Asia-Pacific is increasingly the focus for the travel-beauty retail sector as the region experiences some spectacular sales growth.
Shiseido Travel Retail president and CEO Philippe Lesné revealed the region would play a key role for the brand’s expansion plans, in an interview with Cosmetics Design-asia.com.
Perhaps not surprising, when current forecasts suggest the beauty sector will represent a potential market of $26 billion by 2021.
Lesné said Shiseido Travel Retail recorded year-on-year sales growth of 42% in the third quarter of last year, and the company has said it’s aiming for sales of $900m in sales by 2020.
Success in the region is mainly coming from a rekindling of enthusiasm for Asian cosmetic products, particularly Japanese brands – interest which is especially strong from Chinese consumers.
And Shiseido isn’t the only brand experiencing such success. L’Oréal, too, saw some impressive growth in 2018 – the company says the strong performance of its travel retail division was a key driver of like-for-like sales growth of 24.1% in the region for L’Oréal as a whole, DFNI-Frontier reported.
The brand’s Luxe portfolio especially benefitted from strong sales in travel retail, the company said, adding that it was strong in Asia Pacific, particularly in China, where growth was double-digit.
The key to Shiseido’s travel retail growth, Lesné said, would be to focus on millennial travellers, travel retail exclusives (TREX) and digital innovation. He added that TREX will continue to grow as part of the brand’s travel-retail portfolio, as many travellers continue to see duty-free shopping as a chance to make a purchase with a difference.
L’Oréal, though, freely admits the travel beauty sector could be reaping the benefits supplied by downturns in other sectors.
CEO Jean-Paul Agon told CNBC, “It’s the famous ‘lipstick effect’ – sometimes when people spend less on expensive items like cars or buying apartments, they have more available income and they like to indulge themselves with beautiful products. It could be absolutely positive for us.”
One of the key challenges going forward, not only for the travel-beauty sector, but the whole of travel retail, all observers agree, is digitalization. And, in particular, the potential challenge presented by online e-commerce giants such as Alibaba and Amazon.
Late last year, China Duty Free Group, the country’s largest travel retailer, partnered with Alibaba to develop what it described as a “strategic cooperation” to build a “new tourism retail ecosystem”.
The potential is there, as Drinks International reported, to combine the huge purchasing power and customer knowledge of an e-commerce giant with a mobile-driven platform, bringing into play such options as buying out-of-store on a smartphone, and collecting later in duty-free zones.
Sourced from Cosmetics Design, DFNI, Drinks International; additional content by WARC staff