TRAVEL RETAIL EXECS: WE’RE STILL STANDING
Byline: Brid Costello / Pete Born
CANNES, France — Many executives that came here to the Tax Free World Association meeting expected to find it depopulated, the convention equivalent of ground zero as a result of the Sept. 11 attacks that grounded air travel. Most, however, were surprised by the turnout and by the fact that the business is still standing.
Although the airport-dependent travel retail business seemed to be the hardest hit segment in the beauty industry, those who did attend the convention demonstrated a resilient attitude. “The quality of the people that came here is above the level — we have more time to concentrate on the essentials,” said Harry Diehl, managing director of Gebr. Heinemann.
“I’m not finding it flat,” said Alyson Reilly, director of buying for World Duty Free Europe Ltd. “I’m finding it very dynamic and the industry is rising to meet the challenge.”
The conference, which lasted for five days, attracted 2,961 visitors on opening day on Monday, down 5.8 percent from last year. On Tuesday, visitor numbers increased to 3,586. Over the two days, attendance was down by 11 percent from last year. The number of buyers visiting the show decreased by 9.6 percent from last year’s show to 982.
As an example of the thinned-out attendance, The Estee Lauder Cos. sent only five executives compared with 15 last year — but the quintet consisted of its heaviest hitters: Philip Shearer, group president of international; Fabrice Weber, vice president and general manager travel retailing worldwide, and three area chiefs. “It’s given us an idea for next year — less people, more business,” said Jean Marc Alfandari, managing director of Beauty and Business tracking firm. Overall, he estimates that the travel retail business is down 15 to 20 percent with the hardest hit areas like the U.S. plunging 50 percent in September. For the year, he expects the business to finish at flat to 3 percent down. Beauty and Business was planning to hold a meeting with customers Thursday to extend product categories in makeup, and treatments. And not only was Shearer making his debut here, Eric Henry, formerly international managing director of Guerlain, made his debut as chief operating officer of Beaute Prestige International at this show.
That idea of productivity was also on the mind of Remy Gomez, president of Beaute Prestige International, but he was talking about increased sales to consumers. “The communication we are having with them is deeper and the sales explanation is much more impactful and true to our concept of working with travel retail.”
Although Weber described duty-free as a “dynamic industry,” he also noted that the bombing and the looming recession has hit the convention with a double whammy. “There’s a less festive mood, everyone is reflective and there’s a general lack of joyfulness,” he said.
Lauder gave up the stand it had occupied last year, leaving a poignant sign about the Sept. 11 tragedy. Shearer discussed evolving the business to fine-tune the company’s skin care and makeup offerings in airports — a recent example is a nearly 400-square-foot shop in the Dublin airport with a similarly sized installation planned for MAC Cosmetics.
“This company is the largest player in the high end of the market; it is up to us to make it evolve,” said Shearer, referring to Lauder’s obvious position as the leading prestige market cosmetics maker in the world. “There is the responsibility of making business evolve.”
But that comment drew a wry reaction and gentle jest from Shearer’s longtime comrade at his former company, L’Oreal. Eric Lauzat, managing director of L’Oreal’s Parfums et Beaute travel retail division, asserted that Lauder may have leadership but L’Oreal has market share in the travel retail business — 21 percent to Lauder’s 15 percent.
Lauzat said that L’Oreal’s travel retail business had been chalking up strong double-digit gains prior to the Sept. 11 tragedy and he hopes to finish the year with a gain, perhaps in the double-digits. “The main concern for me is the financial health of the airlines,” he said. “This has been an eye-opener pointing out the importance of the airlines, the airplane makers and the airport business as an essential part of the economy. It is essential that we get it back in order.”
While there was much discussion about who might be missing from the conference, Shiseido showed up for the first time in its 130-year history.
“We’ve been away a long time, but at least we’ve made it,” quipped Shuichi Tanaka, senior vice president of Shiseido Europe S.A. “It’s a very important sector and we’re expanding on a steady base — we’re not in a rush.”
Loewe was also using travel retail to expand the brand at the base of their business. The brand is currently scouting for a location in New York to showcase its leather goods and accessories. The firm made it clear that it’s taking its time to make the right choice. “There won’t be any second chances,” Ramon Sole, managing director Perfumes Loewe SA “It’s a very tough market that has no mercy for losers.” Sole added that he plans to launch a new Loewe fragrance next year.
Bulgari is also making a retail statement with a Los Angeles flagship store in the pipeline. The Rome-based jeweler is also launching a yellow-gold jewelry line in travel retail called Lucea while at the same time keeping a keen eye on the brand’s fragrance business. “We are happy enough with business,” said Francesco Trapani, ceo of Bulgari. “We want to grow our fragrance business because it has great potential for us. Blu Femme was a surprise.”
By far one of the most dramatic presentations at this year’s conference was the unveiling of Anna Sui’s latest fragrance, Sui Love. In an Oriental-style villa tucked high in the rolling hills above Cannes with hundreds of candles blazing, Sui appeared before a giant reflecting pool flanked by dancers to present her new scent which is based on Sixties-style love power. Werner Hofmann, regional vice president of Cosmopolitan Cosmetics, said the new fragrance will be launched in April or May with a four-week exclusive at Isetan department store in Japan. Hofmann speculated that the new fragrance could exceed the high-water mark that was set by Sui Dreams two years ago. Industry sources estimate that could translate into retail volume in excess of $50 million.
The Puig Group is planning the launch of a Carolina Herrera fragrance called Chic. The scent is set to launch in April in the U.S. in about 1,000 doors. Targeting the thirtysomething market, the transparent, woody, musk, floral was created by Firmenich. The bottle, designed by Fabien Baron, is a clear glass rectangular bottle with brightly colored sides that play on the interaction of light on glass.
Beaute Prestige International will hit the travel retail market with a selection of one-shot travel retail exclusives including products from Issey Miyake and Jean Paul Gaultier. Men’s and women’s travel sets containing the L’Eau d’Issey scents and ancillaries will be launched in April. Limited edition Jean Paul Gaultier fragrance coffrets will hit travel retail shelves in September.
One of the high points of the week was the presentation of YSL Beaute’s new fragrance, Nu, by Chantal Roos, who is president and ceo. During an interview she said: “We must support our brands and our customers. If there are less passengers we have to sell more to each of them; that’s what we bring to [retailers].” Of her efforts to revive the eroded YSL brand she noted, “Nobody’s talked about the difficulties; suddenly they’re positive and looking to the future.”
The silver lining was also spotted by Christian Courtin, group president of Clarins. “The positive aspect of all this is that we have to be more creative about things. Things won’t be the same for a long time and so we have to look at the market in a different way.”
Camille McDonald, president and ceo of Parfums Givenchy, was showing off her new Michael Kors and Marc Jacobs fragrances, and keeping one eye on next year when she will have launched her Kenneth Cole scent. McDonald was clearly stimulated by how much she had learned at the show, particularly in the intricacies of presenting American brands to an international audience.
“It forces you to focus on the product because there are vast differences and differences about how signature names are known,” said McDonald. “We’re forced to communicate to them through the product. It’s a good experience.”
McDonald said she wanted to position her American division as an emerging power next year because it will have racked up over $100 million in sales in two years.
Another emerging power from New York was Andrea Robinson, president of Ralph Lauren Fragrances Worldwide of L’Oreal USA. Robinson said she is seriously focusing on duty-free and she is even thinking of creating a special Ralph Lauren product for the travel retail market, perhaps a travel fragrance. “We are starting to do special things. We’re considering doing a travel-oriented fragrance,” she said. Robinson was here to present Lauren’s latest fragrance, Glamourous, and she said that a new men’s fragrance is in development for next fall.
Robinson was very enthusiastic about the strides that L’Oreal’s travel retail squad has been able to accomplish with the Lauren brands.
Jean Pierre Jabart, vice president international at Ralph Lauren Fragrances, was bullish about the brand’s duty-free business. “The growth rate we are enjoying in travel retail is higher than the average growth in our business,” he said.
Hartwig Langer, president of Procter & Gamble Prestige Beaute division, underscored the significance of P&G’s recent acquisitions of the Jean Patou and Lacoste fragrance licenses. Langer said that he planned to leverage the rich heritage and the ingredients story of Patou with P&G’s prowess and technology. The group is still in talks to acquire the Yohji Yamamoto license.
Philippe Benacin, president of Inter Parfums, was showcasing the Celine fragrances at the show and talked about plans to launch a Christian Lacroix masterbrand next year based on Lacroix’s Bazar diffusion label.
He said that the recent Celine launch could generate $4 million and was confident that Inter Parfums could exceed sales forecasts for this year with volume of some $77 million to $78 million at yearend compared with $68 million in 2000. Benacin added that he had no plans to make brand acquisitions in the near future. “We’re happy with this portfolio — we can’t run 20 horses at the same time.” All figures are translated from the French franc at current exchange rates.
Adrian Ellis, owner of Riviera Concepts, hosted a luncheon at a beach club to announce his new relationship with Elizabeth Arden and its chairman and ceo E. Scott Beattie. Arden will serve as distributor and launch the Alfred Sung Shi fragrance in Puerto Rico in January. Riviera concepts is also talking to Arden about becoming the Canadian company’s distributor for its Caribbean and duty- free business. Ellis also revealed that he is working on a new Adrienne Vittadini fragrance and a men’s version of Alfred Sung’s Shi women’s fragrance. “It won’t be called Shi for Him,” joked Margaret Spasuk, vice president of sales and marketing.
Unilever Cosmetics International was celebrating its first Cannes duty-free show as a unified company. The group was showing off its new Max Azria BCBG fragrance and talking about next year’s launch of Lagerfeld Man, a companion fragrance to Lagerfeld Femme. “People say it’s down but for us it’s been busier than ever before,” said Jean Mortier, senior vice president of international.
An old face wearing a new hat was Massimo Macchi, president and managing director of Boucheron International S.A. He plans to revitalize the brand by relaunching jewelry and watches with the support of the brand’s fragrance business.
Several executives made overtures about stepping up the aggression in such an uncertain time, but none was more eloquent than Hans-Kristian Hoejsgaard, president of Lancaster. “We’re hoping to gain market share in a declining market. Building confidence is the industry’s task and Lancaster’s task.”