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“The way in which we target travellers is how we plan to change the game. “ |
Mohit Lal Chairman & CEO Pernod Ricard Global Travel Retail |
The fundamentals for global travel retail remain positive even in a difficult operating environment, and now is the time to build a strategy for wines & spirits around the changing needs of the traveller.
That’s according to Mohit Lal, who was named Chairman & CEO of the new Pernod Ricard Global Travel Retail unit in February, a move that takes effect on 1 July. Lal, who previously led Pernod Ricard India and before that was Financial Director of Irish Distillers, remains Managing Director of Pernod Ricard Travel Retail Asia.
Lal spoke to The Moodie Davitt Report recently as the reorganisation was taking shape. He reinforced the company’s commitment to improved coordination between the three travel retail regions (Europe, Americas and Asia) and the domestic travel retail teams in individual markets, as the group seeks to deliver best practice and more coherent initiatives across the channel.
Lal says: “From 12 or 13 different entities reporting into three clusters, we will have three regional Managing Directors. Asia becomes Asia Pacific, Europe will also take in the Middle East and Africa and the Americas will remain pretty much intact. Global Travel Retail is about leading the overall strategy and synergies for operational excellence, but then the three business units with teams in market – also in close contact with the domestic markets to uncover new trends – bring this all together.
“What will happen is greater collaboration across all units within travel retail and greater collective decision-making on strategy and creating common platforms for execution that can be deployed on a global scale, but with local expertise.”
Ultimately, the strategy must be fixed around the traveller. “If we keep the traveller at the centre of our attention and our key focus in how we deploy our resources, that is the path to success. It is about getting the traveller to engage with our brands and that is our over-arching strategy today.”
The new unit that serves the channel chimes with the nature of travellers today as “more global in orientation”, notes Lal.
“Global Travel Retail is now a separate organisation and we recognise the need to engage with travellers using a more global approach. That means you look at who your core travellers are, where they travel, understand what their potential engagement areas with wines & spirits are, you look at their motivation to buy and then you create strategies to tell you what brands in what places and with what activations will deliver for you.
“There is no homogenous travelling community. There are varying income profiles, many more women travelling and Millennials are becoming a force now. But the environment is not evolving fast enough to cater to the changing profile of travellers. It’s like saying I have a product that caters for the 40-plus age group and my sales are not growing because the market is all about the under 40s. The issue is to understand how traveller profiles change, how and what motivates them to buy and then you craft strategies around the brands, down to how you retail individual brands.”
That approach has led a number of new activations and investments by the company in the channel recently. Among them was last year’s ‘Art de Vivre’ campaign and pop-up – alongside some limited editions – for Martell as the Cognac celebrated its 300th anniversary. It featured tastings, calligraphy and brand history in an entertaining, educational forum.
“Our goal here was to target travellers right through the travel trail,” says Lal. “What we found was that the results were out of synch with general trends and came as a positive surprise to the retail partner [DFS]. Even with the dampening down of Cognac sales and changing passenger profiles, we delivered a highly successful initiative that benefited everyone. We balanced effort and investment with reward.
“In this channel it’s not always about a big prize, it is often about many smaller prizes. What is important is picking and choosing where you invest.”
Other investments that promise healthy returns or that can be templates for the future, adds Lal, include the Luxe Boutique in Mumbai T2; what he terms “some very effective activations in Miami around Champagne”; collaboration with Schiphol Airport Retail around shop layouts in Amsterdam and value-added executions with Heinemann in Sydney.
“What we want to do is use the learnings from the past and re-channel our investments into what we believe works in today’s environment rather than putting 100% of our resources behind what we have done in the past.
“Many of the learnings, and these investments, come from a mindset that says we should challenge how business was historically done.”
And that means delivering newness in format, product and technology.
“The product offer must serve a need in a disruptive way, not just be another bottle on the shelf,” he notes. “It must maximise impact. Even small formats can have great impact.
“Digital can play a role here; it’s about creating a unique and compelling offer and being efficient in delivering a return. It’s about targeting the right traveller at the right time. Travellers are ever more connected and we need to be more effective in our marketing messages.”
To make those connections requires closer collaboration with the airport community and with retail partners, Easy to talk about, less easy to achieve.
Lal agrees that the focus on the bigger picture has never been more important.
“We know how the model works. Airports require increasing investment for their infrastructure and require therefore high revenues from their retailers and suppliers to deliver that.
“If that is our market then it’s all about growing the pie. But when the pressure starts to build the focus gets shifted to who gets what share of the pie. We still talk in these terms when the focus should be on sustainably growing the pie, not battling over our share when it is shrinking. If we go that road, then the model cannot work. That’s what we have to guard most strongly against.
“There are ways to combat that. If you split the pie based on a fair share, you can get the benefit of everyone working to grow the entire business. If you can generate synergise between the parties it can be so much more than an ‘I win, you lose’ model.”
That brings us back to the new Global Travel Retail unit and how effectively it can operate amid a fast-changing market. Here, says Lal, the de-centralised approach of Pernod Ricard will still be key.
“GTR is about building more empowerment into the regional and local teams. From where we are now to the implementation of the full organisation and strategy will not take very long because we don’t operate multiple layers. We can rapidly change what needs to change.
“If you keep the global traveller in mind, and build strategies that filter into each location, then local teams are empowered to act on this in the store. That creates an engine to do the right things. This global approach coupled with strong execution teams on the ground based on what they see happening is the model we see being most effective. Eventually, the battle is fought in the store.
“It’s fairly simple. From a portfolio standpoint we’re clear that Scotch and Cognac, plus Absolut vodka, are at the centre of what we do in travel retail. How we target travellers is where we plan to change the game. And that will fall into place over the months ahead.”
