PARIS--For cosmetics manufacturers and airport retailers preparing for the Oct. 24 duty-free convention in Cannes, the buzzwords will be promotions, price points and user-friendly stores. Once reserved for major department stores only, airport sales events have come of age and would make even Bloomingdale's jealous. These promotions take several forms. In September, Chanel took over the windows in duty-free cosmetics stores in the Charles de Gaulle Airport in Paris and at the Copenhagen airport. Two weeks ago, Parfums Yves Saint Laurent went one step further by setting up a 200-square-foot shop offering its full range of fragrances and cosmetics in Amsterdam's Schiphol Airport. The boutique, which will be taken down after a month, is designed primarily to promote the YSL name. It was the latest in a series of temporary shops put up by beauty companies in Amsterdam's West Terminal this year. "The operators have witnessed stagnant sales and they're exploring new ways of revitalizing their business," said Marc Matoussowsky, sales director for duty-free in Europe at Sanofi Beaute. All of the cosmetics brands are interested in catching the eye of the 800,000 people who will pass the YSL shop during the month, according to Schiphol's purchasing manager Bobo Lajovic. The duty-free operators also say they're interested in extending their price range beyond the usual upscale merchandise by adding mass market products. That's good news for L'Oréal and Revlon, which have been pushing hard to get their lower-priced goods into the airports. Meanwhile, the look of airport shops is evolving. They're becoming bigger with more self-service and that means brands must adapt their merchandising systems to fit the new environment. All these changes reflect the need for the duty-free business to become more aggressive in reaching out to shoppers and in luring new, price-conscious travelers into the stores. Last year, duty-free sales of fragrances and cosmetics reached $4.15 billion, just over 6 percent of the $65 billion in total industry sales, according to Swedish Generation Publications, the leading duty-free market research group. In 1993, duty-free cosmetics sales were up 6.4 percent over 1992, Generation said. In recent years, the five-day Cannes extravaganza--the largest duty-free convention in the world and the premier showcase for cosmetics--has wrestled with troubling regulatory issues, like spending limits and the tax-free status of the retail outlets. Those questions have been addressed. The governmental limit on duty-free purchases by European travelers was doubled last year and the tax-free status of the outlets in Europe has been preserved until at least June 30, 1999. However, hanging on to the right to sell without tax--the traditional linchpin of the duty-free business--is proving not to be the complete solution that it once seemed. Widespread discounting in local markets allows downtown shops to undercut prices at the airport. "Price is not the first thing to talk about any more," said Arnaud Delattre, chief executive officer of Saresco, France's largest duty-free operator, with 58 airport shops. In-store promotions--extravagant events similar to those organized by leading department stores--are getting more sophisticated. At L'Oréal's Parfums et Beaute International & Cie, international duty- free marketing director Claire Garraud agreed that promotions are becoming more essential. "Of course they're not for every airport, only the big, heavily trafficked ones," she said. "But the big sales points must be animated just like major department stores." Not only has PBI organized airport events in 1994 for its big launches like Cacharel's Eden in Europe and Ralph Lauren's Polo Sport in North America, but it's also devoted resources to an Anais promotion in London's Heathrow and Gatwick Airports. "For the promotion to be successful you must have a hard core--a gift or a special offer," Garraud said. In Asia, PBI did a gift-with-purchase in two dozen airports for Ralph Lauren. A corner of the spacious boutiques was decorated with Lauren trappings and customers were offered a big Lauren bag for the purchase of three products. "Sell-through of merchandise increased by 135 percent overall [in those doors]," she said, adding that the sales boost continued after the event ended. But price promotions and gwp's are not the only answer. "Increasingly, there are different kinds of travelers," said Sanofi's Matoussowsky. "While price promotions work for the charter travelers, what may attract the less price-conscious business traveler are extra services the retailer can provide." He said shop operators have been discussing different options with the luxury goods companies, including gift wrapping, more complete assortments and stepped-up training for salespeople. A major new option for airport retailers are cheaper mass market product assortments. Last year, L'Oréal's mass market division stole the spotlight at Cannes with the announcement it would introduce products into 300 airport shops before the end of 1994. Duty-free manager Gil Leurent says the division has nearly reached its goal and now aims to be in 500 doors by the end of 1995. Although prestige products tend to perform fairly similarly across geographic regions, what types of items do well among mass market products varies, according to Leurent. For example, Studio Line and Plénitude have performed best in European airports. But sales of hair coloring products are slow. However, the hair color category has been a leader in the Mideast, where Leurent said local products are considered unreliable. He noted that the ability to present a full range of products has become a key to the business. Therefore, display units are more important. The need for bold, well-conceived display fixtures cannot be emphasized enough, Leurent said. L'Oréal has developed several display unit designs to accommodate the quick rotation of products in airports and the tight space limitations. Meanwhile, Revlon has made a major push to open up what it dubs a "bridge market" in duty-free. Lori Glass, vice president of international marketing services, said value-priced lipstick packs featuring an assortment of colors had sold particularly well. Generally, she said, Revlon's Asian duty-free business focused on gift-buying, while in Europe, customers were often shopping for themselves, sometimes buying items they forgot to pack. Revlon has tested promotional activities in duty-free and will be looking to do more. In fact, in Cannes, the company will show Revlon Imaging, a machine that allows customers to try out different looks, to operators looking for new ideas.
Hermès is launching a Laundromat pop-up shop in NYC - dubbed Hermèsmatic - where customers can bring their old scarves to be dip-dyed by an expert. Get all the details on WWD.com. #wwdnews (📷: @donstahl)