SINGAPORE — The Asia- Pacific leg of the Tax Free World Association Conference was held at the Marina Bay Sands casino-resort here from May 13 to 16, but the focus of beauty executives was almost entirely on China.
“In travel retail globally, Chinese are the number-one [customers] for perfume and cosmetics,” said Eva Yu, managing director for L’Oréal Travel Retail in Asia.
Many beauty executives said that despite slow growth in the Chinese economy — retail sales there increased by 12.4 percent in the first quarter of 2013, down from 14.8 percent year-on-year — their businesses were still on track.
“I cannot disclose numbers, but quarter one is still positive,” said Luciano Bertinelli, chief executive officer of Ferragamo Parfums. He attributed much of the growth to Signorina, the label’s flagship women’s scent.
“Quarter one has been very dynamic,” agreed Yu.
Some of the talk at the conference, however, was about the opportunities retailers were missing.
A report on “non-shoppers” at travel retail outlets that was presented to the conference by Garry Stasiulevicuis, founder of Counter Intelligence Retail, a research consultancy, noted that 52 percent of regular international travelers never entered duty-free stores. The report said that Asian customers had little intent to browse such stores because of poor product selection and distractions from services like free airport Wi-Fi.
Bertinelli also noted that only about 1 percent of Chinese use fragrances, as compared with 70 percent of Europeans. “That’s a huge gap that we need to cover,” he said.
Some of the strategies used to target Chinese travelers are well known. About 70 percent of L’Oréal Travel Retail’s Asia Pacific sales advisers speak Mandarin, and the company regularly pegs promotions to holidays when millions of Chinese travel. Staff members are also trained to discern whether customers come from first-tier Chinese cities like Shanghai and Beijing, or from other locations. Visitors from non-first-tier cities tend to have less experience with luxury brands, and staffers are trained to then introduce them to best-selling products.
One less-covered area that is seeing substantial growth is the male beauty market.
“There are more men than women in airports, which gives us fantastic opportunities compared to other beauty stores,” said Yu, noting that L’Oréal’s labels like Armani and Biotherm Homme were among the top brands in the male skin-care and fragrance markets. However, she noted that male customers were challenging to reach.
“They don’t necessarily come to us, so we have to make sure we’re visible and approach them,” she said. For instance, Biotherm Homme products are often posted at the entrance of airport stores.
Bertinelli noted that while about 70 percent of the global perfumes market was dedicated to women, males constitute more than 35 percent of Chinese sales, a trend that he expects other countries to follow. Ferragamo launches its new Acqua Essenziale men’s scent there in fall.
Alongside perfumes, much of the exhibition showcased skin-care products.
“The number-one motivation for Chinese consumers is skin care,” said Yu, who said that Lancôme had been doing especially well because of the label’s technical prowess — it has been honored more than 140 times by industry groups — and its “French aura.” She added that growth for the YSL beauty brand last year was in part due to the 2011 introduction of its Forever Youth Liberator line. “The full impact came last year and we felt it very strongly,” she said.
One label planning to roll out a new skin-care line is Milan-based Collistar, which has plans to launch in Singapore and Indonesia soon. It will release Special Essential White, a line that includes a cleansing lotion, whitening essence and bust-firming gel, later this year. “This line took two years to make and we’re focusing on Asia,” said Simona Sangalli, company export area manager.
The Chinese customer is famously logo-conscious: The fact that 55 percent of travel beauty sales are for gifting purposes makes packaging uniquely important.
“It is important [to Chinese consumers] that everything is made in Italy, even the cap and the glass,” said Bertinelli. “There is extra cost because we control all the details.…But they want something that has an iconic link to the Ferragamo DNA.”
For those who cannot command instant recognition, product selection is especially key. Later this year, Inter Parfums Inc. will launch Place Vendôme, a new fragrance for the French jeweler Boucheron. The company said that the fresh top notes of the scent — primarily citrus and spices — go down well with customers in developing Southeast Asia, which the company is targeting with the fragrance.
“Europeans are familiar with centuries of fragrance usage, but [Southeast Asians] want something springy and not too heavy….Sweet notes are difficult in hot weather,” said Marine Obin, Inter Parfums’ regional marketing manager.