It has been a blockbuster year for Shiseido Travel Retail in terms of spectacular activations. In August, Shiseido launched the ‘Red Ginza Street’ pop-up – one of its most ambitious events to date – at the CDF Mall in Haitang Bay, a compelling activation that highlighted the flagship brand’s best-selling Ultimune range.
Our Fashion Beauty & Social Media Editor Hannah Tan-Gillies sat down with Shiseido Asia Pacific Travel Retail General Manager Kenji Calméjane to discuss the group’s growing interests in China and the “magic moments” brought about by creating best-in-class activations. He also spoke of the challenge of maintaining sustainable growth, and how Shiseido is conquering new frontiers in travel retail.
Tell us about the Ultimune Eye Power Infusing Concentrate, which has become one of Shiseido’s best-selling lines.
When our CEO Uotani-san [Masahiko Uotani] took the helm of the company, he started a new belief system that began with creating a stronger connection with our consumer. Because of this, we shifted from ‘product-oriented’ marketing to a more ‘consumer-oriented’ approach. The Ultimune Range has been the crucible of that approach. It is the convergence of consumer insight with our extensive research on skin defence, intelligence, and immunity. It is also the result of a rejuvenated marketing approach, which concentrated investment in a much more compelling way.
The position of the Ultimune Range is also very innovative. It’s a concentrate, which is different from a serum, because its role is to bring something to the skin rather than be a specific part of a routine.
Immugeneration Technology and the Smoothing Defense Complex are at the center of the range. The eye product was a natural extension of the range, and both travel exclusives have been huge successes for Shiseido.
What was the thinking behind the Red Ginza Street Pop-up?
With this kind of pop-up there are always three main elements. The first is the architectural and design side, which was very Shiseido at its core. It really expressed the convergence of modernity and tradition in its ‘Japanese-ness’; through the lines and colours of the space. You have the graphic interpretation of the Ginza crossing, which is one of the most famous intersections in Tokyo.
The second part is the consumer journey. We wanted to create an experience that would allow them to learn more about their skincare needs and discover our story through offline and online interactions. The third part is customer service. Our entire team underwent intensive training to prepare for the event. It was a great opportunity for our team to test themselves outside of the traditional retail environment.
These three ingredients – amazing design, surprising consumer journey, and excellent service – enabled us to create a complete Shiseido experience with the Red Ginza Street pop-up.
‘Offshore duty free’ on Hainan Island has been one of the huge successes of Asian travel retail in recent years, underpinning the rise and rise of China Duty Free Group (CDFG). How important is this unique channel to Shiseido and how does it differ from the traditional duty free sector?
The strength of the Hainan model is that it’s a very big scale downtown store in the heart of China. It really serves as a great flagship for China Duty Free Group, because the sky’s the limit in terms of its potential for size and sales volume. For many brands, it’s among the top five doors, even when you compare domestic stores.
On the retail side, the CDF Mall gives a lot of possibility for expression. This has allowed us to open the first Shiseido boutique in travel retail. It’s a great place to experiment with new ways of interacting and launching more sophisticated tools.
In terms of animation, CDFG has been doing an amazing job of inspiring brands to propose the most compelling and exciting activations. Our partner, CDF-Sunrise Head of Merchandising Terry Chua, was saying “We are here for the travellers” and this is something that CDF really takes to heart.
I’ve seen our competition do amazing things here; and for us it’s a very good incentive to challenge ourselves. I am very proud of what we have achieved here. For me it’s just the beginning, as Haitang Bay and CDFG continue to be one of the most prominent downtown duty free players in Asia and the world. Proving ourselves in this space was very important.
CDFG is now the world’s number five travel retail player. How do you assess the group’s rise of recent years, both in sales and qualitative terms?
CDFG was already the prominent player in the China duty free market, having been in the scene for many years. Their curiosity and the ability to connect in a friendly and smart way has really propelled them to new heights. Also, the very strategic acquisition of Sunrise Duty Free has helped them consolidate the China market.
Having a presence both downtown and in airports also makes their offer very complete. We are proud and honoured to launch the Red Ginza Street concept with CDFG, because they really push brands like us for new ideas. It’s always a motivation for us to create ‘best-in-class’ experiences and go above and beyond. Because for us, a good partnership means that we are constantly challenged to better ourselves.
Prestige brands continue to be a strong growth driver for Shiseido – especially in Mainland China, where sell-out of prestige brands has led to +40% growth. How are you developing your prestige portfolio in China?
First of all, prestige brands need a very targeted marketing investment. Because when you talk about a luxury brand, it needs to be immediately recognisable. Let’s take the example of Clé de Peau Beauté, one of the jewel brands in our prestige portfolio.
Clé de Peau Beauté is one of the highest-end brands in the market and is at the pinnacle of craftsmanship, luxury, and excellence. One of the most vibrant examples of targeted marketing is appointing Chinese actress Zhang Zi Yi as brand ambassador. She is hugely popular among Chinese consumers, and also exudes the elegance and refinement of the brand. This is a significant investment that highlights our unique imprint in the prestige category in China.
Second, the need to put the right choice of brand in the right place is also critical. Third, we need to find the right strategic partners. In China, we have recently signed a joint business agreement with Alibaba Group. Alibaba is one of the most successful retailers in the world, and our partnership with them will allow us to learn from their expertise, knowledge, and data, to strengthen our own e-commerce and CRM.
Shiseido Travel Retail is also collaborating very closely with Shiseido China, to maximise the use of local platforms like Weibo and WeChat. For example, the Red Ginza Street pop-up had a mirror activation using all of these well-known Chinese digital channels.
Shiseido has long embraced the power of experiential activations. Talk us through the role of these experiential pop-ups and installations
Absolutely. For us, it’s an opportunity to try new things. Activations like this are a great way to communicate with global shoppers, increase brand awareness, and really help us stand out.
The amazing moment is when you start to discuss the creative and technology side to partners, and you embark on a journey together to create something unique.
It’s very motivating for the team to work around it. What is becoming increasingly important is not the concept itself, but the methodology around it. The process of innovating, gathering ideas, and to turn them into reality. These pop-ups are our way of thinking outside of the box. When you have brands who have creative freedom, a strong heritage, a strong sense of history, and with a lot of content that you can play with – that’s the magic formula for truly spectacular activations.
Travel retail was forecast to be the fastest-growing division in the Shiseido group — accounting for 20% of the group’s incremental revenue growth between 2017-2020. What kind of role do you see travel retail playing in a post-Vision 2020 landscape?
We expect travel retail to continue with double-digit growth for years to come. The first driver will be the growth of air traffic. It’s expected that by 2035, passengers will reach 7.2 billion. Despite any short-term changes, we know that’s where the long-term trend is. We also know that it will be driven by Asia, which is why the Shiseido Travel Retail team is headquartered in Singapore. Our brands are Japanese, but we have a worldwide reach. We can bring American makeup brands, French fragrances or Japanese skincare to travellers all over the world by leveraging our strong position in Asia.
We predict that Asia will remain the most dynamic market. In the travel retail industry, perfume and cosmetics is the fastest-growing category; and Asia is the fastest-growing continent. The global perfume & cosmetics category grew +23.5% last year with a value of US$31.5 billion. In Asia Pacific, the growth was +37.4%, representing 66% of the entire perfume & cosmetics market in travel retail.
Based on that, our top management has very high expectations of us. As a group, we are aiming for ¥1290 billion for next year and we are quite confident that we can deliver results. Long-term, Shiseido Group is aiming to become one of the top three beauty companies in the world by 2030.
How do you see the travel retail channel evolving? What are you doing to adapt, to keep your point of difference amidst a highly competitive beauty category?
Our President Philippe Lesné says, “We have to cultivate the capacity for sustainable growth.” This means that we have to be careful not to grow too fast. We need to be agile but have the flexibility for adaptation. The good thing about being in a dynamic market is that your competitors are equally as dynamic. At Shiseido, we may have started behind others – but we have the opportunity to leapfrog our competitors and take it a step further.
Our SENSE Installation and SHISEIDO FOREST VALLEY activations at Jewel Changi are great examples of this. You can really see the thought-process behind this project, which is to bring different worlds together. It’s about using innovative multi-sensorial elements to surprise consumers in an environment that’s very travel-retail relevant. I think activations like this really put forward our point of difference, because it’s no longer about ‘story-telling,’ but about ‘story-living.’
The biggest challenge for brands in airports today is that we need more space; and travel retail needs to reform itself to create more spaces for extraordinary experiences. I think that’s where the potential of the Trinity lies. To bring together airports, downtown stores, brands, and retailers to create unique experiences.
Brands need to make a point of difference to survive, and Shiseido Group is confident in our ability to create more unique experiences than our competitors. To create something more advanced, surprising, and beneficial than our peers – which is something strongly linked to our DNA.
Another big factor is digitalisation. Like I said, we were very late in the game, but are now embracing plenty of digital opportunities. With data, we still have a way to go – but we’re on our way to becoming a big player in this. We also want to enhance our interaction with our consumers, which is about offering not just a product but an experience. Our goal is to be front of mind for story-living, digitalisation and experience.
Given Shiseido’s strong performance for the first half of 2019 by (+17.3% to top US$500 million) — it seems you are well on your way to becoming a billion dollar player in the travel retail industry. How are you planning to maintain this momentum?
We are benefitting from certain market dynamics and momentum – so we have to stay humble. We have a very strong multi-axis portfolio of prestige fragrance, skincare, and makeup brands; and this is the first thing that will help ensure our success in the future. We are certainly aiming to expand our portfolio in the years to come.
Strengthening our core capabilities is key: launching new cutting-edge products, increasing our physical touchpoints, and expanding digitally to create more points of contact. We also need to focus on enhancing the consumer experience and investing and educating our people. These are the key factors that will ensure sustainable growth for Shiseido Travel Retail.
What does a great Trinity partnership look like for Shiseido? How are you looking to further develop your relationships with airports and retailers?
Trinity is a work in progress and data sharing is key. In my view, airports and retailers are data-rich – and brands need data. That is an opportunity that will allow us to create better experiences if we had better data.
Data gives a competitive advantage, and I think best-in-class brands in each category need to come together to create this advantage together. Accurate data will enable brands to optimise sales and increase consumer satisfaction. Shiseido Group has the capacity to create that and I’m confident that we can develop further partnerships and continue to work in that direction.
What does the next five years hold for Shiseido Travel Retail, specifically in Asia Pacific?
The first phase was in 2015-2017 and it was about setting the foundations. It was necessary to go back to basics in terms of marketing and organisation; and elevate brands and regions in a much clearer way. From 2018-2020, we have been accelerating but are still learning and focusing on our growth drivers.
After 2020, we now have to consider the next five years – which is very exciting. Our first mission is growth and profitability for the entire Shiseido Group. Second, we want to explore new markets and channels from digital, cruise, inflight and extend our downtown duty free presence. It feels like there’s always a new frontier to expand for us.
In terms of how we are going to do that: First, we have to strengthen our relationships with key partners and retailers through joint business planning. Second, we will continue to develop our people, which is something intrinsic to the Shiseido philosophy. Last but not least, we will strive to be relevant to Chinese travellers, who remain our core consumers. In the next five years, I can see the Chinese traveller still at the core of Shiseido’s strategy in travel retail. We have to understand them and their expectations better. It’s a constant work in progress, but we are ready to enter this new phase.
