Victoria’s Secret takes the international plunge – 29/09/04

Pink by Victoria's SecretWorld Duty Free becomes the first international retailer to handle the Victoria’s Secret fragrances, cosmetics and gifts lines. Picture: Pink by Victoria’s SecretUK/US. In a story first revealed by The Moodie Report, World Duty Free and US beauty brand Victoria’s Secret Beauty announced on 20 September that they had entered into an exclusive retail agreement.

The UK company becomes the first international retailer to handle the Victoria’s Secret fragrances, cosmetics and gifts lines that have taken the US domestic market by storm. Martin Moodie spoke to Victoria’s Secret Beauty Chief Operating Officer Jill Granoff and Vice President of New Business Development Sandra Heppenheimer about the deal.

The Moodie Report: Sandra, you’re obviously very familiar with travel retail through your past experiences with CKOne. So did the channel come up on your radar pretty quickly when you joined Victoria’s Secret Beauty?

Sandra Heppenheimer: When I joined the company it was with the idea that we saw the [US overseas] military business developing and in time to come that travel retail would be a viable business – but only when we were ready.

Now you are ready and outside the military this is your first big plunge internationally. Why did you choose to do that with a travel retailer rather than, say, a Harrods or a Harvey Nichols?

Sandra Heppenheimer: We’re very focused on developing this special market. The travel retail market in this category is a US$5 billion business and it is very tantalizing…and growing.

Having had previous history with the World Duty Free people and knowing that of the US$5 billion I mentioned half is in Europe – and of that number half is in the airports – made it very easy for us to focus on where we wanted to put our efforts. Knowing World Duty Free from my previous experience, I just knew they were the right partners.

Lynne Phillips-JenkinsSpoiled for choiceWorld Duty Free fragrance buyer Lynne Phillips-Jenkins laughs that Victoria’s Secret isn’t going to be a secret much longer. She told The Moodie Report how excited she was about the wide range of products on offer – and in particular the range of price points.”Not everyone wants to spend £20-25 on a gift, and within our shops, there is not much available under that price in terms of [fragrance products],” she explained. “Victoria’s Secret has created some amazing items that start at just £4.50. And even higher up the scale you feel that you are getting a lot for your money. We believe this will encourage new customers to come in and spend. “In addition, these gifts are so innovative. They have created things that you just don’t see anywhere else.” A prime example is the intriguingly-named ‘Swivel Your Lips Glosses to Go’. This is a jeweled, mirrored, fringed silver compact that contains a lip gloss duo. It hooks onto a belt loop, combining portable beauty and fashion in one swoop. Phillips-Jenkins also singled out ‘All That Shimmers’ Body Powder & Brush. “This is such a great product, we have very high hopes for it,” she said. The collection comprises a trio of shimmering scented body powders, which are dispensed by twisting the integrated, over-sized brush. Three fragrances are available: PINK, dream angels heavenly, and Very Sexy for Her. “There were so many great items to choose from. Making our final selection was one of the hardest parts of the project.”Jill Granoff: We didn’t want to invest in bricks and mortar in the local market so it was easier for us to go into an established retail channel. World Duty Free is one of the leading retailers, they’re very innovative and with similar values to ours. They’re focused on the customer, they believe in long-term relationships, they’re willing to take bold moves with regards to marketing and merchandising and that’s the type of company we like to partner with.

We thought this would be a great way to get our toe in the water and based on our success here, we can determine whether we want to develop local market opportunities beyond that.

Besides choosing a travel retail company, you chose a UK one. Why this choice of market? Was it simply a question of scale?

Sandra Heppenheimer: Some 130 million people go through the [BAA] airports, so that’s a very good way to establish your product across a broad consumer base. It’s very focused, the consumer is there and World Duty Free shares similar values to us – with a focus on innovation and the consumers’ needs, just as we are in our stores in America.

So when you look at where the volume is, where the traffic is, at, say, Heathrow and Gatwick airports, it became a natural target for us.

And BAA is hardly a small player in the UK beauty market per se?

Sandra Heppenheimer: That’s right; I think they claim 20% of the market.

And much of that is built around the gifting sector, an area in which Victoria’s Secret Beauty seems particularly active?

Sandra Heppenheimer: We are. We’re not just going to do fragrances. We will also introduce a range of unique, giftable items. It’s really a white space category not developed by any other business, and one where we’re very strong.

Our company has won five FiFi awards, three for men, two for women, so we know we have an excellent portfolio of prestige fragrances, but so do many of our competitors. But no-one is in the giftable category the way we are.

And do you see yourself becoming a global travel retail player?

Sandra Heppenheimer: I think that the US$5 billion number is very attractive to us. But first we want to test it, we want World Duty Free to respond to us. We’re very open to opportunities once we have a better understanding of our viability in this world.

Jill Granoff: Right now we will really focus our effort on leveraging our relationship with World Duty Free and capitalizing on the opportunity here. Once we get it right here, we’ll begin to make inroads into other markets.

Sandra has extensive experience in the travel retail market. We have developed a multi-year, multi-market plan so if in fact, we are successful – and we believe we will be – we will then look at alternative markets to introduce our products.

How’s the chemistry with World Duty Free?

Sandra Heppenheimer: Outstanding. When you’re doing a project like this you need to choose the right partner, people who can share your values. We have worked so well together before; we understand each other and they’re very dedicated to innovation and have a lot of long-term vision and entrepreneurial spirit. Those are the sorts of things you’re looking for when you’re pioneering something.

Jill Granoff: It all feels great. We’re very passionate. We’re focused on doing things that are innovative and trail-blazing to really capture incremental share. So it felt great from day one. We’ve just spent the past two days with both Nigel Keal and Lynne Phillips-Jenkins of World Duty Free and if that’s any indication of how the future will be, we think it will be very, very successful.

We’ve been able to get some great locations, some outpost locations and an innovative marketing presence.

Victoria’s Secret Beauty is a US powerhouse. How will that translate into international markets – US brands don’t always ‘travel’ after all?

Blazing a trail in travel retail: Victoria’s Secret Beauty executives Jill Granoff and Sandra HeppenheimerJill Granoff: Today we distribute our catalogue to 127 different countries so there is awareness of the brand on a much broader basis than just the United States. What’s amazing is that many people actually think that Victoria’s Secret is a British brand.

So we think that, particularly in the Anglo markets, there is a very, very high awareness level. So many people travel to the States. We have a unique positioning – everything that is sexy yet sophisticated and feminine. We believe that will resonate to a global customer.

So we’re confident, especially in the UK, about the potential for the brand. If you start with fragrance alone, the travel retail market is so big at US$5 billion and so even if we can get a small share of that market it represents a very sizable opportunity.

We have been very successful with our fragrance launches in the US. When I joined Victoria’s Secret about five years ago, we were about US$450 million [in sales]; we’ve almost doubled that to around US$850 million. Most of that has been driven by the new fragrances.

We’ve launched several fragrances in the past five years, we currently have the number one fragrance in America, we have three of the top 20 in women’s and one of the top 10 in men’s. So these brands have proven very successful with the customer and now we want to take them here [the UK] and capitalize on that success.

Do you think that not having an established UK domestic market presence could hold back your development in UK travel retail?

Jill Granoff: We don’t. There is so much traffic through the airports. World Duty Free not only has 20% of the UK market but for several of the leading fragrance brands their number one doors are at the airports.

Finally, in terms of the internationalization of Victoria’s Secret Beauty, how important is this?

Jill Granoff: It’s the first step for us. We’ve thought long and hard about it. We think this will be the beginning of a very bright future internationally for the Victoria’s Secret Beauty brand.


Victoria’s Secret is out as US beauty house sees World Duty Free as key to global expansion – 20/09/04

‘Defining moment’ for World Duty Free as it secures Victoria’s Secret agreement – 20/09/04

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