Introduction: Meet Filip Sedic, the charismatic creative maverick behind Swedish beauty tech and wellness house FOREO.
Since creating a sonic skincare device called LUNA in 2013, Sedic and FOREO (‘for everyone’ abbreviated) have embarked on an astounding creative and commercial journey that has embraced electric toothbrushes, eye massagers, microcurrent devices, sonic mask activators and numerous other hi-tech products such as the BEAR, a ‘facial gym’ designed to exercise over 65 muscles in the face and neck.
Sedic is far from finished yet, in fact he’s just warming up, as he told Martin Moodie during a meeting in Hong Kong recently. We also present an update on the company’s booming travel retail business from Gary Leong, the man charged with driving FOREO in a key channel.
Filip Sedic greets me at FOREO headquarters dressed top to toe in black. Black Hugo boss trainers, cargo pants and a turtleneck top. He’s just completed his daily 35-minute walk from his home in Deepwater Way to FOREO’s extraordinary base spread over three floors of a giant converted industrial building in Hong Kong’s southside area of Wong Chuk Hang.
The casual look marries with the interior of the work environment. The whole space resembles something out of a Carlsberg lager fantasy ad, with brilliantly coloured chairs and sofas; table football, pool table and dart board; well-stocked wine and beer fridges; and an exhilarating sense of freedom. It’s the sort of environment that almost breeds creativity. His daily walk does the rest, Sedic says.
It’s around 19 months since we last spoke, that time by Zoom in the early months of the pandemic. In the intervening period FOREO, a brand built around Sedic’s holistic concept of wellbeing, has continued its heritage of innovation, rolling out a new device called FAQ, dubbed ‘the world’s most powerful anti-aging brand’, and a series of line extensions to the original FOREO brand.
What turns into a long, stimulating and idiosyncratic conversation starts with a stock question – how has the COVID era shaped the company and Sedic’s thinking? “It’s a good question as it’s definitely lasting much longer than we were expecting,” he replies. “We have been using this period a lot to reorganise and reinforce things. So we have done a lot of recruiting. We have got over 100 new people and made a big reorganisation of the teams and their way of working.”
That reorganisation is based on an ‘amoeba structure’, a Japanese concept created by Kazuo Inamori, a renowned Japanese entrepreneur and philanthropist who founded the Kyocera and KDDI corporations and is a former Chairman of Japan Airlines.
According to Inamori’s personal website, the Amoeba Management System entails an organisation being divided into small units and operated using an independent, market-oriented, divisional accounting system. This is designed to promote leadership development and to facilitate ‘Management by All’ — a method of engaging every employee in the day-to-day operation of the business.
“We have made the organisation so that every team has their one head and two arms and two legs, so each can survive and work on their own without the others,” Sedic explains. “People can rely too much on others so if someone does not do their job, then the whole chain falls. That’s why I think it will be very interesting to see how this new structure works. I’m very optimistic and excited to see it.
“The concept was very successful in Japan in the 50s and 60s, which was very interesting. Because at that time they didn’t have computers and systems yet they were able to manage in a good way. Now with the benefit of today’s technology I was thinking it would be extremely good to try, because we now have the ability to divide the company into these small amoebas.”
The concept has been introduced to FOREO’s structure worldwide, allowing much greater flexibility in identifying innovation and investment opportunities with small start-ups (more of that later in this story). That’s key, says Sedic, to maintaining the spirit of entrepreneurialism and disruption that the company is rooted in rather than it being eroded due to the company’s tremendous growth in recent years.
The pandemic has posed other, more prosaic, challenges. Prime among them has been shortage of key parts such as microprocessors and chips. Typically, Sedic and FOREO turned a problem into an opportunity. If a new component had to be sourced, why not ensure the replacement was better than the original, with improved functionality and more features?
“Once you discover a shortage of components you need to make and develop an alternative platform,” he adds. The problem, however, is that other enterprises are thinking similarly, meaning alternatives can also dry up. So you need to run before the others and be faster than them if you want to get something. It was a big challenge.”
Nonetheless, FOREO has managed to keep the innovation pipeline fuelled to overflowing during the crisis. “We have actually increased it,” says Sedic. “The product pipeline and the speed of developing new products has increased dramatically. Why? Because right now, when we already need to change our platforms and other things, why not consider what else we can do?”
Primary among those initiatives was FAQ, “a really heavy project”, as Sedic puts it, “and actually the beginning of something that is much bigger than the device itself”. But all that heavy lifting is paying off, he says, noting stellar results in Asia generally and China in particular. And with U.S. Food and Drug Administration (FDA) certification imminent, progress should be rapid in America as well as in another key target region, Europe.
Given that FOREO was born with mental wellbeing at its core and the way in which the pandemic has raised the profile of mental health universally, has the company actually become more relevant during the crisis?
“All these needs were there before but the pandemic has accelerated this need to look more inside of oneself – to be less dependent on someone else telling you that you are worth something or good at something,” Sedic replies. “You need to be more self-aware and to know that you can achieve a certain perception of yourself without the need to have others reinforce it. It’s a process that is just at its beginning but the pandemic has definitely made this need bigger.”
While many companies have floundered or, sadly, fallen during the pandemic, FOREO has flourished through one of the most traumatic periods in mankind’s recent history. I put it to Sedic that pandemics are unforgiving in the way they expose company weaknesses but equally allow the fleet of foot to not just survive but thrive.
“Absolutely,” he answers. “Our goals and our story have been received much better in these times of pandemic. And this is where travel retail and FOREO are very complementary… because if people are taken out of their safety bubble then suddenly they become more open-minded. During a pandemic you’re more open-minded, just the same as when you are travelling and are open to new experiences that you would not do when you are in your hometown – like skydiving, or go-karting, or whitewater rafting.
“Even if maybe you have a go-kart track five kilometers from your house you will never visit it, because you’re not open-minded for that. But if you are already in some other country, you will do it. How many of us have been to Paris and visited half of their museums yet have not even seen museums in our own city? So the pandemic definitely has helped to change attitudes with people more open-minded to new experiences and new things.”
Stepping up the pace
How far has FOREO progressed in terms of delivering on Sedic’s original vision? “For me, things never go as fast as I wish,” he responds. “So I’m always pushing things as much as I can. However, if you look at it realistically, we have achieved a lot during these last two years. I will never be fully satisfied, I think we can always do more, but just yesterday I got the numbers that we have sold over eight billion treatments with FOREO products. That’s more than one per person in the world! And my comment is, ‘Can we make ten billion?’”
Sedic, an engineer by background, an entrepreneur by instinct and a relentless creator by nature, is an intriguing mix. A creative maverick running what is now a big commercial empire but one he built from scratch. How does he manage that combination?
“I call it ‘dynamic balance’,” he responds. “I really admire people who can say ‘Okay, I work, say, five percent on this project and thirty percent on this project. I can’t say that. The dynamic balance goes up and down, depending on the needs of the business. I would say that during the last couple of years it has been very little of the businessperson and very much back to the creating and inventing person. But the line is pretty fuzzy because by experimenting with our own variation of an amoeba structure you can actually do the invention, the experiments and also the business side itself.
Inventiveness is not confined simply to products, Sedic says. “I would say the opposite. I don’t believe in any company that claims to have innovative products yet their organisation structure and the way they work is like every other company. That does not make sense to me. So, either you are a creative type of organisation or person and you are creative in everything that you do – including your own way of working, marketing, even warehousing, and all of these things – or you are not. And in that case you might outsource the design of some cool product and then you think that you are cool in everything.”
I gesture to the space all around us, as far removed from a traditional corporate environment as you could imagine. Sedic agrees and eagerly promises to show me a woodworking workshop that is being created one level below. During the confines of the pandemic he thought it a good idea to create an area where kids could come and discover the wonders and intricacies of woodwork.
As we speak, the crew and captain from the luxury launch he moors in nearby Aberdeen are learning a new kind of ropes, discovering how to make joints, furniture and cabinets and fitting out a whole workshop for ongoing FOREO experimentation and product development.
That offers an appropriate segue to discussing the FOREO Institute, an in-house platform dedicated to creating and developing barrier-breaking products while exploring different ways to promote innovation. “A kind of think tank – a broad base of everything,” as Sedic described it in our first interview. Each year FOREO ploughs three percent of revenue into research, driving thousands of patent applications since the Institute was born.
“It’s more like a research centre for big ideas and at the beginning of last year it was very successful,” Sedic comments. “Unfortunately, towards the end of the year our focus had to shift back to the burning issues surrounding component shortages, the supply chain challenges and all the consequences of that. So it was a little bit on the back burner for the last half of 2021, But already for 2022, it has had a huge start in terms of many interesting ideas – maybe a few too many! So, we’ll need to strike some of them and not go everywhere.”
Is there any particular project that excites him – the next big thing? “There are a lot of next big things,” he responds. “We always think about well-being and what makes us feel good. We don’t necessarily say ‘happy’ because happiness is a very relative thing. With feeling good there are a lot of things that we can control and a lot of things that we can’t. Our belief is that if we tackle the things that we can control, that will be sufficient to feel good anyway – because you cannot do anything about what you can’t control, except be worried!”
The name FOREO represents ‘for everyone’ and the discussion takes another interesting turn as we discuss areas of life that could be considered universal – language, music and more. Did Sedic ever look at the field of linguistics, for example, and the fundamental barrier to mankind’s communication – the fact that millions of people by dint of language limitations can’t speak to each other? The answer is a qualified yes. The company even considered ways to revive Esperanto – the artificial language devised in 1887 by Polish ophthalmologist L.L. Zamenhof in 1887 as a universal medium of communication.
“It’s a very old idea that I remember as a kid when I loved the idea of having one universal language. Now English has become like Esperanto. But it’s not really fair to the other big languages that we have, such as Chinese, Spanish, Portuguese and French. Esperanto would put everything on the same plane. It’s probably too late, but it would be really nice to see it revived.”
“It is amazing how many start-ups there are in the world. If you want to go through all of them you could spend a couple of lifetimes.”
How about music, perhaps the most universal language? Does he play? “Unfortunately, among instruments, only the CD player,” he replies with a laugh. “I wish I could as my family was very musical. It looks like it skipped a generation but for me music is more than just the language. I see music more as a part of the wellbeing concept because it’s incredible how much music can impact your feeling, even without you noticing, when it is played in the background. There’s so much research done about that. There is this very interesting experiment, for example, that is very promising in cancer treatment – that you can actually use music or tones to kill cancer cells.
“It’s amazing research. The idea was very simple. If you find the original frequency of the particular cell that you want to eliminate you can play that sound with exactly the frequency that will excite this cell to a level that it will literally just explode. Just as a glass breaks when you play the right pitch. The experiment has been done and it’s working. So instead of chemotherapy you can now think of how to exactly target those cells. This would be a non-invasive and perfect way to target only the cells that you want to destroy so you don’t need to have a scalpel or to put any chemicals into the body.”
FOREO’s research showed an even stronger dynamic than music in creating emotion – smell. “It’s the best way of manipulating mood,” Sedic comments. “And when I say manipulating mood, that is not a negative comment, it’s actually about positive effects.” The perfume industry was created on the principle of smell positively affecting emotion, he adds, noting that many skincare brands today also put great emphasis on smell. “However,” he remarks pointedly, “Our interest in this was how to make you feel better – not how it will be easier for you to open your wallet.”
We return to our 2020 discussion when Sedic revealed the creation of an investment arm that supports projects and companies that offer substantial ecological or social impact. Uniquely, FOREO’s return on investment is measured in terms of that impact rather than traditional financial indicators. A very big idea. How is it progressing?
“Again, during the last year everything had to be put on the back burner due to this virus,” he responds. “But we are now working with five big universities to connect us with interesting start-ups. It is amazing how many start-ups there are in the world. If you want to go through all of them you could spend a couple of lifetimes. So now we have good partners to help select the start-ups and ideas that are very good.”
“I really believe in Nietzsche’s theory ‘That which does not kill us makes us stronger’. That’s definitely the case with travel retail. It’s going to be normalised.”
The change to an amoeba structure has also aided in supporting such ventures through network awareness and product development knowledge, Sedic says. “If we believe that an idea is good and it’s sensible, then we can help them with infrastructure.
“That is usually the biggest problem as an entrepreneur for a business to take off. Because, for example, you don’t just happen to have a lawyer on hand or someone who knows how to do, say, FDA registration and so on. It needs a certain critical mass to be able to do that. And if someone could provide you with that, it will make a huge difference – a much bigger difference than if someone simply gives you a couple of hundred million dollars. Because then, you still need to figure it all out yourself, which is not easy to do.
“They say everything is already invented. No it’s not! But most of the simple things have been and the complex things require a more complex structure. And that is why you have this paradox in the modern world surrounding inventions.
“The big companies have the infrastructure and the possibility to invent but due to their organisational inheritance, they are not doing it. Whereas the small start-ups have a will to do it but they don’t have the infrastructure and capabilities because all the simple things have been already invented. And you will not be able to pull together the complex things with, say, three or four friends.
“If you need to have MRI and just to start with, say, a mass spectrometer and all of these things, okay you can spend a couple of million dollars on equipment. But to be able to handle this instrument you need to also have a couple of world-class scientists to tell you what this MRI is looking at. Where will you find that?”
That is precisely where Sedic and FOREO enter the equation by not implementing classic ROI thresholds and timelines. Interestingly, FOREO has thus far avoided the acquisitional route. But that may be about to change. “I haven’t done acquisitions in the past because the acquisitions would have been just a third wheel. I don’t like third wheels,” says Sedic. “But now after this reorganisation of the company we are definitely looking for acquisitions that would fit the mosaic of how we think things should look like.”
“Not everyone in this industry will like me saying it but personal care does not belong to the beauty category”
What sectors interest him most? Sedic returns to his prevailing dedication to doing good for humanity. His particular focus is on non-invasive or minimally invasive treatments. He admits it’s a crowded field but isn’t impressed by a lot of what he sees. “There are hundreds of different diagnostic methods and each of these have hundreds of different companies making related treatment products. But making treatment without first being able to see what you are doing – without diagnostics – is like driving at night with the lights off.
How Foreo founder Filip Sedic discovered the amoeba factorWarning! Revolutionary contents – may cause excessive beauty and smiles. Open at your own risk. The bright white-on-pink messaging on the side of the box told me what the wording on the top confirmed – my newly ordered Foreo Luna ISSA 2 toothbrush had arrived.
Now, while admitting that my new ‘Moodie Blue’ device most certainly won’t cause ‘excessive beauty’ in my case, it most certainly does make me smile. As does the whole Foreo approach to business, one based on an unwavering obsession with innovation and on doing things in the right way and for the right reasons. |
“We feel that we need to do both things – diagnostics and treatment. But people generally want to have quick solutions so they usually like to skip the diagnostic part. Just give me treatment and make this headache go away or make this acne disappear. Don’t spend my day on testing why I have acne. And we need to take into account that psychology.
“So if you could integrate seamlessly the treatment and the diagnostics… you would be able to get the diagnostics and receive the treatment straight after. Then you would be able to see if the treatment has made a difference, and in which direction it has made a difference.” Using algorithms and artificial intelligence, various treatments could be better assessed for effectiveness, he explains, presenting consumers with those that offer the highest chance of success for their skin type or condition.
“But to be able to achieve this, I think we need to change the whole landscape of the business,” Sedic continues. “Not everyone in this industry will like me saying it but personal care does not belong to the beauty category.” It is only placed, there, he argues, because it’s often produced by the same companies as those making beauty products.
“Makeup, for example, is more about painting the face… and where your personal taste plays a big role. But personal care belongs more to the medical area. When you go to a doctor you cannot say, ‘Oh I like these pills – they have really nice texture and a good smell. Can I get these ones?’ No, you get the pills that you need for your condition.”
Makeup belongs, therefore, with fashion and garments, Sedic contends, with personal care recognised as a key category offering a seamless path between professional care and at-home care. “I think the shift has to happen. In fact, it’s already slowly happening. The question is always when and how fast. But it’s very slow because a lot of big companies with big investments have an interest to maintain the status quo.”
As an engrossing exchange draws to an end, I ask Sedic how he feels about prospects for the company and for the world in the years ahead. What does he want for the beautiful baby that he brought into the world in the form of FOREO, now almost a teenager, once it reaches adulthood?
“Yes, almost a teenager,” he replies with a smile. “That’s why it is a little bit crazy and moody sometimes. But it’s a good time. When you define a search for yourself and try a lot of different concepts, some of them you will be proud of in the future, some of them less. But it’s not going to be much different in the future except that I hope that we will be able to speed up the system. We have prepared a lot of exciting new concepts and products that will be released in 2022. We have also done new versions of old favourites Luna and UFO.
“So a changing of these platforms and a rethinking of the products has helped us. A lot of things have been in the development pipeline during this last year. So in 2022 there will be a lot of new product launches. And for the future beyond that, it’s just the same as always – focus on the products and ideas and try to do everything as well as we can because we don’t want to cut corners.”
I put it to Sedic that people must see the impressive scale of the company without having any idea of the journey of its founder, supercharged with energy and innovation, who pulled off an improbable success story. Is he still as driven as when he set off on that journey, since when, like all entrepreneurs, he has had to do a lot of hard yards?
“Yeah. Now it’s just getting even worse!” he says, chuckling. “You become more and more modulated because before you had just ideas, but no means to develop them all. You could choose only the ones that were simpler. But with this success comes both the responsibility and the possibilities to do more new things.
“So it gets more exciting. You have to be more careful, though, to choose the right things and not get lost in all of these projects and ideas. You need to constantly evaluate.
“That’s why my walk to and from the office has been extremely beneficial for me personally. Because during those 30 to 35 minutes before arriving at the office you have to try to structure your priorities, schedules, and re-evaluate all the things that you are working on. It’s the same on the way back – you have to kind of put everything back in their drawers and then make your mind clear. What have we done and what are the next steps to do it? It’s a really good balance.”
Was the decision to appoint a CEO – Boris Trupčević, formerly CEO at powerful Croatian multimedia company 24sata – in January 2021 about freeing Sedic up to focus on his creative side?
“Yes, absolutely,” he responds, adding that having the right management structure in place recognises fundamental differences between leadership and management roles. The leaders should generate the creative “mess” while the managers should create the order. “That dynamic works well.”
And sometimes clean your mess, I suggest. Because the founding leader, most of all, is allowed to make the mess.
“Exactly that,” Sedic says, laughing. “That’s my job – creating a mess!”
Talking travel retail with Filip Sedic |
How travel retail drove FOREO to new heights
Gary Leong is Global Travel Retail Director at FOREO, charged with shaping the company’s presence in what has long been earmarked as a key channel. He’s done precisely that, driving impressive growth over recent years, even in 2021 in a pandemic-ravaged sector. He talked performance and potential with Martin Moodie.
Gary, can you sum up FOREO’s progress in the travel retail channel over the past year and how you assess prospects for the balance of 2022?
In 2021, FOREO’s expansion was 16 counters while 11 FAQ counters were opened in Hainan.
Locations of FOREO counters include:
- CDFG Sanya International Duty Free Shopping Complex in Haitang Bay
- Haikou Meilan Airport Terminal 2 with China Duty Free Group (CDFG)
- Hainan Tourism Duty Free Shopping Complex
- Haikou Mova Mall with CDFG
- Haikou Mission Hills with Shenzhen Duty Free and DFS Group
- Haikou GDF Plaza
- CNSC’s Sanya International Duty Free Plaza
FAQ saw an aggressive expansion in Hainan in 2021, including
- CDFG Sanya International Duty Free Shopping Complex in Haitang Bay
- Hainan Tourism Duty Free Shopping Complex
- Haikou Mova Mall with CDFG
- Global Duty Free Plaza, Mova Mall, Haikou with Hainan Development Holdings & Dufry
- Haikou Meilan Airport Terminals 1 & 2 with CDFG
- Haikou Mission Hills with Shenzhen Duty Free and DFS Group
For Hainan in 2022, we will continue to develop the counters that have been delayed in 2021.
These include Haikou WFJ Duty-Free Haiken Plaza, Haikou GDF, Sanya Phoenix International Airport, and Haikou CDF Mall. They are some of the physical touch points we can reveal now.
We are of course expanding in online channels too, ranging from the Haikou WFJ DF online platform to those of Haikou Mission Hills and Lagardère/JD online.
For the rest of the Asia Pacific region, FOREO GTR has been planning to open in Southeast Asia with targets in Malaysia, India and Indonesia. Negotiations have been ongoing and we hope to launch these targets in Q2 and Q3.
For the rest of the world, we have been getting many interesting requests lately and will follow up with discussion with retailers in Europe and America. In Gibraltar, FOREO partnered with SM Seruya Limited last October, which saw the opening of two new stores covering a downtown location and at the Gibraltar International Airport departure lounge.
We continue to develop and expand our business scope in the Middle East. Besides opening stores with Qatar Duty Free and Dubai Duty Free, we also opened a new store with Bahrain Duty Free at the new Bahrain International Airport terminal last November.
When I talked with Filip Sedic, we discussed the rise of the livestreaming trend in China. How key is the platform for FOREO and FAQ?
We’ve seen the potential of livestreaming and e-commerce in the market, as McKinsey expects the live commerce trade in the world’s second-biggest economy to be worth US$423 billion next year. That is more than double the estimate for 2020, and bigger than the whole economies of countries such as Norway and Ireland.
Many retailers have taken to further developing their online shopping platforms in order to allow consumers to have better access to duty free products.
We have supported our online partners to enhance their exposure through online platforms, including the Sunrise Duty Free (Shanghai) Members’ App and the CDF WeChat mini program.
FOREO also launched a campaign with Shinsegae’s online shopping platform, SSG.com. This saw an ‘Experience Group’ launch on SSG.com over the span of a seven-day period, with a LUNA play plus and a Micro-Foam Cleanser up for grabs.
Participants were then required to leave a comment stating why they deserved to win, with five top entries finally being chosen out of a staggering 2,000 participants.
With the pandemic forcing companies to become more reliant on digital content to attract both current and potential customer bases, we are constantly on the lookout for new partnerships to push creative digital campaigns. Content has become more important than ever, and partnering with the right people will give us an edge over the competition.
Our Korean arm also recently conducted a livestream with ecommerce platform Naver. It featured various events and promotions during the session to effectively promote the products and generate hype and traffic.
Almost 3,000 people tuned in for the hour-long session, and the livestream was placed in the top ranking of beauty categories. It was also highlighted on the main page of the Naver live-shopping platform.
For Hong Kong, we have partnered with CDF Beauty to launch a livestream for FOREO exclusively. The hour-long session saw customers in Hong Kong purchasing FOREO’s hero products and exclusive travel retails sets on cdf Beauty’s WeChat Mini program while watching the livestream.
Our livestream was highlighted on top banners of CDF Beauty’s WeChat Mini program. We have also launched a livestream session with YOHO, one of the top online stores for consumer electronics in Hong Kong, to promote the exclusive UFO home spa bundle set.
In 2022, we will continue to strengthen our ecommerce initiatives in Hong Kong, where we are planning two more livestream sessions with YOHO to relaunch the exclusive UFO bundle set. With the current social restrictions imposed, beauty salons are closed and customers are pushed to recreate a facial experience at home, resulting in increasing demand for at-home facial products.
These partnerships are in line with FOREO’s intention to expand further digitally according to the current situation where the global pandemic has forced customers to be more dependent on a zero-contact shopping experience.
Quarantine restrictions have also pushed them to consume social media content at an increased rate, resulting in customers depending heavily on digital marketing to sway their purchasing decisions.
We’ve seen an increase in demand for livestreaming, which led to us setting up our own livestream studio, broadcast on Tmall throughout the day. Live-commerce is definitely the marketing trend of the future. Post-pandemic, we have seen a skyrocketing demand for these interactive sessions.
Equipped with professional gear and well-trained hosts, our livestreams aim to educate the audience on our expansive range of products comprehensively, to ensure that our audiences are well informed of the benefits and methods of usage.
Our own GTR team has also shown exponential talent and growth in livestreaming. Our most recent livestream with Naver featured our own Hyewon Cho from the Korean office. Bella Ding from the China TR office has shown the same talent.
We’re thrilled that our team members are stepping up to the challenge to adapt to the digital world, and even happier that they have the same passion to promote our products and their wide array of benefits.
In terms of the changing role of influencers in China and the sensitivities involved recently, how is FOREO adapting?
FOREO is, of course, aware of the sensitivities of using top influencers in China. However, as a brand, we prefer to cultivate our talent from within. Our livestream hosts are often our own employees, who are more equipped with product knowledge and armed with years of experience of using FOREO products.
To cultivate an influencer with that kind of knowledge would take Herculean efforts, and a significantly longer time period. Our employees are focused on presenting the best user experience to end customers, which also helps us cultivate customer loyalty towards the brand.
“The uncertainty of the pandemic caused us to re-evaluate our positioning in the market – physical touchpoints and on-ground beauty advisors were no longer going to cut it.”
The role of livestream broadcaster is as an extension of a Brand Ambassador, and is specifically tasked with channelling accurate information in an engaging way to convert ‘pitches’ into sales and effectively answering wide-ranging questions. This innovative content marketing approach supports the idea that brand education is a key component of purchase.
Do you see social commerce becoming a bigger part of your strategy?
Social commerce is set to be a global shopping revolution, with Forbes estimating the industry to potentially be worth US$1.2 trillion. With the typical social media user spending two hours a day on their favourite platforms, social media has been made the front door to the internet.
According to Forbes, global social commerce sales reached US$492 billion in 2021, and is expected to nearly triple by 2025. Social commerce is going to be a huge chunk of customer experience and FOREO is well on the path to becoming a pioneer in the industry.
The uncertainty of the pandemic caused us to re-evaluate our positioning in the market – physical touchpoints and on-ground beauty advisors were no longer going to cut it. We evolved further to focus on digital platforms, live streams, and promotions via retailers’ online platforms. This ensured that all our bases were covered, and we were catering to the consumer in a much more efficient and timely manner.
FOREO was one of the first brands to actively expand digitally during such trying times, and we adjusted our messaging to focus on staying at home while promoting self-care.
In mid-December 2021, we also experimented with a new promotion for FAQ on the Dianping app, which is one of the most comprehensive apps available.
The app includes a series of functions that are similar to Yelp, Tasty, Airbnb, Fandango, and Expedia, targeting people pre-departure to Hainan and travellers on the island during Christmas and the New Year Holiday and leading them to the FAQ brand page within the CDF online shopping platform. We achieved over 2.3 million impressions.
The Glow Up Collection continues a strong edition of seasonal sets. How important is that concept to your strategy in travel retail and other channels?
FOREO has long recognised the importance of travel retail sets to customers, and we painstakingly curate each set based on season, product launch, and target consumer. As a brand, we consistently release sets annually that include our bestsellers in order to cater to a wide variety of needs and demands.
In the past year, we have seen an increase in demand for value sets from our partners, as retailers are keen to offer a wider array of products in travel retail channels.
To cater to this request, FOREO recently launched the holiday set of the Skincare Secret Collection, made available through Hyundai Duty Free in Korea, CDFG in China, and KrisShop and The Shilla Duty Free in Singapore for a limited time only.
The four available sets highlight FOREO’s star products, namely the UFO 2, UFO mini 2, LUNA mini 2, and the BEAR.
Customers are also more interested in new sets available in travel retail channels, more specifically the LUNA 3 sets. This rings true particularly in Sanya and Haikou, where customers are seeking different products than those that are available on the Mainland.
Hainan has been core to your travel success over recent times. How do you see the market developing in light of 1) increased retailer competition; 2) the eventual opening-up of outbound Chinese travel; and 3) the 2025 factor when the island becomes entirely tax free?
FOREO GTR works in tandem with all travel retailers in China. Our relationships are one of the key aspects of all our partnerships, with our history with CDFG dating back to 2014. In fact, we were one of the early adopters of CDFG in Sanya at Haitang Bay.
We highly value all business with our retailers, and this is highlighted particularly in Hainan, where most are spread out from each other due to the island’s large area. We work with each retailer closely to customise promotions, and tailor-make sets based on their customer demographic.
In Hainan, tourists are destination- and resort-bound, where the distance from a resort to a downtown duty free location can vary from 20 to 60 minutes. We have aimed to make FOREO as accessible as possible by introducing numerous physical touchpoints in various locations across Hainan.
We welcome healthy competition in the market, and in fact, would go so far as to say that we thrive from it. Competition ensures that we are always stepping up our game, and conjuring new ways of appealing to different demographics.
FOREO is a company that never ceases to shatter glass ceilings and break boundaries, so competition in the market spurs this, in order to bring a better product experience to consumers. As one of the first brands to realise the incredible potential of Hainan, our promotions for Chinese New Year are still generating amazing revenue.
During the first three days of Chinese New Year, Hainan reported duty free shopping sales of CNY600 million (US$94 million). The government has been instrumental in supporting the development of the province, and is poised to see CNY100 billion (US$15.8 billion) in sales for 2022. We are confident that Hainan will maintain this momentum, even with the eventual opening of international borders.
In 2020 when the pandemic began, FOREO GTR suffered significantly. However, later in 2021, due to the expansion in Hainan and our strong presence in Korean duty free, we managed to end the year with +22% growth. In 2022, we are forecasting a + 30% increase against 2021.
How about the travel retail business outside Hainan, both within and outside China?
As mentioned, 2022 will see FOREO expanding further into Southeast Asia countries that were delayed in 2021. We are planning new locations in Hainan which are set to develop further over the fiscal year.
For the rest of the Asia Pacific region, FOREO GTR is eyeing Thailand, Vietnam, Malaysia, India and Indonesia as key markets for the year. Negotiations are ongoing and we hope to fully launch in Q2 and Q3. For other countries, we have been receiving many interesting requests, and we are following up with discussions with retailers in Europe and America.
And how do you see the wider travel retail climate for the year?
In 2022, industry prospects are bright, with borders slowly opening and travel once again beginning to flourish. We expect to see a massive jump from US$89 billion in sales [pre-pandemic 2019 -Ed; Source: Generation Research] to a whopping US$149 billion by 2025.
The Chinese consumer expenditure is an integral part of this growth, with their spending predicted to have increased from 48% to 56% by 2025. We foresee China itself attracting a significant portion of this spending, which translates in turn to incredible growth for its local industry.
