Hennessy - Louis Vuitton They came into being in 1987 and since then the group has grown strongly to become active in five different sectors: Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics, Watches & Jewellery and Selective retailing. Overall, LVMH possesses a unique portfolio of over 60 prestigious brands. In Perfumes & Cosmetics they only do premium: Christian Dior, Guerlain, Givenchy, Kenzo, Benefit, Fresh, Make Up Forever, Acqua di Parma, Loewe, Fendi and Nude. Lover of luxury, do you find this brands familiar?
far its most valuable brand and its most important growth driver in the category. More than this, another strong aspect of the company is represented by its global brand equity. LVMH’s enviable portfolio of premium brands carries noteworthy equity. It ranges from classic brands (Dior, Givenchy and Guerlain), which have a well-established consumer base, to “youthful” brands such as BeneFit and Make Up For Ever. This allows LVMH’s portfolio to be an exceptional platform for developing its presence in traditional and newer marketplaces with beauty progressively becoming a focus. (Passport, 2014)
LVMH’s mission is clear: to represent the most refined qualities of Western “Art de Vivre” around the world. As they put it, “Our products, and the cultural values they embody, blend tradition and innovation, and kindle dream and fantasy.” (LVMH)
Although the group established a worldwide solid presence in premium fragrances and color cosmetics, they are not so strong in skin care (small portfolio and low credibility in premium skin care), which is the largest category in BPC (Passport, 2014).
Globally, LVMH’s area of strength is premium fragrances, particularly women’s (where it ranks second globally). This is on the account of Christian Dior that is by
You can discover more about their presence in the premium beauty sector in 2013 as well as the growth prospects until 2018 in Appendix F.
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Mapping the stars by Charlotte Rose
Now that you know more about the top ‘mother companies’ in BPC sector of Travel Retail, let’s narrow it down to individual brands. High end brands, of course. You
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can see in the positioning map on the right side where premium brands are placed depending on their brand value and market share. Hungry for more? Check the figures
November 15, 2014
in the table below which shows 2013 Brand Statistics in Global Premium Beauty and Personal Care.
Adapted from Passport (2013) and Brand Finance (2013)
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Around the globe by Charlotte Rose
November 23, 2014
Hello! Remember I made you a promise earlier this month? I am dying to tell you more about the centre of attention in today’s world of Travel Retail - the shopper. Predictably, this international traveller who clearly associates travelling with shopping is ...the Global Shopper (JCDecaux, 2013). They shop wherever they are: in their local markets, when travelling, and also in the markets of their destination. (L’OrÊal, 2014) I felt intrigued to explore who the customers that buy beauty products in airports are and what their habits are.So I said to myself: why not draw a profile for the Global Shopper? Inspired by JCDecaux (2013), I came up with the two profiles on the right-hand side page: one for the universal Global Shopper and another one specifically for the Global Shopper in the beauty world.
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Global Shopper
96%
like to go shopping visiting a foreign city
when
Global Beauty Shopper
â‚Ź225
spending on average
select destinations based on shopping opportunities and available brands at the location
68%
Buy to treat themselves and to gift loved ones
83%
A balanced mix of available and unavailable brands in the country they originate from
consider shopping an important part of their trips
Are affluent individuals belonging to the income class AB
Primarily buy Fashion and Clothing, Cosmetics and High-End Fragrances and Accessories
A mix of planned and impulse purchases
Buy products abroad because they are less expensive and want to indulge themselves during travel
Adapted from JCDecaux (2013)
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...and
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around the The Global Shoppers represent a priceless opportunity, but before engaging them brands need to understand their expectations. Just to give you a brief picture, Sfez (2012) emphasizes on a few simple ways to meet the Global Shoppers’ expectations and make them happy:
SOPHISTICATION.
As lovers of luxury, they expect a sophisticated shopping environment.
PERSONALISATION.
Tailor-made experience is crucial. A well-trained assistant must know everything about a product and its availability and demonstrate a subtle understanding of the shoppers’ culture.
COMMUNICATION. It goes without
saying that speaking the Global Shoppers’ language is essential.
FLEXIBILITY.
Though simple, accepting their preferred payment card and
clock
allowing payment in their own currency could make a difference.
GENEROSITY.
Three quarters of Chinese shoppers expect to be offered a discount of some kind. As L’Oréal (2014) puts it, in Travel Retail customers come from varied cultures and have different expectations, but they share a common aspiration for luxury and beauty (as it is evident in the rise of Global Shoppers from emerging countries like China, Russia, Korea and Brazil above all). I can’t stress enough the importance of travellers from these countries, so I will have a closer look at them in the following pages!
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A taste of China by Charlotte Rose
嗨! After having a closer look at the emerging markets I’ve brought you more information on some of the main ones. JCDecaux (2013) say that in 2005 alone, Chinese travellers spent $21.8bn abroad. Do you know how much they spent abroad 7 years later? A staggering $102bn - that’s more than any other country. With this in mind, we can say that the Chinese traveller is undeniably becoming the most significant Global Shopper amongst all. So today’s post is all about the Chinese travellers and their appetite for shopping.
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It all starts with China’s expanding middle class which determined the rise of the Chinese traveller. From short business trips to longer holidays abroad, more and more Chinese consumers are travelling overseas. One of the biggest beneficiaries of this trend is the duty-free channel and the beauty world - 59% of Chinese sales in duty-free
November 30, 2014
shops are perfumery and cosmetics. This is shown in the pie chart on the right which breaks down Chinese duty-free spend by product in 2011. Before we dive into the Chinese, Russians and Brazillians’ ID cards, I’ll tell you one more thing about the Chinese Global Shoppers. According to Eva Yu, quoted by Davitt (2013), there are three areas of obsession that brands need to react to when it comes to the Chinese Global Shopper.
THE IMPORTANCE OF SKINCARE PREMIUMNESS GIFTING Passport (2012) also goes into more detail and talks about the specificities of the Chinese Global Shopper, highlighted on the right hand-side:
Sourced from Passport (2012)
Availability Many brands are simply not available in China. The limited availability of luxury goods in large parts of China has driven Chinese travellers to purchase luxury items abroad. (Passport, 2012)
Status
Price Many foreign brands choose to position their products higher in China. This creates a feeling of exclusivity, which is particularly appealing to them. Luxury items are subject to higher sales taxes, making these products even more expensive. Consequently, luxury items sold abroad are often perceived as “cheap� in comparison to Chinese retail prices. This is a major driver of duty-free sales. (Passport, 2012)
It’s hard to travel because of Visa restrictions; the minority are therefore held in high regard because of the wealth and status attached to foreign travel. The ability to show off by purchasing luxury items or products exclusive to duty-free outlets is an additional benefit for Chinese travellers purchasing duty-free products. Aside from spending on family members, midlifers in their fifties are keen on self-indulgent leisure and lifestyle spending. (Passport, 2012)
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Chinese Global Shopper ID CARD
Sourced from JCDecaux (2013)
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Russian Global Shopper ID CARD
Sourced from JCDecaux (2013)
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Brazilian Global Shopper ID CARD
Sourced from JCDecaux (2013)
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L
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king
for trends by Charlotte Rose
Hi again to all the beautiful people reading my blog! Now that we all know who the Global Shoppers are and what their habits and purchasing behaviour are, let’s find out what consumer trends are out there for them. Global consumer trends (suggested by Trendwatching, 2014) currently affecting Global Shoppers are:
STATUS SEEKERS.
The desire for recognition and status is a universal human need. In consumer societies, people reflect their social status through the products, services and experiences they consume.
YOUNIVERSE.
The Youniverse is where each person’s preferences and tastes claim supremacy. It is believed that each consumer wants to express and be recognised for their individual tastes, personality and identity through
December 6, 2014
consumption.
UBITECH.
Consumers will continue to crave for the advantages offered by technology: perfect and instant information, absolute transparency, limitless choice and more. It is also useful to acknowledge the main Asian consumer trends, considering the booming number of customers coming from Asia.
VIRGIN CONSUMERS. Consumers,
from the bottom of the pyramid to the new middle classes, whose unfamiliarity with a certain product or service corresponds to their excitement to engage with it for the first time.
DECENTRALISED.
Asian consumption boom is not just limited to megacities. Millions of middle class Asians already live, work and spend their hard-
earned cash in the Tier I suburbs and peripheries, Tier II (III, IV, V, VI) cities, and new frontier markets (such as Vietnam, Sri Lanka, Myanmar, Laos, Cambodia or Bangladesh).
DIGITAL CRAMMING.
For most Asians, the online revolution is more about lifestyle maximisation.
E-MPOWERMENT. ‘E-mpowered
netizens’ are becoming important agents of change. Whether they’re expressing their own needs and wants or helping to solve pressing social and economic issues, consumers are harnessing the power and wisdom of the digital crowd. Let’s admit what an exciting picture for the future these trends portray...but enough for now! Until next time, remind yourself every day how amazing you are!
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Magnet by Charlotte Rose
Hello, After reading my remarkable recent articles, I am sure there is no doubt in your minds that Global Shoppers are becoming precious customers for brands in Travel Retail. But how can brands recruit this type of customers? And more importantly, how can they loyalize them? As JCDecaux (2013) recommend, these are invaluable opportunities to connect with Global Shoppers and therefore priceless chances to recruit them as customers:
POINT OF SALE.
Brand messages are very likely to influence at the point of sale - 53% of Global Shoppers have specific products or brands in mind but change their minds and choose something else while in the shop.
GLOBAL AD NETWORK.
Nearly 70% of the Global Shoppers said seeing the
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same ads overseas helps them feel at ease and less disoriented.
OUT OF HOME ADVERTISING. When abroad, 95% pay attention to Roadside OOH advertising and 92% to Airport advertising.
If we listen to JCDecaux (2013), brands should identify key connection points for each nationality (departures, destinations, transit), ensure visibility in the main destination cities and animate the key events PER NATIONALITY (e.g. days around the Ramadan for Middle Eastern global shoppers) and PER DESTINATION (e.g.: the Fashion Week in Paris or London). It is not enough to just recruit these customers. Remember, the goal is to LOYALISE them! For example, at the Point of Sale, brands could:
December 13, 2014
OFFER COMPETITIVE PRICES. After all, this is the reason why 78% of Global Shoppers purchasing in airport duty free shops choose to go there.
DELIVER CONVENIENCE.
77% appreciate this attribute when shopping in duty-free stores.
PROVIDE A WIDE RANGE OF PRODUCTS. This factor influenced 58% of the Global Shoppers to buy from duty free shops.
Of course, this is just an example of one touchpoint in the Global Shopper journey, but there is more than this! If brands want to loyalise the, they really need to keep this in mind: THE MAGNET TO THE GLOBAL SHOPPER IS AN INTEGRATED EXPERIENCE!
for shoppers For a Global Shopper travelling is a seamless experience that takes the form of discovery, emotion and impulse. Brands that accompany the Global Shoppers throughout their journey will becaome an integral part of their experience. JCDecaux (2013) For an integrated experience to happen, brands need to identify top destinations and top connection points for the Global Shopper. For the three key nationalities that I expanded on earlier you’ll find the answers in the following pages.
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Global Shoppers TOP DESTINATIONS
Adapted from JCDecaux (2013)
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Global Shoppers TOP CONNECTION POINTS
Sourced from JCDecaux (2013)
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The travel Hello friends, It’s time to reveal the fact that I consider myself a Global Shopper, because I must admit: I love to shop abroad! Especially to take advantage of duty-free bespoke offers! Plus, I always Google available shops before flying to my destination. After a few shopping sessions in airports and duty-free shops, it came to me that my Travel Retail experience as a customer was somehow different from my usual high-street shopping experience. So let’s see why:
DIFFERENT PURPOSE VISITING. The main reason for
OF
Global Shoppers to enter a duty-free shop is to buy a gift (L’Oréal). If you’re curious to see what the other reasons are and how they’re ranked you can always check the image on the right side.
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retail experience by Charlotte Rose
SHOPPING DWELL TIME.
In the Travel Retail context, brands have almost infinite amount of time to engage with consumers as they deal with a captive audience naturally predisposed to kill time before boarding. Like The Economist (2014) puts it, “once passengers step through the security scanner a “golden hour” begins”.
TAX-FREE nature of the channel. EXCLUSIVE PRODUCT RANGE AND OFFERS. Many brands have developed exclusive products and services specifically for this channel.
CUSTOMIZED MEDIA COMMUNICATIONS. For example, L’Oréal is using a lot of digital in their media strategy to be able to allow adaptability for their communications which are tailor-made by flight, by language and by airport. (Javier Labarta, 2014).
December 20, 2014
TO BUY A GIFT
1
TO BROWSE THE STORES AND PASS TIME
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TO TAKE ADVANTAGE OF AIRPORT PRICES
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IT’S WHAT I ALWAYS DO WHEN I TRAVEL
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TO TREAT MYSELF
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TO BUY AN ITEM FOR SOMEONE ELSE
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TO BUY PRODUCTS FOR WHEN I’M AWAY
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TO STOCK UP ON ITEMS FOR HOME
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Sourced from L’Oréal( 2014)
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Of course, my friends, there is plenty more than this. Another specific aspect of the shopping experience in Travel Retail is the context of travelling that obviously has an influence on this experience. Let’s see why. 96% of Global Shoppers like to do some shopping when visiting a foreign city (JCDecaux, 2013). I do that too! Let’s admit it, people love to buy things from a place they visit - after all it is a memory of you visiting that specific location. And if it wasn’t for this reason, you would still buy a souvenir for the loved ones back home. 83% of Global Shoppers consider shopping as an important part of their trips. Why do you think this is the case? Travellers see holidays as a treat or a reward for working hard all year. This is why all that travellers do is spend quality time wandering around cities, trying the best food, the best drinks
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or going to the best touristic attractions. This is why they shop too! To treat themselves or make someone else happy. And in case they’ve been busy having too much fun at the destination and didn’t have time for shopping or they simply look for exclusive and tax free offers, duty-free shops are there for them! Plus, let’s not forget about another important thing that travelling implies - disposable income. We save hard earned money for holidays - so we need to spend it. Where? In Travel Retail and on things that we want (I always buy perfumes or luxury gift sets for my dear friends). Of course Travel Retail shopping experience is more pleasant than the usual shopping session. Remember, you’re away from your daily routine, relaxed and with enough time (and cash) to spend. How is this called? The shopping mood! …at least for me. I am sure it all makes perfect sense for you too. See you next time!
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THE LOST RELEVANCE PRODUCT
THE VALUE PERCEPTION EASY PRICE COMPARISON
Upgr Hi everyone,
CHOICE
CONFUSION
Because we live through experiences, we will always seek better ones. And this applies to customer experiences too! So judging by customer statements, the lost relevance and the value perception of Travel Retail experiences should be the key things to improve. (TFWA, 2013)
RETAIL
OTHER OPTIONS FOR SHOPPING
As a result, Travel Retail shops should offer a wider range of products that are always the latest launches. The retail stores’ layouts could also be enhanced to avoid the overcrowded and confusing image perceived by customers. To improve Global Shoppers’ experiences in Travel Retail, brands also need to work on enhancing the perceived value of their offering via this channel. Pricing, shopping options and products’ exclusivity are all aspects that could highly improve customers’
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rade
my experience by Charlotte Rose
December 27, 2014
perception about this matter. As you would assume, these are just starting points and there could be other aspects of the retail experience that can be improved in Travel Retail. However, in my opinion, these would be the main ones and would have a high impact power on Global Shoppers’ experiences. Wish you all a better customer experience next time you go shopping in duty free shops! Have a wonderful day!
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LANCÔME LANCÔME
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Meet THE brand Hello friends, Assuming you’ve read my articles, you already know a lot about me. I am a Global Shopper, a loyal fan of beauty brands and a lover of luxury. Hence I decided you should know more about my favourite premium brand in the cosmetics industry. So guess what? This post is all about LANCÔME, as described by L’Oréal of course. It all started in 1935 when Armand Petitjean, visionary and lover of French elegance and women, created Lancôme – ‘THE brand of women’. He wanted his core business to be perfume so he simultaneously launched five great fragrances (Tropiques, Conquête, Kypre, Tendres Nuits, Bocages), as well as a powder (Conquête), and lipsticks. The next year, his chemist Pierre Vélon had a brilliant idea and created Nutrix, a regenerating night cream with a natural serum base, which is still a success today. As soon as Nutrix was created, Lancôme opened its prestigious
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first Boutique, which in 1936 became the Institute. Shortly afterwards, Lancôme decided on its inspirational symbols: lotus for skincare, the cherub for make-up, the rose for fragrances. During its 80 years of glory, Lancôme has become the no. 1 brand in the women selective cosmetics market by offering unique and complementary skin care, makeup and perfume in more than 130 countries. Also, Lancôme is a pioneering brand which keeps writing the future of cosmetics by successfully combining scientific expertise with an intuitive understanding of women’s needs. Loved by everyone, their best-sellers include: Visionnaire, Génifique, Absolue (for skincare), Hypnôse, L’Absolu Rouge, Teint Miracle (for make-up), and La vie est belle, Trésor, Ô and Hypnôse (for fragrance).
The spirit of Lancôme is clearly reflected in its mission - making sure that every woman who comes to Lancôme to be more beautiful, always leaves happier. And as L’Oréal beautifully stated, “today more than ever, ultra-femininity, emotion, joie-de-vivre, happiness and beauty are at the very heart of Lancôme’s DNA”. Lancôme is also about positive beauty. This explains why the brand selects charming and fully accomplished women to be its ambassadresses. Julia Roberts, Kate Winslet, Penélope Cruz and Emma Watson are just some of the lovely celebrities endorsing the brand. The women are all gorgeous icons who love life, but most of all, they are all icons every woman can relate to. “They embody a radiant, confident and universal beauty while keeping modern and down to earth” (L’Oréal). So this, mon chéri, is what Lancôme is all about.
of women by Charlotte Rose
January 3, 2015
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SWOT it by Charlotte Rose
January 10, 2015
STRENGTHS STRONG BRAND IMAGE AND FRENCH HERITAGE L’ORÉAL’S GROUP TRAVEL RETAIL DIVISION RETAIL EXCELLENCE DIGITAL IQ GENIUS
A big hello to all the beautiful people out there!
STRONG FINANCIAL PERFORMANCE
Now that we familiarised ourselves with the brilliant Lancôme in my previous post, let’s have a look at their strengths, weaknesses, opportunities and threats in Travel Retail.
OPPORTUNITIES
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THE RISE OF THE GLOBAL SHOPPER
CHANGING RETAIL SPACE: THE RISE OF THE AEROMALLS
WEAKNESSES LOW RETAIL FOOTFALL AND PENETRATION INSUFFICIENT BIG DATA DIFFICULTIES IN ATTRACTING YOUNGER TARGET AUDIENCES LIMITED BRAND VISIBILITY DUE TO DUTY-FREE SHOPS’ LAYOUTS
THREATS HIGH NUMBER OF COMPETITORS CHANGES IN TAXES AND REGULATIONS SECURITY ISSUES 49
Value your Because I previously revealed the elements of the SWOT quite briefly, I feel I should firstly expand a little bit on the strengths that Lancôme presents.
STRONG BRAND IMAGE AND FRENCH HERITAGE. This is what makes Lancôme one of the most wanted beauty brands worldwide. As an icon for ultra-femininity, French excellence, joiede-vivre, happiness and beauty, Lancôme stands out from the crowded Travel Retail market. Moreover, Lancôme’s identity and origins seduce status-seeking travellers who crave for luxury French products.
L’ORÉAL’S GROUP TRAVEL RETAIL DIVISION. Lancôme is one
of the most powerful brands developing on the 6th continent with the help of L’Oréal’s Group Travel Retail Division, a team dedicated entirely to the Travel Retail channel. Amongst many other key responsibilities, the team is responsible for
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tracking travellers’ flow, examining where and how they live, what media they are exposed to, where they travel and what their favourite products and brands are (The Moodie Report, 2014). All these insights into consumer behaviour gathered by the team provides Lancôme with a competitive advantage.
RETAIL EXCELLENCE. Lancôme’s recent initiatives to reshape the retail experience are just beautiful. One example is The Wonderful World of Lancôme 3D exhibition at London Heathrow T5. The exhibition uses Microsoft’s Kinect movement recognition system that allows travellers to join an “unprecedented journey to the heart of the brand”, showcasing its history and heritage.
DIGITAL IQ GENIUS.
Digital is an integral part of Lancôme’s media strategy. Its outstanding digital competence across Site, Digital Marketing, Social Media, and
Mobile has been rewarded with the title of “Digital IQ Genius”, ranking first in a top 10 of 85 global beauty brands. (L2, 2013)
STRONG PERFORMANCE.
FINANCIAL
Lancôme is the fastest-growing brand out of the top four major players — Lancôme with 21.8 per cent, Estée Lauder with 18.8 per cent, Chanel with 19.9 per cent and respectively Christian Dior with 16.9 per cent (Travel Retail Magazine, 2013). Also, as part of L’Oréal, the historical leader in the beauty category of the Travel Retail market, Lancôme is even more powerful.
strengths by Charlotte Rose
January 17, 2015
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Identify by Charlotte Rose
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January 18, 2015
your weaknesses Right, we’ve discussed Lancôme’s strengths in Travel Retail, now let’s see what weaknesses they’ve got in this particular channel.
LOW RETAIL FOOTFALL AND PENETRATION. Eva Yu, the
Managing Director of L’Oréal Luxe Travel Retail Asia Pacific referred to this weakness in a 2013 interview - “We need to go beyond our reliance on passenger traffic to grow the business. [...] Raising penetration – only 13% in P&C in travel retail – is the opportunity. But unless we take action we will continue to suffer from low footfall and penetration.”
INSUFFICIENT BIG DATA. This is
another key issue that Ms Yu highlighted in the same interview - “Targeting the traveller door by door is not so easy when you are missing information, which we frequently are. [...] We need better information on nationality mix but also common KPIs (key
performance indicators), like average basket size, footfall and penetration by category. [...] Today we don’t recognise our customers when they come to our counters. We don’t have data on them.”
DIFFICULTY IN ATTRACTING YOUNGER AUDIENCES. Lancôme
currently targets women in their 40s (Oh My Luxury, 2014). The same online magazine mentioned that while they rely on their well established reputation, Lancôme aims to rejuvenate its customer base by developing a range of products for younger people. Françoise Lehmann, Lancôme’s CEO commented on this topic and mentioned that “the goal is not to rejuvenate the brand, only to target a wider population of women”.
LIMITED BRAND VISIBILITY due to duty-free shops’ layouts. In most airports, Lancôme boutiques are placed next to their competitors. This acts as a drawback for the brand’s own differentiated image.
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Know
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your opportunities by Charlotte Rose
Hello world! Hope you are all doing great! While I was waiting to board my flight back to Paris, I remembered I still have to talk you through the opportunities and threats emerging for Lancôme in Travel Retail. Let’s start with the opportunities:
THE RISE OF THE GLOBAL SHOPPER. Inhabitants of L’Oréal’s 6th
continent - professionals, occasional tourists or frequent travellers, are characterised by their love for shopping and aspiration for luxury and beauty. More and more travellers associate travelling with shopping, especially with the raise of the middle class and democratisation of travel in emerging zones of China, Russia, Korea and Brazil.
January 19, 2015
CHANGING
RETAIL
SPACE
and implicitly the rise of the aeromalls. The business model of airports and other dutyfree locations is changing - airports are now becoming big shopping malls, opening up more opportunities for brands to deliver better retail experiences. As Eva Yu(2013) says, the airport-retailer-brand relationship could work better: “We all have our part to play but airports have the power to help turn travellers into shoppers by making the airport a destination in itself. The retailer too has a role in creating the alluring environment that will entice passengers in, and brands have their role in assisting them with great products, merchandising and service.”
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Beware Obviously, we always need to be aware of the threats! So let’s see what’s threatening Lancôme in Travel Retail...
HIGH NUMBER COMPETITORS. More
OF
and more beauty brands recognized the power of Travel Retail and turned their attention to this channel (even I noticed the variety of brands while waiting for my flight to Paris!). As you might know, L’Oréal is a pioneer in this distribution circuit, but predictably, its competitors followed them. Sooner or later, more brands will start doing the same and this could represent a threat for all the beauty brands, and certainly for Lancôme.
CHANGES IN TAXATION AND REGULATIONS.. Fluctuations in local taxation rates, in particular VAT and excise duty, can have a profound impact on the duty-free market. Also, restrictions on the amount of duty-free that can be brought from one country to another (customs allowances)
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of the threats by Charlotte Rose
January 20, 2015
varies significantly and limits the potential for the duty-free market (Passport, 2012).
SECURITY ISSUES.
As airports are extremely busy areas, they can be easy targets for criminals. Thus, unexpected fatalities such as 9/11 can have a major impact on the duty-free shops. Summing everything up, I am sure that my last few articles managed to display a clearer picture of Lancôme in Travel Retail. But until next time, don’t forget to stay calm and read my blog!
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THE FUTURE
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Stroke of genius by Charlotte Rose
January 27, 2015
Last night I had a very exciting dream about the future. It was of course, related to shopping, but my shopping experience was just ‘something else’ and the surroundings were the definition of innovation. This made me think about how consumer trends change over time and as soon as I woke up I decided to do something new today: I will create my own consumer trend! Hence, I turned to Trendwatching and designed my own trend by carefully going through all the steps included in their Consumer Trend Canvas. However, I have to admit, my favourite bit was the final stage – naming the trend. So I wrote down the top 5 attributes that consumers of beauty products in Travel Retail expect from their experiences – Bespoke, Luxurious, Innovative, Sophisticated, and Special. And now I will let you enjoy my beautiful canvas on your left hand-side.
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A glimpse into the by Charlotte Rose
I bet you are already in love with my trend idea. And I bet travel retailers will be ecstatic about the new wave of Bliss Seekers inundating their stores. So airports will need to be prepared and take retail spaces to the next level as they become aeromalls or as others call it, an aerotropolis (Insight Media, 2008).
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I am saying this because I think the airports of the future will be smaller versions of the world’s largest cities. In addition to the variety of stores available, the aeromalls will include facilities such as health resorts and theatres, theme parks and hundreds of hotels and apartments. For instance, Singapore Changi already offers cinemas, saunas, and a tropical butterfly forest
February 5, 2015
future (Insight Media, 2008). Or you can think of the Haitang Bay Shopping Complex, owned by the China Duty Free Group, which is the world’s largest duty free mall (Trendwatching, 2014).
Otherwise, simply look at this cutting-edge design project for the Mall of the World in Dubai, set to be the world’s largest shopping mall. You should now understand exactly how I imagine the things will be in 10 years’ time. So friends, there will be plenty of space and opportunities for brands to give their best and satisfy Bliss Seekers by delivering unforgettable retail experiences.
As you would expect, I know exactly what beauty brands should do to offer memorable Travel Retail experiences. Think innovation, personalisation, sophistication and Lancôme. It’s going to be BLISSFUL! But I’ll reveal this stroke of genius when the time comes and only to the most loyal fans of my blog. So prove you’re loyal and you crave for more of my posts, and you’ll find out
the big idea…
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References Brand Finance (2013). Global Top 50 Brands 2013. Retrieved from http://www.brandfinance.com/images/upload/cosmetics_2013_spc.pdf Davitt, D. (2013). The Moodie Report Interview: L’Oréal Luxe Travel Retail’s Eva Yu. Retrieved from http://www.moodiereport.com/document.php?doc_id=35524 Estée Lauder Companies (n.d.). Company website. Retrieved from http://www.elcompanies.com/ Insight Media (2008). Airport Cities: The Evolution. Retrieved from http://aerotropolis. com/files/evolutionChapter1.pdf
Passport (2012). The Evolution of Duty-Free Retailing: Past, Present and Future. Euromonitor International Passport (2014). Estée Lauder Cos Inc in Beauty and Personal Care (World). Euromonitor International Passport (2014). L‘Oréal Groupe in Beauty and Personal Care (World). Euromonitor International
JCDecaux (2013). Global Shopper Connection.
Passport (2014). LVMH Moët Hennessy Louis Vuitton SA in Beauty and Personal Care (World). Euromonitor International
JCDecaux (2013). Global Travellers are Global Shoppers. Retrieved from http://www. jcdecaux-oneworld.com/2013/11/global-travellers-global-shoppers/
Passport (n.d.). Brand Shares (by Umbrella Brand Name) in Premium Beauty and Personal Care - World. Euromonitor International
L’Oréal (2014). Brandstorm 2015 - L’Oréal Travel Retail. L’Oréal 2015 Resource Pack
Passport (n.d.). Company Shares (by Global Brand Owner) in Premium Beauty and
L’Oréal (2014). L’Oréal Travel Retail Presentation. L’Oréal 2015 Resource Pack
Personal Care - World. Euromonitor International
L’Oréal (2014). Lancôme heritage. L’Oréal 2015 Resource Pack
Rozario, K. (2012). Beauty Report 2012. Retrieved from http://www.trbusiness. com/?option=com_content&view=article&id=11734:beauty-report-2012&catid=44:category-reports&Itemid=51
L’Oréal (2014). Travel Retail - Press review best-of 2013-2014. L’Oréal 2015 Resource Pack L’Oréal (2014). Travel Retail Specificities. L’Oréal 2015 Resource Pack L’Oréal (n.d.). The “Global Shopper”. Retrieved from http://www.loreal.com/beauty-inluxe-in-china/travel-retail/the-global-shopper.aspx L’Oréal Group (n.d.). Company website. Retrieved from http://www.loreal.com/ L2 (2013). Beauty 2013 - Digital IQ Index. Retrieved from http://www.l2inc.com/research/beauty-2013 LVMH Moët Hennessy - Louis Vuitton (n.d.). Company website. Retrieved from http:// www.lvmh.com/ Nuance. (2014). Perfumes & Cosmetics | Tax Free Store | Duty Free Store. Retrieved from http://www.thenuancegroup.com/our_concepts/duty_free_departures/ perfume___cosmetics/ Oh My Luxury (2014). Targeting younger consumers, Lancôme’s new objective. Retrieved from http://ohmyluxury.com/lancome-cosmetics-lupita/ Passport (2005). The Global Duty-Free Market: Opportunities and Threats to 2010.
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Euromonitor International
Sfez, M (2012). Comment: Understanding the Globe Shopper. Retrieved from http:// www.retailgazette.co.uk/articles/43400-comment-understanding-the-globe-shopper TFWA (2013). The Duty Free Non Visitor / Non Shopper. Retrieved from http://www. tfwa.com/duty_free/fileadmin/user_upload/ap/presentations_2013/AP2013-Garry%20 Stasiulevicuis.pdf The Economist (2014). Airport shopping - The sixth continent. Retrieved from http:// www.economist.com/news/business/21601885-battle-catch-people-golden-hour-theyboard-getting-ever-more Travel Retail Magazine (2013). Retail Excellence. Retrieved from http://travelretailmagazine.com/beauty-fragrances/retail-excellence-1.1240262 Trendwatching (2013). Asian Consumer Trends. Trendwatching (2014). May 2014 Trend Briefing - Consumer Trend Canvas. Retrieved from http://trendwatching.com/trends/consumertrendcanvas/ Trendwatching (2014). Trend Report 2014.
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Appendices Appendix A – Duty-Free Cosmetics and Toiletries as Percentage of all Retail Sales 2004
(Source: Passport, 2012) Appendix B – Passport (2012) - The Trinity: Roles and responsibilities in duty-free retailing
(Source: Passport, 2012)
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Appendix C – Duty-Free Cosmetics and Toiletries as Percentage of all Retail Sales 2004
(Source: Passport, 2005) Appendix D – Global Retail Market for All Cosmetics and Toiletries by Sector 2004
(Source: Passport, 2005)
Appendix E – L’Oréal Groupe: BPC Presence 2013 and Growth Prospects 2013-2018 by category
(Source: Passport, 2014) Appendix F - Estée Lauder Cos Inc: Premium BPC Presence 2013 and Growth Prospects 2013-2018 by category
(Source: Passport, 2014) Appendix G – LVMH: Premium BPC Presence 2013 and Growth Prospects 20132018 by category
(Source: Passport, 2014)
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