World Duty Free MD Mark Riches: “On our list of aspirational brands that we didn’t do business with, they were very high”UK/US. World Duty Free has entered into a landmark agreement with hot US beauty brand Victoria’s Secret Beauty, representing the latter’s first foray into the international retail arena.
BAA subsidiary World Duty Free will sell Victoria’s Secret Beauty fragrance and cosmetics lines (and related gifts) on an exclusive basis in dedicated areas across seven terminals with a particularly strong presence in London Gatwick South and Heathrow T1 and T3.
Owned by Limited Brands, Victoria’s Secret is one of the biggest beauty brands in the US. Its beauty range comprises fragrance, colour cosmetics, skincare and personal accessories. But until now its international presence has been confined to selling to US military outlets abroad.
For World Duty Free to spearhead the brand’s international expansion on an exclusive basis is a major coup for the BAA retail subsidiary. Commenting on the agreement, World Duty Free Managing Director Mark Riches told The Moodie Report it was “one of the key defining moments in World Duty Free’s growth”.
To celebrate the agreement, which will be announced formally later today in London at a press conference at the Hempel, Riches spoke about the importance of the agreement with Martin Moodie:
The Moodie Report: Mark, how did this agreement with Victoria’s Secret come about?
Mark Riches: This is the end of a long courtship. On our list of aspirational brands that we didn’t do business with, they were very high. It’s been a target for some time.
They see their business very much as a US business; it’s not a business they export in terms of having their own shops elsewhere. The only outlets they have internationally are their own military shops.
First and foremost, Victoria’s Secrets is known for lingerie. But they’ve been growing their beauty business quietly for a long time and they are now the number one beauty business in the US and sell more product than Estée Lauder. They’re a £3.6 billion (US$1.8 billion) business totally. There are three businesses, Victoria’s Secret Beauty, Victoria’s Secret Stores and Victoria’s Secret Direct.
So they were on our aspirational list. They are number one in the US and we are a big player in the UK beauty business and very progressive. Put those things together and we are pretty good bedfellows.
We’re very proud to get an arrangement with Victoria’s Secret by which we will be the first international outlet for their beauty products. And we’re very pleased that they trust us to do it with them.
If you put together the number one US beauty brand with World Duty Free as probably the most progressive beauty travel retailer, then it should work.
The Moodie Report: How are you going to go about building the brand?
Mark Riches: We’re not going to go for broke first-off. We’re going to take a limited range of their beauty products. We’ll give it something like 150sq ft to start with [in the major locations].
Dream agreement: The US fragrance brands will appeal to an international audience, Riches insistsBut it will have a real presence and we are going to do it in a more major way in Gatwick South and Heathrow T1 and T3. But we will also launch it in all the other stores as well.
The Moodie Report: How will it be presented – in a stand-alone area?
Mark Riches: Yes. Within that, they have some very key lines. They have eight key fragrance lines and related beauty care products. We have selected the range very carefully with them to not only appeal to the British market but also the ones that were well-known [These are: Dream Angels, Heavenly, Pink, Breathless, Very Sexy for Her, Very Sexy for Him, Very Sexy for Her 2 and Very Sexy for Him 2 = Ed].
The Moodie Report: What about their skincare? Are you putting that in?
Mark Riches: Absolutely. There will be fragrances, body lotion, body wash, deodorant, accessories. Plus their gifts are superb, really fun products that demonstrate the personality of the brand very well. There will be a cohesive range. But we’re not launching colour cosmetics.
It’s a toe in the water. We’re going to build it but we want to build it in the right way and learn as we go – for both businesses. Hopefully this is a long-term relationship. When we look back I hope it will be seen as one of the key defining moments in World Duty Free’s growth.
The Moodie Repor: It’s a US powerhouse brand with the US consumer. How will it translate to your international clientele?
Mark Riches: Given the demographics of our passengers, people will have heard of it and read about it – it’s widely covered in the magazines. Of course it’s not as well known as it is in the States but with the international dimension of our passengers there will be far greater knowledge than in any normal passenger segment.
So I’m not worried about that factor. Victoria’s Secret as a brand is a very, very strong brand.
The Moodie Report: The agreement is with the beauty products, did you contemplate doing the lingerie as well?
Mark Riches: No. Let’s go back to Victoria Secret’s strategy. After a lot of careful thought – and I really mean a lot of thought – this is a very big step for them, to actually have their products retailed outside of the US.
The beauty part of their business is successful. I think they know that there’s a trust between the way that we manage and look after an umbrella of the big brands. So they know that we will not mess with their brand. We will take the same kind of care over their brand as they do.
So there’s a control, if you like, that they can exercise and there will be a spirit of partnership with someone who understands their brand instinctively. So in terms of such a major internationalisation of their business, to start with the beauty side rather than the better-known lingerie side is a wise step.
“THIS TICKS ALL THE BOXES, AND TICKS ONES WE HADN’T EVEN THOUGHT OF” – Mark Riches
The Moodie Report: Looking at their business, between 1990 and 2004 there was phenomenal growth in the States, with sales virtually doubling and outperforming the US beauty market. So you’re buying into something very hot?
Mark Riches: They’re growing their business very strongly. The business is doing well, it has wide appeal. That’s a reason they’re confident about this move. Where outside the US would you try as your first step? Probably the UK market.
The Moodie Report: To conclude, do you have really big hopes for this one?
Mark Riches: I get excited about every new launch; I get excited about our beauty business and the opportunities for it. Half of our success has been our ability to select the right partners to work with.
This ticks all the boxes, and ticks ones we hadn’t even thought of. In terms of what we try to do and how we try to work with people and how we are trying to grow our business and in which areas we want to work and with people who try to work the same way, this has been an amazing fit. It has not been an easy ride. We’ve had long negotiations. We didn’t meet and marry within a week. But we liked each other immediately and we took care of the relationship.
Because we’re all so excited about the potential of this, we want to be very sure-footed. We’ve spent a lot of time on every single SKU building the range, item by item by item, challenging ourselves and asking is this right? You’d be amazed at the minutiae we’ve got through on this one.
“IT’S A GREAT FEATHER IN THE CAP FOR THE PEOPLE WHO HAVE BUILT OUR BUSINESS THAT VICTORIA’S SECRET IS PREPARED TO DO THIS.” – Mark Riches
The Moodie Report: Besides travel retail, this appears to be a major story for the UK retail and beauty market per se?
Mark Riches: I think most domestic players in this market would wish to have a relationship with Victoria’s Secret Beauty. Having managed to get this agreement, it will be a significant new step in the UK beauty business.
I think it’s a great feather in the cap for the people who have built our business that Victoria’s Secret is prepared to do this.
NOTE: This story was first broken via The Moodie Report VIP News Alert, a new service from The Moodie Report. Stories of major industry importance only are e-mailed to readers, free of charge. The new service is sponsored by Beauté Prestige International (BPI).
