RETAIL DUTY FREE
“To manage social distancing, consumers are using digital to connect, entertain and shop,” L’Hostis tells Cosmetics Business. “We saw a surge in livestreaming by retailers and social e-commerce. These innovative ways to shop have helped bolster sales for both international brands and local businesses.” She stresses that travel retail will have to step up its game in this respect, asking: “How are we going to create value in travel retail in the next three years? How can we include the travel experience within our domestic omnichannel strategy?” L’Occitane itself is “shifting from strict opportunistic
in-store selling to an omnichannel and CRM [Customer Relationship Management] approach”, explains L’Hostis. This omnichannel transition, she says, presents the perfect opportunity to better share information and data between online, in-store and travel retail, to constantly adapt and stay relevant to travellers under all circumstances. “With consumers spending less time shopping in airports following Covid-19, digital can also help us to explore untapped opportunities,” she adds. “Initiatives are already in place within this evolving digital environment and L’Occitane is already part of this journey in travel retail. “We’ve launched more than ten social-selling projects so far (mainly livestreaming in APAC) and have more than ten upcoming, including test and learn projects in EMEA and the Americas. We are also working in close partnership with retailers to increase our presence online and on social media. We are ready to listen to opportunities on innovative digital projects.” Moreover, from a launch angle, L’Occitane has used this unplanned travel retail ‘downtime’ strategically. As L’Hostis explains: “While travel retail has slowed down, we were rethinking our approach to deliver a stronger sense of place and a dedicated traveller offer. “The perfect example is our ‘Destinations’ campaign: a collection of three exclusive products and 28 exclusive illustrations that will only be available in duty free areas, designed by the British artist Ruby Taylor.” The 2020 gifting season will see L’Occitane launch ‘Destinations’ travel retail exclusive products, for example a travel-oriented advent calendar, only available in airports and on cruises. “Unlike your usual advent calendar, this original box will make the passenger’s experience a 24-day Provencal World Tour, starting in Asia, going through the Americas, the Middle East, Europe and ending in Provence,” says L’Hostis. “They will discover 24 beauty treasures – only bestsellers – with two full-size products.”
“Our future is highly digital, and very focused on China
While the Covid-19 crisis has certainly been an unhoped for antagonist in the story of travel retail, L’Hostis notes that it has created “a chance to reset and emerge with business models that are mutually supportive, collaborative and financially viable”.
THE RECOVERY With Covid-19 vaccines from Pfizer, Moderna and Oxford AstraZeneca all demonstrating strong trial results, airline stocks are experiencing a bounceback, all of which bodes well for the travel retail and duty free world.
60 December 2020
L’Occitane is making the evolving digital environment part of its travel retail strategy
Nevertheless, Beaute Luxe’s Dayan believes that, because the reopening of airports, cruises or border shops will be done gradually and according to each country, it will “take several years for brands to return to the 2019 levels of revenue generated in this sector”.
Luxury brands and distributors will have to work on new distribution concepts for travel retail, he adds: “I think we need to focus on specific product offerings that are exclusive to duty free shops and what we call ‘good deal for value’ offers. Since the start of the pandemic, we have seen a real increase in sales in the stores we call ‘downtown duty free’ and at our border stores. Clearly, we are going to have to review all our offers in this market so that travelers gain a real interest in making their purchases in duty free stores.” Also central to the eventual recovery of the sector is reassuring travellers and staff that they can safely and confidently visit and work in shops. In June, says Branquinho, DFWC produced a set of protocols for the recovery of retail operations with input from over 300 industry stakeholders. “Many retailers and brands are also providing guidelines and training for their staff specific to locations or to product categories,” she tells Cosmetics Business. “All these efforts will ensure the duty free and travel retail environment is as safe and welcoming as possible for shoppers and staff.”
BREXIT OPPORTUNITY?
It would be naive to assume that Covid-19 is the only factor currently influencing the world of duty free and travel retail; Brexit, for example, could provide positivity in the long term – pending certain decisions by the UK government. “Brexit represents an important opportunity for our industry as duty and tax free sales to travellers from EU countries to the UK will be permitted from 1 January next year,” explains Branquinho. “The extent of the impact is difficult to quantify in the current climate, but in the longer term this will be a significant boost to the industry. “Similarly, duty free sales to travellers from the UK to the EU will also be permitted from 1 January. But any benefit to our industry that might have accrued from such a move will be more than wiped out by the proposal from the UK not to extend VAT-free sales to EU-bound travellers from the UK, and furthermore to remove existing VAT relief from sales to passengers leaving the UK to travel to international destinations.”
While the immediate future for duty free and travel retail will be bumpy, it’s still an avenue in which beauty brands are investing – albeit with greater emphasis on omnichannel strategies to bolster visibility and purchase opportunities. If the global community can get Covid-19 under control in 2021, there’s no reason why duty free and travel retail cannot soar to dizzying heights once more
cosmeticsbusiness.com
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