L’Oréal dedicated its traditional Cannes press conference to a celebration of the company’s 40 years in travel retail, since creating L’Oréal Luxe in 1977. Following an introduction by Vincent Boinay, L’Oreal Travel Retail Managing Director, the beauty giant followed with presentations from senior executives from each of its geographic zones: Yannick Raynaud, Managing Director of Travel Retail Americas; John Mangan, MD of Europe, Middle East & Africa; and Emmanuel Goulin, MD of Asia Pacific.
L’Oréal has long designated travel retail as a “6th continent” and its Travel Retail division places travelers at the heart of this 6th continent with the aim of providing them with exciting shopping experiences through consumer-centric retail, premium offers, exclusive gifts, retailtainment and expert beauty advisors, says the company.
The beauty giant has long considered Travel Retail as a key channel for winning new consumers, said Boinay.
In a review of the 40 years, Boinay discussed what he calls the most balanced and most relevant portfolio dedicated to travel retail in the industry, a portfolio that ranges from luxury to mass market, and now includes dermocosmetic wellness brands like Vichy and La Roche-Posay, and hair care like Kérastase. These brands highlight the strength of the L’Oréal portfolio in travel retail, said Boinay, and are among the reasons why L’Oréal is the “undisputed” leader in the industry.
Travel retail targets the global shoppers that inhabit this “6th continent”, with special attention dedicated to emerging markets, which now account for 50% of sales. Travelers from China, Korea, Brazil and Russia are key drivers behind the market’s dynamism, as are millennials and the emerging middle class. Forecasts estimate that 3.7 billion passengers will take a flight in 2020.
Among the mega-trends discussed by Boinay, Chinese travelers are of special interest—with 180 million Chinese travelers expected by 2023. Millennials are especially important for L’Oréal since they are beauty addicts and they are greatly influenced by all manner of social media. Another trend to watch is the growing interest in beauty products from men.
“If we want to be successful in the future, we must connect with all these trends in beauty,” said Boinay, who touched on Click & Collect (“we must be obsessed by convenience in travel retail”) as one way to increase instore penetration.
With the very best stores only reaching a 15% penetration rate, and most stores at only 10% penetration, that means that 85-90% of passengers are not buying any beauty products. This represents an immense potential, he said.
“All the fundamentals are in place: from international traffic to connecting to customers through digital. We must give the customers what they are looking for, what they need; the products and the categories,” he said.
Environment and sustainability
Boinay also stressed the importance of environmental protection and sustain-ability. “Sustainability is a crusade for our company,” he said, pointing out two concrete examples of L’Oréal’s commitment to this concept. First, he said, 80% of the retail design in its booths in Tax Free 2017—which cover the entire 5th and part of the 6th levels of the Palais de Festivals, is either recycled or reused, and 67% of the booth materials are sorted and recovered by the Palais.
Second is the company’s carbon balance project. L’Oréal’s travel retail staff number around 700 people, many of whom travel extensively. This travel produces carbon emissions equivalent to 900 soccer fields.
L’Oréal Travel Retail is involved in a reforestation project that offsets 100% of the carbon dioxide produced by its travel retail business trips. The program comprises 400,000 hectares of agroforestry, reforestation and forest conservation projects taking place in Honduras, Peru, Colombia, Morocco and China. World transport generates about 20% of global carbon emissions.
Discussing the various regions, Boinay said that travel retail sales are bouyant and L’Oréal is gaining market shares in all regions, but its efforts to do something meaningful to protect the environment in all regions makes them particularly proud.
Europe is back
John Mangon, MD of L’Oréal TREMEA, kicked off his presentation on a high note saying that the business in his region “is back” this year after a difficult 2016. But the market is changing, in part due to the increased flow of low-cost airlines, which is leading to the increased ‘democratization’ of travel across Europe. Russians and Chinese are traveling to Europe again, they are spending and they are spreading out to more destinations. This has led to a new customer, but with 88% of travelers connected with smart phones, it is a customer with access to more information than in the past.
The color explosion in travel retail is the most significant development in that region along with the development of premium collections.
Skincare is also developing strong customer engagement. Haircare is another new frontier to connect with customers.
The goal is to ensure that travel retail stays relevant, he said.
Rise of the Latin beauty spend, new brands launch
Yannick Raynaud, MD, L’Oréal Travel Retail Americas, spoke about the rise of the Latin American customer as a top spender in beauty. Chinese and Brazilian travelers are tied as the top spenders in the Americas.
Latin America is back but the customer has dramatically changed. Despite steady passenger growth of 5-6% per year, spend per passenger has been lackluster, she said.
“So our core obsession has been to increase penetration,” she added.
To do this, L’Oréal is focusing on increasing consumer engagement and broadening its portfolio in order to appeal to its diverse passengers.
To illustrate these trends, Reynaud spoke about the stunning Lip Art Academy it held at Los Angeles International Airport this summer, which resulted in a high conversion rate and recruited new consumers to the brand. A Kiehl’s skincare activation in San Francisco International airport generated double digit growth, and will be expanded to airports in other cities. Both of these projects had a strong digital component, she said. The introduction of Kérastase in airports in cities such as Buenos Aires is also attracting great excitement and significant customer engagement and has propelled the brand to the #3 spot in haircare in travel retail.
Broadening the product portfolio, L’Oréal announced the launch of the first travel retail boutique for NYX Cosmetics, which is opening at JFK Airport T4 by the end of the year.
Raynaud also confirmed that L’Oréal is opening its first boutique for Atelier Cologne — the premium giftable fragrance brand it acquired last year — in Vancouver airport in December.
Emmanuel Goulin, MD of Asia Pacific detailed the strong growth that L’Oréal is experiencing in the dynamic region, which is outpacing the growth in air traffic, much of which is driven by strong makeup sales.
The L’Oréal business in Asia Pacific is strongly connected to social media and a new series of events from Lancôme Paris, called ‘Declaring Happiness’ are rolling out in five destinations – Seoul, Changi, Bangkok, Haitang Bag and Hong Kong – in the next three months. LP