Exclusive – Star Brands Travel Retail launches China operations with Hainan debut

CHINA. In a major development for Hainan’s burgeoning offshore duty free channel, Star Brands Asia and Bluebell Group today announced the launch of Star Brands Travel Retail, a venture designed to unlock the potential for global brands entering Asia travel retail’s modern-day hotspot.

Star Brands Asia was established in 2009 with a mission to become China’s beauty expert partner for global brands. Through Star Brands Travel Retail, it will work closely with Bluebell Group, which describes itself as Asia’s leading omni brand curator, to offer a range of brand operation and management services for brands already present or seeking to enter Hainan’s travel retail market.

Star Brands Asia has been Bluebell Group’s strategic partner in China for the beauty sector since 2018.

Star Brands Travel Retail will facilitate on the ground operations and navigation of the booming Hainan offshore duty free sector. It will leverage Bluebell Group’s leadership in travel retail and long history of partnership with global brands across ten Asia markets, and Star Brands Asia’s existing brand portfolio, local China experience, team and beauty expertise.

Star Brands Travel Retail’s services include facilitating entry into the island’s leading duty free retailers, control and management of brand image, plus business and promotional activity planning. It will also offer retail management and staff training, digital amplification in China’s increasingly important ecosystem, as well as retail store, counter and pop-up design and production in tandem with local strategic partner Sina Retail & Image.

Star Brands Travel Retail CEO Rob Robertson expressed his delight in entering the Chinese travel retail market. “The opportunity for brands in Hainan is immense, but it is a unique ecosystem that requires excellence on the ground and in coordination with local duty free operators,” he said. “We have a team on the ground and could not be more pleased to provide the catalyst brands need to explode and sustain the growth.”

The Moodie Davitt Report is providing exclusive coverage of this major sector development. Today we feature an interview with Rob Robertson (see below) in which he explains what brands must do to both seize and manage the Hainan opportunity. “The growth is going to be tremendous and there is no time to get in like the current moment,” he says. “We’re ready. We’re here. And we’re dedicated to the brands’ success.”

Next month we talk to Bluebell Group President and CEO Ashley Micklewright and Daniel Mayran, Chairman, Bluebell Korea, and Managing Director, Travel Retail, Bluebell Group about the travel retail, beauty and luxury markets in China and elsewhere in Asia.

Micklewright said that having someone as well-versed in the intricacies of the China market as Robertson will offer critical benefits not only to brands and retailers but to consumers. “When Chinese consumers are going into a store and spending the amount of money that they’re spending on a bag or other products, they expect a certain quality of experience… Chinese consumers will become as demanding if not more demanding than the European consumer is now,” he noted.

Micklewright said that the Hainan market has grown so fast and so big in a short period of time that focus on areas such as training, merchandising and brand image will be critical going forward. Star Brands Travel Retail backed by Bluebell Group will nurture brands as if they were its own, always putting the brand owner’s needs first, he said.

Mayran, one of Asia’s most experienced and respected travel retail figures, said: “The two key priorities in Hainan are recruitment and training. But we have also received many requests from brands who want to talk with us due to the fact that we have such quality management of distribution. This is one of the the major qualities of Bluebell. The brands are confident with Bluebell and want to take advantage of that to upgrade their distribution in Hainan and China.

“Due to Bluebell’s reputation, especially in Korea, but also in Japan and elsewhere in Asia, in Hainan we have retailers asking for help to upgrade the quality of service.”

Robertson said that while beauty is the initial focus, Star Brands Travel Retail will work with partners across all categories: “We’re here for the brands that want to explode the business in Hainan and at the same time are serious about controlling their brand image and their pricing,” he told The Moodie Davitt Report. “We feel that there are a lot of brands in that situation, so we are very optimistic about the future.”

INTERVIEW: Star Brands Travel Retail’s Rob Robertson on the great Hainan opportunity

Prologue: Not many western beauty brand executives know as much about China as Rob Robertson. The Shanghai-based American, fluent in Mandarin, has lived and worked in the country since 1997 when he took on a role as Marketing Director for Clairol China, before becoming General Manager for Matrix China. There he launched America’s #1 salon brand in China from zero to over 10,000 salons.

 After returning to the US for eight years with L’Oréal as VP Business Development, SalonCentric USA, Robertson moved back to China with LVMH-owned Benefit Cosmetics. There he returned the brand to growth, drove an increase in Sephora sales for the brand of over +40%, and successfully launched Tmall.

In April 2009 he stepped out on his own, creating Star Brands Asia, described as a team of Brand Curators focused on building beauty brands in China. Star Brands Asia set out to provide brands with complete solutions to run all aspects of the China business and it is precisely that mission and the associated skillset and resources that the company is bringing to the party, supported by Bluebell (which invested in Star Brands Asia three years ago), in Hainan.

During his years in China, Robertson has led brand management efforts for over 50 brands across every category of beauty. He has been involved with all major online and offline channels including travel retail (CDFG, Sunrise, CNSC), department stores, boutiques, Sephora, niche retail (Beast Shop, SKP-S Select Beauty), mass retail (The Colorist, Watsons, supermarkets), hair and beauty salons, and all leading online channels (Tmall, Taobao, JD, RED, Douyin, Kuaishou and more). Earlier this month Robertson spoke to Martin Moodie about why he considers Hainan among the most exciting opportunities in his career, while Starbrands Travel Retail Brand Manager Maya Wang underlined the company’s digital expertise and talked about how she sees a whole  digital marketing ecosystem taking shape around Hainan travel retail.

The Moodie Davitt Report: Rob, let’s start by setting the scene. Tell us about Star Brands Asia first of all and the relationship with Bluebell.

Rob Robertson: Star Brands Asia, based in Shanghai, has been existing for more than a decade. For the last three years, Bluebell has been an investor in Star Brands Asia.

Star Brands Asia is beauty-focused and the majority of the business is online. That being said, we are having great success with retailers like SKP-S Select Beauty in Beijing, Little B and Harmay and a few other offline channels.

So for Star Brands Asia, the establishment of Star Brands Travel Retail, with the full support and backing from Bluebell, is a natural extension of our vision to provide the best access and the best capabilities for brands to expand and reach luxury consumers in all different channels.

Of course, Hainan is a particularly conspicuous channel in terms of its sheer concentration of luxury consumers. And that’s what really excites Bluebell and Star Brands Asia.

We’ve seen rapid and sustained growth in Hainan offshore duty free since it was created in 2011. But the introduction of the enhanced duty free shopping policy last July really gave the business extraordinary momentum didn’t it?

 Yes, the short-term impacts have clearly boosted Hainan tremendously. But I see this more as a seismic shift and a significant long-term opportunity. What the Chinese government is doing with Hainan is quite amazing.

One thing that we are particularly interested in – and our brands are particularly interested in – is the concentration of luxury consumers coming to Hainan and I’m confident that this will continue. If you look at social media nowadays, Hainan is everywhere. A week ago, there was an influencer conference down in Hainan – it’s all the buzz.

A lot of white collar educated professionals are coming into Hainan. They need a lot more, educated professionals to come and I think the government is aware of that. In our way, we hope to help make that a reality.

So, as you say, this is part of something bigger. It’s not a short-term sales phenomenon driven by the fact that the Chinese can’t travel freely at the moment outside the country – it’s also part of a mega trend about maximising domestic consumption and repatriating overseas spend. So the prize on offer is considerable. What are the biggest challenges for a brand seeking to leverage this opportunity, because I suppose that’s where Star Brands Travel Retail comes in?

I was responsible for the Hainan business with Benefit Cosmetics for a few years. The Hainan market is difficult to manage, even for the big group brands. It’s all about the retail conditions – that includes the staffing, the quality of the consultation that the BAs are able to provide and the visual merchandising. And now, of course, it also includes the digital aspect, which is really quite new everywhere in the world but particularly in Hainan it’s becoming very important.

Until now, Hainan has been a kind of add-on for the brands – a ‘let’s do what we can’ mentality. That has changed. Star Brands Travel Retail with the support of Bluebell intends to bring first-class management capabilities, training, professional KPI management, extremely close monitoring, and visual merchandising, plus brand image and pricing control.

All of these things are essentially new to Hainan but it’s now a major market, and it’s going to become even more so. So we saw the opportunity to step in and make a step change in the quality of management, retail and luxury brand presentation in Hainan.

There are a lot of new retailers on the island, both in Haikou and in Sanya. I guess that puts even more pressure on the disciplines that you talked about.

Yes, some of the new travel retail operators have global partners, whether it’s DFS, Dufry or Lagardère Travel Retail. But essentially the local parties control the business. So what’s needed today is a partner such as us who has penetration and relationships with the local operators as well as the global operators.

“That is probably the reason why I love China so much – it’s always the frontier, and the frontier keeps changing. For people who are willing to make something new, this is really the place to be.”

In many markets such as Macau for example, DFS is DFS and just like in other parts of the world the plans roll through to completion. In Hainan, that is not necessarily the case. What we feel is quite urgent for brands – and existing brands we’ve talked with are very aware of this now – is the need to present and sell and align with global partners as the first step but on an ongoing basis it’s critical to have the relationship, access and influence with the local operators as well.

Bluebell Group has a proud history of relationships with global brands in markets such as South Korea and elsewhere in Asia. How will you approach Hainan in terms of your portfolio?

Step one is focused on prestige beauty. We are busy talking with a variety of brands. There are two types of brands that we see as either needing help or wanting to do better in Hainan. There are the existing non-group brands, that don’t have a huge national sales force and are already in Hainan. For those existing brands, we feel we can significantly improve their performance as well as their brand image presentation.

The second target – and we’re talking with quite a few different brands right now – is the newcomers coming in. The majority of the new operators are quite smart in that they are looking at prestige brands that are not yet sold broadly offline but have a huge awareness and huge appeal online. So a lot of the buzzy brands are just going through product registration now that they can do so without animal testing.

I think the operators are quite smart to differentiate their offers, vis-a-vis CDF with these types of brands. Because the consumer wants these brands and loves these brands. A lot of them don’t have an offline footprint, but they can see that in Hainan the turnover per door and the concentration of luxury consumers coming to the island is quite extraordinary.

For example, we just launched domestically in Beijing’s SKP-S Select Beauty with Tata Harper [a US clean beauty skincare brand]. It has had great results so far – it’s a very special account – and the same type of consumer who is shopping SKP-S is also visiting Hainan. So there is great potential in Hainan and we provide full services to handle the entire channel for those brands.

Since July 2020 there has been a really interesting broadening of the category mix. Bluebell has been involved with the wines & spirits category for a few years now elsewhere in Asia. Are you looking at at other product sectors in Hainan too?

Yes we certainly are because the same services we provide are very much needed in other categories. My expertise is primarily in beauty but through the Bluebell Group, we are already engaged in conversations with a wide variety of categories. Daniel Mayran is leading that. Beauty is just the first step into the water.

We’re here for the brands that want to explode the business in Hainan and at the same time are serious about controlling their brand image and their pricing. We feel that there are a lot of brands in that situation, so we are very optimistic about the future.

That’s a critical point on brand image and pricing – both very much related to one another. Some brands fear that with so much new competition Hainan will turn into an overly aggressive discount market. How much of a role can you play in terms of assisting the retailer and the brands in ensuring sensible pricing?

I think the benchmark is set… the general level of a travel retail discount is there. I don’t see that as a movable object. Neither is it a movable object in Macau or South Korea or Japan or elsewhere.

What we do, which is important, is to control on the front end setting up the right pricing levels brand by brand, individual items versus China MSRP. What is critically important also is ongoing monitoring of pricing to ensure that what’s agreed on the front end is carried through at retail.

You have a team of eight people already onboard, so I guess they are going to be getting around the Haikou and Sanya stores regularly. A real frontline focus.

Yes. I’ve been in been in retail management a long time and being present in retail and seeing what’s happening on the ground is critical. It couldn’t be more important in Hainan. Temporarily [due to the pandemic], there’s a situation where many brand managers for the business in Hainan haven’t even been able to see the new stores that are open, and to talk to the staff that are representing their brands.

We are ready to do store audits for brands. Even if they just want to get a temperature check of what’s happening in Hainan because they’ve opened some of the new travel retail shops and the numbers look great, but they haven’t had the possibility to get over there themselves.

Within two weeks we can provide a comprehensive store audit, including interviews with the counter staff, so that people are aware of the status of their brand. For brands based, say, in Hong Kong having their negotiations and discussions with the operators in Beijing or Hainan, a simple store audit gives them powerful tools to discuss what needs to happen in Hainan.

You are attending the forthcoming China International Consumer Products Expo in May. (Note SBTR will be there but we don’t have an official presence.) The event has assumed tremendous regional and national importance. Do you think it will accelerate the offshore duty free business?

Yes, I see it as primarily about the big picture story of Hainan. The government is well aware that they need to convince white collar workers to come to Hainan. There are increasing incentives for individuals to go there, from preferential tax rates to localised duty free shopping etc.

But I see the most important part of this Expo is President XI’s campaign to convince people that Hainan is cool and trendy and that if you move there you’re not going to be sacrificing your cultural life, and that includes prestige and luxury brands.

I think the presence of all these brands at the Expo and of all the people involved with those brands is an important part of showing Chinese professionals that Hainan is a place where I can consider to move and prosper and build my career. I think the luxury story fits into the grand plan for Hainan and I believe the Expo is going to be a great success.

What role will Sina Retail & Image play for you?

So Sina Retail & Image is our strategic partner regarding visual merchandising. They are an outstanding partner and are doing tremendous work in Hainan today. They can have as many as 50 or 60 people on the ground to handle major pop-up installations. We couldn’t be happier to be working together with Sina Retail & Image to ensure that the total brand proposition in Hainan is first class from head to toe.

Our team of experts have deep knowledge and experience in the market. We work hard on delivering professional planning and execution and ensuring new capabilities are being brought online as opportunities increase.

One question I’m asked a lot by the brands, especially those that are yet to play in the market to any significant degree, is what happens in 2025 when Hainan becomes a completely tax free island. What does that mean for the established offshore duty free business when everything else will be, in theory, tax free anyway?

I see it as an expansion. But I don’t see it as an expansion that will come at the cost of brands that have established a strong foothold in duty free in Hainan.

The traditional retail environment in Hainan is not so developed. There are a couple of A class department stores; there’s no Sephora there, for example, while some other retail chains like The Colorist are present. Even with all the boom in duty free, the growth of traditional retail in Hainan is set for super strong growth.

So by the time this change [2025] comes about, the brands that have a strong retail presence in the market will be able to expand to the department stores that will be in Haiku or Sanya and by then I’m sure there will be a number of Sephoras and other prestige retail chain stores. So my sense is that 2025 will just be a broadening for the brands that are already established.

Today, we are all focused on duty free for inbound and outbound travellers. But when you talk about 2025, remember that later on this year there will be duty free shops opening for Hainan residents, who don’t need to travel. So I think that’s a step in the direction of 2025 in that the market in Hainan is going to be broadening step by step. So for brands that are well positioned to take advantage of that, it seems quite promising.

For any brands who don’t know Rob Robertson, tell us a little bit about your China journey.

Well, it goes back a ways. I started learning Chinese in 1980 and moved to Beijing in 1985. In 1986, I wrote a feature article for an international magazine about the emerging salon industry in China.

I’ve been very lucky to see a lot of major transformations in China. So through earlier positions, for example, I was involved with the birth of the hair conditioner and styling market. In terms of professional hair colour, when that category started to arise from nowhere, I was also part of that. So it’s been a very interesting process of continual change and development.

And that is probably the reason why I love China so much – it’s always the frontier, and the frontier keeps changing. For people who are willing to make something new, this is really the place to be. So for me, despite all of my history here, everything is new each day. It’s exciting to be a part of these new changes and helping brands keep up with the growth.

And in terms of those changes, we should not forget that this offshore duty free sector did not even exist before 2011 and is now a US$5 billion channel. In the context of your career, where does this sit in terms of opportunities?

This is one of the most exciting things I’ve ever been involved with. So it is explosive, and the best prestige brands have huge opportunities here. We’re so excited to be a part of it. It also helps, by the way, that I honestly like Hainan. Through my frequent visits here, I’ve discovered it’s a great place. And I think Chinese consumers are catching on too that this really is a great place. So that’s the icing on the cake.

In my view, the time is now for the brands. With the expansion happening among the duty free operators and the consumer traffic surging, we feel that brands have an opportunity now to jump in on this opportunity and into this new environment. Entry now is excellent timing as the duty free operators are in need of the right brands to come in. But it’s also very smart, in my view, to get in now and just start to build.

So the growth is going to be tremendous and there is no time to get in like the current moment. We’re ready. We’re here. And we’re dedicated to the brands’ success. So we are very much looking forward to assisting brands achieve our goals in Hainan.

Footnote: Every fortnight The Moodie Davitt Report publishes Hainan Curated, in association with Foreo, a selection of all recent stories from the offshore duty free sector in Hainan province. Click here to subscribe free of charge and to view all back issues.