THE BEAUTY REPORT: CHANEL Chanel remains the core beauty pillar
Few beauty brands continue to be ‘must-have’ draw cards for duty free and travel retail operators, but Chanel is still right up there as it mostly continues to pick the airports where it wants to be, rather than the other way
round...Doug Newhouse reports.
T
here was ‘quite a stir’ back in 2012 when Chanel decided it no longer wished
to participate in the inflight duty free market. After all, it was one of the few
brands in duty free and travel retail at that time to have a retail sales value of more than a billion dollars and the ramifications for the inflight business – itself only worth around $2.5bn a year at that time – were serious. TRBusiness predicted entirely
correctly at that time that the repercussions would be very serious for many airlines, even though Chanel’s departure opened up multiple opportunities for competitor brands which have since filled the gap. What was almost as interesting
as Chanel’s decision to depart from inflight was the reaction by some of the airlines however, with some seemingly suggesting that it was somehow ‘wrong’ for the premium perfume house to make such decisions without consulting them. This was, of course, the end of
lesson number one for many of these airlines, as Chanel characteristically declined to give any reasons publicly why it was departing. At that time the French brand’s
beauty sales in DF&TR were estimated to have been worth around US$1bn in 2010, according to Generation Research – or roughly 8% of the entire DF&TR beauty business in that year. Put another way, without inflight
which accounted for less than 6% of the beauty giant’s overall DF&TR sales, Chanel still retained its ‘billion dollar brand’ status through its last inflight year in 2012, even though the effect of the withdrawal was more prominent in the Asia Pacific region. The fact Chanel has since stuck to
its guns and never gone back to the channel certainly says more about the lack of prestige it perceived in the trolley-driven galley environment,
JUNE 2017
plus the high cost of business and how this reflected on its image within the more profitable ground shop environment. It was also nothing personal,
since it was only three years later that it also withdrew from Incheon International Airport after it was unable to agree terms to operate exclusive Chanel-only boutiques.
Chanel remains ‘choosey’ The relevance of all this today is that Chanel remains as ‘choosey’ about preserving its prestige retail environment as it did five years ago and it is even arguable whether its withdrawal from inflight wasn’t another catalyst for simply engaging with its airport and downtown businesses (primarily DFS and more latterly also in South Korea) than ever before. The last five years has seen a
lot more aggressive activity from the beauty brand in the mainline business, with huge developments with Dufry initially in the UK with World Duty Free, Heathrow Airport directly and subsequently with Dufry in particular as it has expanded rapidly around the world. It has also explored more avenues
to expand its business through standalone shops, partnering with retailers such as Lotte Duty Free and Shilla Duty Free in South Korea,
plus Hong Kong International Airport, Heathrow in London, Heinemann in several locations and numerous others. Of course, such is the importance
of Chanel that Incheon International Airport recently went as far as initiating discussions with Chanel (and Louis Vuitton) to ensure that sufficient and suitable space will be available within its new Terminal 2 retail mix – and this is even before any tender has been held, although the winning bidder(s) will still have the first right of refusal. There are few other prestige
brands any retailer or airport company would do that for, which says much for the high regard that top retail organisations and airports have for both the prestige and sheer customer pulling power of Chanel. As such, the brand is also expected
to take centre stage when the Abu Dhabi Airport’s Midfield Terminal Building (MTB) finally opens. «
The last five years has seen a lot more aggressive activity from Chanel in the mainline business, including huge developments with Dufry, Heathrow and Hong Kong airports, Lotte, Shilla, Heinemann and many others…
TRBusiness TRBUSINESS 53
Above: Chanel’s duplex is the most eye- catching luxury unit at HKIA.
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