Based in Hong Kong and led by Director and CEO Yoshikazu Yokote, POLA ORBIS Travel Retail (POTR) has since proven that investment a sound one, helping the Group achieve +120% sales in Fiscal 2021.
In this exclusive interview, we caught up with Yokote who discusses how POTR has navigated the waves of the pandemic, its China and Hainan-focused travel retail push and how it is leveraging the strengths of POHD’s three brands, POLA, Jurlique and THREE, to drive recovery and growth in travel retail.
POLA ORBIS Holdings created a new travel retail entity at the end of 2020. What led to the creation of this subsidiary and how has it performed since then?
Although the travel retail market continues to experience tough conditions in various regions due to a significant reduction in international flights, China’s offshore duty free market continues to grow strongly. It is a very important channel that is indispensable for the group’s future international business growth strategies, as it is expected to grow again after the pandemic subsides.
Therefore, in order to integrate and leverage the strengths and resources of the travel retail business and speed up expansion, we established POTR as a sales company specialising in travel retail in Hong Kong. In terms of business performance, we have achieved more than +120% of the previous years sales as a Group in FY2021.
What is your overall ambition for POLA ORBIS Holdings in the travel retail channel?
POTR was established by POHD to efficiently capture the strong demand for travel retail around the world. As a core business of the group, we aim to capture demand overseas, especially in China, and maximise sales.
Based on the group mission to ‘Sensitise the world to beauty’, we aim to maximise the uniqueness of our brands to our customers in the travel retail channel and become a choice corporate partner for our business partners in this channel.
How has the pandemic crisis affected your travel retail expansion? Could you give us some insight into how the Group is recovering?
Travel retail is highly dependent on the amount of travellers, especially Chinese consumers. As a result, in the first half of 2020, all areas shrunk significantly. However from July onwards, there was a partial recovery in Hainan. In 2021, the immense positive impact of Hainan continued, while there were no fundamental improvements in other areas. This year, that recovery still looks uncertain due to the lockdown in China and in Hainan in August.
In 2019, POLA ORBIS Holdings’ had a China-focused travel retail push. How has the pandemic affected those plans? How are you reaching this core Chinese consumer – who are now unable to travel?
The pandemic has not affected our plans to drive travel retail and domestic in China. Jurlique has a mature footprint in travel retail especially in China. THREE opened its first travel retail store in China in Beijing International Airport in 2019 and POTR also launched POLA in China Travel Retail in Hainan in 2021.
All these launches are in conjunction with the development of local markets. Digital is also a key channel to develop and reach the Chinese consumer and we have been building and growing this channel strongly in recent years.
Flagship brand POLA took its first travel retail steps when it opened a new counter with CDFG in Haikou. How important is Hainan to your business today? Do you have any more launches planned in this key region?
Hainan is very important to our business today and in the future. We have strong partnerships with our retail operators and are in constant discussions with new partners for more opportunities in Hainan.
POLA launched its very first travel retail counter in China in Hainan and this allowed us to express the brand DNA in a physical format. It was a long discussion with the retailer but we have a strong collaboration with CDFG and we are happy to finally bring the brand to Hainan customers.
Jurlique, POLA and THREE were the three focus brands for travel retail, driving the Group’s multi-brand strategy. How does this multi-brand strategy play out in post-pandemic travel retail?
The multi-brand strategy is important to us as a group. Many brands are currently in the natural positioning and POTR wants to be a key group in travel retail to offer this to customers.
We are performing in line with the expectations of the modern consumer and we are convinced that customers will really appreciate the value that we offer. This all comes back to the mission of the group that I mentioned earlier about ‘Sensitising the world to beauty’.
Amidst pandemic times, perfumes & cosmetics is still the biggest category in the channel. What role do companies like POLA ORBIS Holdings play in driving category and wider channel recovery?
The customer’s purchasing behaviour has changed post-pandemic. As a beauty company, we need to be sensitive and reactive to customer’s changing needs. We need to understand the intrinsic value of how our brands and products are able to enhance the lives of our consumers from product usage to impact on the environment.
POLA, Jurlique and cruelty-free THREE express naturality and are dedicated to preserving nature. After the pandemic, this has become even more important to the modern consumer.
Jurlique is a biodynamic brand with our own farm in Adelaide Hills. For over 35 years, our biodynamic farming process has used a closed loop ecosystem using only holistic methods, internally produced fertilisers and soil conditioning to ensure the purity and authenticity of the botanicals we farm.
Satoshi Suzuki, Representative Director and President of POLA ORBIS Holdings, was convinced of our methods and eventually integrated Jurlique into the group ten years ago. So, as one of the pioneers in this category, we have a big role to play ensuring we deliver the best biodynamic skincare to our customers.
In 2019, 90% of POLA ORBIS Holdings revenues came from the Japanese domestic market. How has your local to international mix evolved since then?
Our international sales ratio was 15% in 2020 and 18% in 2021. The priority in the group is to continuously grow and capture market share. As CEO of POTR, I have been appointed in this position to grow the international business and POTR is part of the international division.
We are already growing Jurlique and POLA. Next, we will be registering THREE in China domestic and expanding the business there. We are constantly looking for more opportunities to develop the business. The current economic situation is not favourable, but we want to be there when the economy rebounds.
How do you think brands, retailers and airports must evolve to meet the demands of consumers in the post-COVID retail landscape?
From a brand perspective, Jurlique is working on B-Corp certification to have impact on the planet. We are really thinking about redoing the packaging for all our brands. Jurlique’s future is to be holistic and conscious about the impact it places on the environment. This is really important to us as a brand.
Do you have a final message for the travel retail industry?
While POHD opened POTR in the middle of pandemic, the decision to focus on travel retail is right and I am confident we will become a key player.
We are convinced that travel retail will recover and that our brands’ DNA and propositions will be able to satisfy the customer and make us a key player in the future. Travel retail is also going to be one of the key pillars of the group in the long-term.
