“The Beauty Lounge is a learning curve for us. Basically it’s a test store, where we will try lots of different things.” |
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Parbel considers the US domestic airport business to be a relatively untapped segment, says Vice President General Manager Milos Djuric |
US. Who dares wins. That seems to be the philosophy of the L’Oréal group’s Parbel division, as it makes its first foray into the US duty-paid arena – and prepares to introduce a new brand, Kiehl’s, into the travel retail channel.
The Beauty Lounge, a 1,500sq ft multi-brand fragrance and cosmetics store located in terminal C at Houston George Bush Intercontinental Airport, is a groundbreaking initiative for Parbel.
While parent company L’Oréal has already tested the duty paid waters, for example with a store for its mid-market L’Oréal Paris brand at Montreal-Trudeau Airport (in conjunction with Aer Rianta International), Houston is a first for Parbel. But it’s unlikely to be the last.
“The Beauty Lounge is big for us,” confirms Parbel Vice President General Manager Milos Djuric. “And duty paid in general will be important for us in the future. We have to keep looking one step ahead; we can’t just be satisfied by looking at the growth in international passenger numbers.”
In short, Parbel considers the US domestic airport business to be a relatively untapped segment. “We have been observing this sector for a long time,” notes Djuric. “But we weren’t active in it. We didn’t dare before; it’s an area that we don’t know, and to enter it is a big investment.
“But eventually I decided that we should try. So for our debut we waited for the ideal space, the ideal location – the ideal everything. That’s why we chose the space in Houston.”
According to the latest 2005 traffic figures released by Airports Council International, Houston’s George Bush Intercontinental Airport is now the nation’s ninth busiest in terms of the number of passengers served annually. Last year it handled a total of 39.7 million passengers – of which a whopping 32.7 million were domestic, an increase of +8.9% over the previous year.
“When you do a make-over, you usually sell at least three products on the back of it.” |
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The Beauty Lounge’s comprehensive service element is helping to further boost strong make-up sales |
Parbel’s partner at Houston is retailer DFASS. What brought the two parties together? “We are not airport retailers,” replies Djuric. “We have no experience of airport bid processes, so we wanted to partner with someone who did.
“DFASS has experience of duty paid stores, and had previously worked with L’Oréal Paris on a stand-alone [at Las Vegas McCarran Airport], so we decided to try with them. And we have built a real partnership together, not just a client/supplier relationship.”
And like all the best partnerships, it’s a work in progress. “The Beauty Lounge is a learning curve for us,” admits Djuric. “Basically it’s a test store, where we will try lots of different things. It’s somewhere we are going to show off all our expertise in terms of express make-overs, skincare diagnoses, fragrance launches and animations.
“In terms of animations, we want to get very close to the US [domestic] calendar, but with a different offer – we don’t want to go down the standard department store gwp route. We want to focus instead on service. That’s the key challenge.”
With the exception of Helena Rubinstein (which ceased trading in the US in July 2003) and Kiehl’s (of which, more later), The Beauty Lounge carries all L’Oréal group prestige brands.
“We wanted to have all our brands together to make a luxury L’Oréal store and see how it would work,” explains Djuric. “The results were surprising.
“The men’s skincare market is still small when compared with the women’s, but we have absolutely no doubt that it is going to grow and grow.” |
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Houston’s in-store Men’s Lounge area is dominated by Lancôme Homme and Biotherm Homme |
“In duty free, we are very strong in fragrance; it’s about 70% of the business. But so far make-up, and Lancôme in particular, is accounting for a huge chunk of the sales.
“Also, in duty free we are used to a more stable mix of products during the year. At Houston we are going to be faced with a totally different marketing calendar.”
In terms of layout, there are three key areas within The Beauty Lounge. On the right is the in-store Men’s Lounge, spearheaded by Lancôme Homme and Biotherm Homme. This area incorporates service elements such as mini-massages, shaving and facials.
Then there is the fragrance area, followed by the skincare/make-up beauty section, which includes a display area for the latest launches, express treatments and Lancôme’s Diagnôs Expert (a tool which allows Beauty Advisors to make a precise evaluation of a client’s skin – and create a tailor-made skincare programme).
Djuric is particularly optimistic about the potential of the Men’s Lounge. “For us one of the strategic axes of development is men,” he explains. “We have seen this segment grow and grow over the years.
“Biotherm Homme worldwide accounts for about 50%-60% market share for men’s skincare in the selective distribution channel, despite being challenged by our competitors recently.”
Parbel is poised to up the ante even further, by installing the Biotherm Homme Skin Profiler (The Moodie Report.com, 21 February) diagnostic tool at Houston. Described as a user-friendly, interactive, touch-screen computer terminal, the Profiler – already available in certain key European airports – can provide time-poor travellers with professional, personalised skin care advice in under one minute.
“Of course, the men’s skincare market is still small when compared with the women’s, but we have absolutely no doubt that it is going to grow and grow,” notes Djuric.
“We did not anticipate the amount (and variety) of make-up that we would be selling every day.” |
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The Beauty Lounge is increasing its colour assortment in response to “huge” make-up sales, says Parbel Division Manager Lancôme Jean-François Ninu |
“Right now we are over-representing that segment today. We have Lancôme Homme back walls in all our Lancôme units, and within our zone we are installing 150 points of sale just for Biotherm Homme. Even when we are not present in a point of sale with Biotherm [for women], we try to enter with the men’s offer.”
The other star performing sector is Lancôme make-up. “To begin with, this was a surprise for us,” explains Parbel Division Manager Lancôme Jean-François Ninu. “We sold so many complexion products, in addition to mascaras and lipsticks, which is not usually the case in duty free. We did not anticipate the amount (and variety) of make-up that we would be selling every day.”
He continues: “We are capitalising on that with our make-over service. It’s complementary; all our Beauty Advisors can do it and it’s almost automatically suggested as soon as a client comes into the store.”
Parbel has also overhauled the range of products on offer at Houston. “On the local market you cannot survive with six shades of foundation,” Ninu points out. “So we are increasing the assortment and offering a bit more service on that part of the make-up offer, which was not our core business until now. In travel retail we are used to selling Hypnôse mascara and Juicy Tubes.
“In Houston we can sell so much more. And when you do a make-over, you usually sell at least three products on the back of it. So our service element is helping to emphasise a trend that was already very strong.”
Of course, make-up is generally less expensive a purchase than, say, fragrance, which makes it more accessible for consumers, but less profitable for suppliers. In terms of the bottom line, are the volumes being sold compensating for the value differentiation?
“Absolutely,” confirms Ninu. “Make-up is huge. I was amazed at the volumes we were doing in colour, although when you consider the sales on the local market it’s not so surprising.”
THE NEXT STEP
The Beauty Lounge has only been open for a matter of months, but Parbel is pleased with the initial results and is already considering how best to roll out the concept.
“Eventually we plan to open between 10 and 20 stores in the US,” reveals Djuric. “The difficulty will be finding the right space. The retail areas are not always strategically located.”
“Eventually we plan to open between 10 and 20 [duty paid] stores in the US. But we don’t want to rush because we don’t want to make mistakes; we want to learn.” |
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The Beauty Lounge has only been open for a matter of months, but Parbel is pleased with the initial results and is already considering how best to roll out the concept |
He continues: “Also, a lot of the airports are very fragmented. Take Atlanta – there are nine different buildings. So it might be the number one airport in terms of traffic, but there is no one store that can serve all that traffic. That is my frustration.
“The situation in the US is much more difficult than in Europe, where the traffic is also more mixed within the terminals. In addition, the retail structure is better. Take Heathrow T3 – you have to go through the shops there; there is no option not to. In the US you don’t even know where the shops are.
“When I came and saw how much business we were doing in the whole of the US compared with a small country like the UK, it was a shock. That is why we wanted to compensate for the lack of exposure in travel retail by creating a concept for US domestic passengers.”
Despite the difficulties of finding appropriate space, Djuric admits Parbel already has a few locations in mind for phase two of the project. “But we don’t want to rush because we don’t want to make mistakes; we want to learn,” he points out, adding that the next duty paid store will probably not open before early 2007.
“In the US if you create a good gwp animation your sales are huge, so we want to know what it is that makes this happen. The Beauty Lounge has only been open for a few months and we’ve only tried a few things.
“We have to try out the whole array of animations in order to decide what is going to be the plan and the approach. We knew that it was not sufficient just to put the products on the shelf. That’s why service, animation, gwps, special activities, music, retail experience and retail therapy were the key elements for this concept.”
Another key objective for Parbel is the refurbishment of all its Lancôme counters. “By the end of 2006 we should have updated all our strategic airports with the new Lancôme look, which is extremely important for the expression of the brand, in terms of merchandising, visuals, service areas, Diagnôs and Biômetric make-up,” comments Djuric. “That will represent our main refurbishment programme for this year.”
THE COMING OF KIEHL’S
The other big news – as previewed by L’Oréal Produits de Luxe International Managing Director Travel Retail Worldwide Vincent Boinay in The Moodie Report print October 2005 edition – is the travel retail debut of Kiehl’s.
“Kiehl’s is a niche brand and its biggest competitive advantage is service – it’s the key element to the brand.” |
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Parbel is planning the travel retail introduction of Kiehl’s in its zone and is currently negotiating with strategic airports |
Kiehl’s was founded as an old-world apothecary in New York’s East Village neighbourhood over 150 years ago. The brand offers skin, hair and body care products that are a blend of the cosmetic, pharmaceutical, herbal and medicinal. Customer service – and “service to the community” – are key principles.
“We are planning the introduction of Kiehl’s in our zone,” confirmed Djuric. “We are currently negotiating in a few strategic airports to start selling the brand within Americas travel retail.”
Djuric describes the Kiehl’s customer as urban, product- and care-sensitive. “Of course we are targeting the cities where Kiehl’s is strong, starting with New York and San Francisco, but the brand is expanding so quickly, and being demanded so fast by customers worldwide,” he points out.
“Where possible we want to follow the local markets. Kiehl’s has just opened in Mexico, so that’s another opportunity we are looking at.
“It is a niche brand and its biggest competitive advantage is service – it’s the key element to the brand. It doesn’t push you; it gives a lot of samples; it doesn’t do any advertising; and it’s based around sharing and a community. So that’s a concept we have to find a way to adapt to the traveller, which is also going to be a great experience.”
In short, it’s another learning curve. Djuric agrees. “We want to move away from shelves and gift-sets and value sets,” he comments. “We want to focus more on service, new brands and new retail concepts, which is why the experience of Kiehl’s and the Houston duty paid Beauty Lounge is very important for us now and in the future.”
He concludes: “We want to rethink the way we do travel retail.”
MORE STORIES ON L’OREAL/PARBEL
The L’Oréal group scoops five FiFi Awards – 05/04/06
Charles de Montalivet takes key Prestige & Collections post at L’Oréal Travel Retail – 24/03/06
The Moodie Report Interview: Parbel profits from South American recovery
Prestige & Collections management boost at Parbel – 11/03/04
