In this guest column, Shiseido Travel Retail General Manager of Europe, Middle East and Africa Olivier Decazes explains why the dynamic Middle East market represents an opportunity for the beauty company.
Standing at the strategically important crossroads of Asia, Europe and Africa, the Middle East is one of the most dynamic markets in travel retail. Furthermore, with a steady rise in local travellers and transiting passengers (largely from Asia), the Middle East is quickly becoming one of the most bustling areas in the world for our industry. The biggest opportunity in the channel is to think global and engage with many different types of consumers to maximise value – it’s a laboratory of the travel retail experience. Brands must stay abreast of trends, be agile and work closely with retailers to update their range and marketing offering to catch all growth opportunities.
The Europe, Middle East and Africa (EMEA) region represents 59% of international passengers worldwide, a slight decline in the last few years in favour of the Asia Pacific region. Although it receives nearly two thirds of passenger traffic worldwide, the region drives 25% of travel retail sales. The EMEA region is growing 6.5 times slower than Asia Pacific, which represents 26% of international air traffic and drives 66% of worldwide travel retail sales. Internally, the Middle East hubs welcome 14% of EMEA passenger traffic and 20% of EMEA sales value. Sales have been growing by +7% in 2018 in the Middle East region, according to Generation Research, while Europe shows +5.5% growth during the same period.
Still, it is interesting that Middle Eastern passengers mainly travel locally – their top 13 destinations outside their home country are all local airports, including Dubai, Muscat, Bahrain and Istanbul.
These Middle Eastern airports are part of the top international hubs and may result in fierce competition. Dubai is the number one airport in terms of international traffic worldwide, while Istanbul is predicted to have the most considerable growth as a result of the new airport’s recent opening. These international hubs welcome a significant number of global shoppers: Dubai is the third airport in EMEA in terms of Chinese passengers, while the number of Chinese travellers in Doha has grown double digits for the last two years.
Not only is the Middle East region growing as a result of its advantageous geography, which connects it to all four corners of the globe, the region is also welcoming more tourists due to the recent launch of the openness policies, such as the new visa issuance policy launched by Saudi Arabia.
This healthy rivalry is the perfect arena for Shiseido to develop our portfolio. In the past, brands have been focusing on local travellers in the Middle Eastern region. These consumers, mainly Saudis, Emiratis, Egyptians and Indians, are very fragrance-driven, dedicating more than 80% of their spending to this category. As an example, Indians are the number one nationality flying to Doha, accounting for a significant share of fragrance sales.
With this in mind, Shiseido Travel Retail has adapted the offer to the market, bringing in unique and premium fragrance collections, such as Dolce & Gabbana’s Velvet collection and Narciso Rodriguez’s Oriental Musc collection. The Dolce & Gabbana Velvet collection represents 35% of the brand’s sales to Middle Eastern passengers, versus approximately 17% for other nationalities in Middle Eastern hubs.
The rise of Chinese middle-class travellers has led to a growth in the number of Chinese global shoppers in Middle Eastern hubs. Chinese passengers are expected to be the fastest-growing nationality in Doha, for example. In Asia, Chinese consumers are very likely to buy in downtown shops, but our internal research by our Consumer Market Intelligence team shows that in the Middle East, these travellers are more likely to buy in airports than in the domestic market; it then becomes our job in travel retail to offer exclusive and attractive ranges to Chinese consumers in the region.
In Dubai, we estimate that Chinese travellers represent 3.5% of international passengers, however they contribute more than 50% to Shiseido Travel Retail’s skincare sales. It is precisely the case for our star brand Shiseido, where the Chinese account for close to two-thirds of sales. Within the Shiseido brand, our best-seller, the Ultimune Power Infusing Concentrate, accounts for 40% of Chinese purchases within the brand. According to Jessica’s Secret, the Ultimune Power Infusing Concentrate is part of the top five skincare online searches made by the Chinese.
Dubai International Airport (DXB)’s agility and willingness to try new concepts made it the first airport in the EMEA region to open a Clé de Peau Beauté counter. Furthermore, the newly launched premium skincare and make-up brand’s sales are driven by the Chinese passengers, who contribute 60% of its sales. For NARS, our top make-up brand, the Chinese account for at least one-third of the total sales in the region. The increasing Chinese presence in the region has led to a shift in our portfolio management: while we aim to further develop our core business with fragrances such as Dolce & Gabbana, Narciso Rodriguez and Issey Miyake, we are also dramatically accelerating our skincare and make-up offer.
In order to strengthen the presence of our brands in the region, and to benefit from the region’s strong attraction and renewal, Shiseido Travel Retail has recently opened a new dedicated Middle East office, based in Dubai, which aims to enhance our support to our retailers, and enables us to be more reactive to new trends.
Our group takes advantage of strong partnerships and support from retailers in this fast and dynamic environment, in order to develop experiential marketing campaigns or special and unique podiums. In response to this, Dubai Duty Free and Shiseido Travel Retail have reconducted, for the second time, a partnership with C-trip, aimed at increasing average basket during key holiday periods, like during Chinese New Year for the Shiseido brand.
The Middle East region, thanks to its multiple international hubs and great retail quality, is the perfect place to showcase new brands. Dedicated partnerships with the retailers are necessary in order to leverage the potential of this launch platform. There are many opportunities to come in the region, with the reshuffle of Hamad International Airport in Doha, the new Abu Dhabi Midfield Terminal and flagship locations like Beirut. While in the bustling DXB, opportunities arise every day.
Our market intelligence team enables us to have a deeper understanding of our consumers and the trends they are likely to follow. We found out that the Chinese are more sensitive to niche ingredients; they converse more frequently on social media on the details of core beauty ingredients and their effectiveness. Shiseido Travel Retail’s brands are going to take advantage of the Chinese travel boom, which is expected to remain strong in the future, as Japanese skincare brands continue to drive high conversion rates, above-category average. Our brands meet the Chinese needs, by offering an extended range of skincare and make-up products: protection, anti-ageing suncare, anti-pollution, as well as offering niche ingredients.
The Middle East is a trendsetter, not only for category trends but also for innovation. Even though complexion accounts for about 60% of make-up sales, the lips and eye categories are definitely on the rise in the region, growing more than three times faster than the complexion segment. Middle East and Africa accounts for the largest volume percentage (22%) of eye make-up launches from October 2018 to September 2019, Mintel research suggests.
The Middle East region gathers top-of-the-line augmented reality beauty features, such as the Saudi e-beauty retail platform, Golden Scent, which launched a new virtual make-up try-on feature on its app in June 2019, taking the lead in the integration between beauty and technology in the region.
Located at the forefront of Europe, the Middle East is the gateway for Asians in Europe, and the region is getting more and more attractive for tourism and business. As such, Shiseido Travel Retail is very confident that there are many business opportunities and partnerships to create with qualitative retailers. It’s only the beginning.
