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Rémi Chadapaux: “We are heading for a fantastic year,” |
ASIA PACIFIC. Asia is a region most definitely on the up, generating high double-digit growth for L’Oréal Luxury Products Division – TR arm Scental.
“The first quarter was very strong for us, with the growth quite balanced between the various Asian regions,” Scental General Manager Rémi Chadapaux told The Moodie Report.
“We have seen the most dynamic growth in Greater China and Hong Kong, followed by South East Asia, the second most dynamic region, with Thailand and Singapore paving the way.”
Interestingly, the only region giving cause for concern is Japan, described as “weak” by Chadapaux. “The reason for the problem is quite basic – it’s traffic,” he explained. “Japanese travel was flat in March and negative in April, and the inbound numbers from other nationalities do not compensate for this, which is affecting the business.”
He added: “It’s bizarre in a way; with the yen being stronger, we would have expected the Japanese numbers to be coming back, but that hasn’t happened yet. The other area which was not so great early on in the year is the Pacific region, but that seems to be gradually getting back on track.”
But Chadapaux is doing anything but resting on his laurels. While the L’Oréal group’s brands are all performing well, he acknowledges that the competition within beauty is unquestionably hotting up.
“For example, if we look at performance by brand, Lancôme is doing quite well,” he noted. “To be precise we are slightly below the market, but there is a lot of growth coming from new brands, so on a like-for-like basis we are close to market growth.
“There is a new dynamic to the Helena Rubinstein brand in Japan and other markets, especially China, where we had a very interesting performance last year. We want to capitalise on China, and the influence of Chinese pax in the region.“ |
Scental General Manager Rémi Chadapaux |
“But we are under a lot of pressure from competition, especially in Greater China; it’s a challenging time. In the past we have had a very big market share with our whitening range, Blanc Expert, a best-seller within Asian travel retail. Now we are being challenged by other brands, which are finally starting to catch up.”
But this is a trend being mirrored within L’Oréal itself, as the group’s so-called developing brands like Kiehl’s, Shu Uemura and Biotherm continue to expand. Chadapaux also singled out Helena Rubinstein, recently the subject of a major overhaul, as a brand that was back to “very solid growth”.
“In the past, Rubinstein has been a sleeping beauty,” he admitted. “But since everything has been re-shaped we are in line with the market growth year-to-date.
“There is a new dynamic to the brand in Japan and other markets, especially China, where we had a very interesting performance last year. We want to capitalise on China, and the influence of Chinese pax in the region. This will be our focus, and we are quite happy that our efforts to support the brand have paid off.”
Another trail-blazing brand within Asia is Biotherm, which is benefiting this year from a “dermobiotic” relaunch. “We have very high expectations for this brand,” confirmed Chadapaux. “It has exploded in the region, is outperforming the market, and we are heading for another very strong year.”
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The Changi T2 Kiehl’s boutique: emblematic of the brand’s “whiz-kid” status within Asia Pacific | |
The brand has gained good ground on its main competitors within South Korea in particular, and L’Oréal is committed to building on this strong foundation. “It is definitely time to accelerate the brand in Greater China and south-east Asia,” noted Chadapaux.
“We have a lot of new products in the pipeline, so our marketing plan is extremely strong. We also have an unrivalled men’s range, which we have boosted recently with the launch of the first whitening range for men.”
Shu Uemura is also making good ground in Asia, outperforming the market relentlessly month after month, according to Chadapaux. “All the lights are green for Shu Uemura,” he noted. “We are lucky that it has a very balanced product mix between skin care and make-up, which is a real strength in this region.”
“We want to keep our existing format, of either stand-alone or shop-in-shop, for Kiehl’s. That means we will be quite demanding in terms of space, but we know what we can deliver in terms of sales and business.“ |
Scental General Manager Rémi Chadapaux |
And so to Kiehl’s, described by Chadapaux as a “whiz-kid” within Asia Pacific. “Kiehl’s has just exploded into the region since the opening of its first travel retail door in Hong Kong International [HKIA] just two years ago,” he acknowledged.
Next came a boutique at Taiwan Taoyuan International Airport, in August 2007, followed by two stores earlier this year at South Korea’s Incheon International. In June the brand opened a new boutique at Singapore Changi Terminal 2; and DFS Group’s Macao Galleria has just been formally unveiled.
“We have found our business model, and in this respect the first store in HKIA was important,” Chadapaux explained. “That door is still growing month after month; the brand is just amazing and in many respects has found its place in Asia.”
He attributed the brand’s New York apothecary identity, strength within skin care, simple but effective formulas, and inherent quirkiness as key reasons for its appeal.
“And of course, the eye-catching merchandising [which incorporates, among other elements, skeletons, chandeliers and Harley Davidson Hummers] is another major success factor.”
Chadapaux added: “We want to keep our existing format, of either stand-alone or shop-in-shop, for Kiehl’s. That means we will be quite demanding in terms of space, but we know what we can deliver in terms of sales and business.”
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Rémi Chadapaux (third from left) at the opening of the flagship Giorgio Armani Beauty Boutique at HKIA |
HKIA was the location for another major L’Oréal group opening this year, notably the first travel retail Giorgio Armani Beauty Boutique, which opened its doors amidst much fanfare in January.
The high-profile event kicked off with a video showcasing the brand’s latest products, including the Emporio Armani Diamonds fragrance and the premium skin care range Crema Nera.
Guests were then treated to a unique catwalk show where models, clad in stunning black Armani dresses, showed off the latest make-up looks.
“We wanted to have a flagship store in the region,” explained Chadapaux, who paid tribute to the vision of retailer Nuance-Watson at the location.
“Incheon is the most important beauty airport in the world now, and the two renovations that were done have been critical in this respect. They have brought new standards to the location.“ |
Scental General Manager Rémi Chadapaux |
“We are delivering +20% beyond target, and what is very interesting is that we have 23% penetration of mainland Chinese in Hong Kong airport, even though the brand is not yet available in China (although two openings are scheduled for later this year).”
He continued: “I very much want to underline the partnership we have built with Nuance-Watson. They were also our partner when we launched Biotherm in Asian travel retail, and when we opened the first point of sale for Shu Uemura.
“We are planning other projects together for the future too, because this combination of one of the most dynamic airports and a really interesting mix of passengers has proved so successful for us. Airport-wise, operator-wise, and structure-wise, Hong Kong is such an efficient airport.”
Another landmark initiative this year for L’Oréal was the opening of the first international point of sale outside China, for Yue Sai.
L’Oréal acquired the brand from Coty in 2004, and transferred it to the group’s luxury division in 2006.
“In April we opened Yue Sai in the newly-renovated DFS Chinachem in Hong Kong,” affirmed Chadapaux. “We started with a very short range of products, as we are totally revamping the lines, formulas and packaging, to be finished by year-end.
“So in that respect the timing was not perfect, but we could not miss out on this opportunity. We have around 74 skus at present, which will rise to close to 150 by the end of the year. There will also be new travel sets.”
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Magnifique, the new feminine fragrance from Lancôme, will spearhead launch activity in the second half |
He continued: “Like Shu Uemura, the Yue Sai mix is very well balanced between skin care and make-up. And the colour offer is very innovative, with a good level of creativity, including some nice palettes. Importantly, there is a good understanding from the brand that travel retail can be an excellent communication tool, from an international perspective.”
In short, it has been a busy first half for Scental – particularly in terms of new retail doors. Of all the major openings in the Asia Pacific region so far, such as Singapore T3, Incheon and Beijing T3, which have been most significant for the L’Oréal group, and why?
“All of the openings are important,” replied Chadapaux. “For Singapore, for us most of the work was done at the end of last year, and I have to praise the openness of Nuance-Watson regarding this development.
“We had long discussions on the layout of the store, and it was our strong recommendation to have the major brands on the back wall, within a proper space, to create real brand projection and presence. This for me was a major step forward.”
Chadapaux continued: “Incheon is the most important beauty airport in the world now, and the two renovations that were done have been critical in this respect. They have brought new standards to the location. The previous stores had not been renovated in a very long time, so there has been a big jump in terms of the quality.”
Looking ahead, Chadapaux is excited by the opportunities represented by the opening of the DFS Galleria Macao.
“This will create a new momentum and new standards for downtown duty free, in the way that Okinawa did,” he predicted. “I think Macao represents an untapped reservoir of customers for us. The potential is immense and we are very confident.”
“DFS Galleria Macao will create a new momentum and new standards for downtown duty free, in the way that Okinawa did. I think Macao represents an untapped reservoir of customers for us. The potential is immense.“ |
Scental General Manager Rémi Chadapaux |
In product terms, Chadapaux is also buoyant about fragrance prospects for the group. “We are heading for a fantastic year,” he claimed. “We are still seeing the benefits of Diesel, and we are set to capitalise on the success of Emporio Armani Diamonds with a masculine version. We are also preparing to launch Magnifique, the new flagship fragrance from Lancôme.”
In conclusion, it all seems very positive. “Not quite,” smiled Chadapaux. “We have to pay attention to what is happening in Japan. And the other economic problem for us, of course, is the strong Euro.
“We source the major share of our products in Europe – we are a French company, with a few French brands – so the economic equation is a bit tricky right now. It is giving us a lot of challenges.
“But it is good in the sense that this is making us focus, forcing us to look at our structures and how we can be more efficient.
“But I would agree that the fundamentals in Asia are very strong,” he concluded. “I am confident that we will have a good year overall; a better year than last year.”
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