Most honest executives would admit that they are still struggling with digital and reaching millennials. Part of

the problem is how quickly digital moves. One retail manager recently told BW Confidential that beauty stores have had a hard time implementing digital strategies as they aren’t used to the fast pace of change in this area. Another reason is that there is still little integration between traditional marketing and sales teams and their online counterparts at many major groups; the internet is perceived as separate, meaning valuable information is not being shared. A third reason is that some

large industry players are simply not agile enough to deal with changes in digital (and the millennial), which is why many of them are buying start-ups in that area. However, despite all this, the beauty industry has nonetheless come a long way

on the digital front. While just a few years ago, many dismissed the internet as not being prestige enough, now they are boasting about how much they spend on digital marketing and the growing importance of online in their business. And more companies are looking beyond traditional ways of reaching consumers and outside their own business to better exploit digital tools. One recent example of how successful this strategy can be is Estée Lauder’s collaboration with Victoria Beckham to create a make-up collection. Seen as a key influencer (Beckham has 12.4 million followers on Instagram), Beckham created a buzz around the Lauder brand and some of the products reportedly sold out just a few hours after they went on sale. To get a better grip on digital, beauty groups are likely to become a lot more influenced by today’s influencers. How the rules have changed.

Comment

The difficulties of digital

Oonagh PhillipsEditor in Chiefophillips@bwconfidential.com

Inside

CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

The buzz 5News roundup

Netwatch 8Social media monitor

Interview 10The Shilla Duty Free director of Travel Retail Cosmetics & Perfumes Changha Shin

Insight 15New opportunities in travel retail

Focus 18 Analyst viewpoint

Store visit 21Crème de la Crème, Vilnius airport, Lithuania

www.bwconfidential.com The inside view on the international beauty industry Sept 22-Oct 19, 2016 #136

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News roundup

At a glance...

Strategy

The potential sale of French beauty packaging specialist Albéa could be getting closer, according to news reports. Albéa’s owner, US-based investment fund Sun Capital, is said to be looking to sell the company. Sources say that a sale could value Albéa at around $2bn. It is thought that private-equity companies such as Bain, CVC, Advent or strategic players like AptarGroup or RPC could be interested.

Glass bottle manufacturing company SGD Perfumery has changed its name to Verescence. The change in name follows the demerger of its perfumery and pharmacy business units in January this year. Verescence is now solely focused on the fragrance and cosmetics business. Verescence posted sales of €330m in 2015.

LVMH has inaugurated Les Fontaines Parfumées, fragrance workshops for Louis Vuitton perfumer Jacques Cavallier Belletrud and Christian Dior perfumer François Demachy in Grasse, France. LVMH says the renovation of the Les Fontaines Parfumées site, a bastide in the French town, is a commitment to the preservation of the area’s fragrance expertise.

A new perfume museum is set to open in Paris in December, called the Grand Musée du Parfum. Located in a 1,400m2 (15,069ft2) private mansion on the city’s rue du Faubourg Saint Honoré, the museum aims to allow visitors to discover the history of fragrance and perfumers’ creative process. The museum has a partnership with France-based Syndicat Français de la Parfumerie (SFP) and with US flavor and fragrance firm IFF.

Retail

Harvey Nichols has unveiled a revamped fragrance space at its London Knightsbridge flagship store. The new fragrance hall is part of the renovation of the store’s beauty department, which was revealed in July. The fragrance hall stocks 50 brands, with a strong focus on niche scent lines. The store’s beauty department covering 13,000ft2 (1,209m2) moves away from traditional branded shop fits to create an interior similar to a luxury boutique. It now stocks 130 brands and offers a range of new services.

L’Oréal Paris has opened its first standalone store in Paris, France. The 40m² (430ft2) boutique, devoted entirely to make-up and called L’Oréal Paris Make Up Designer,targets millennials. It will stock 600 products, 150 of which will be exclusives, and will debut Nail Genius, an app to test products using augmented reality. n n n

Stay informed with our daily news headlines on www.bwconfidential.com

n SGD Perfumery changes its name to Verescence

n L’Oréal Paris opens first standalone store in France

n Christian Louboutin moves into fragrance

n n n Data

Millennials visiting the beauty category in travel retail are less likely than generation X or baby boomers to have a specific purchase in mind when they enter a store, according to new data from Swiss research company m1nd-set. Millennials are more likely to browse to see if they can find something for themselves or to spontaneously try to find a gift. Millennials are also more likely to look for and purchase travel-retail exclusives or gift sets in beauty. Some 70% of millennials say that their friends’ posts on social media influenced their shopping decisions, and that they are also interested in receiving coupons for discounts at airport stores.

Launches

French luxury shoe and accessories brand Christian Louboutin is making its first foray into fragrance with three women’s scents: Bikini Questa Sera, Tornade Blonde and Trouble in Heaven. Firmenich’s Pierre Negrin and Olivier Cresp created the scents. The fragrances launch in October priced at €275 for an 80ml parfum.

Italian company Euroitalia is to roll out a new men’s fragrance for Versace. Called Dylan Blue, the fougère scent was composed by Alberto Morillas of Firmenich. The scent launched in Europe from September. The EdT comes in four sizes: 30ml (€49), 50ml (€62.50), 100ml (€82) and 200ml (€111).

Puig has launched a new women’s fragrance for Carolina Herrera. Called Good Girl, the scent was composed by Louise Turner of Givaudan and comes in a bottle designed to resemble a high-heeled shoe. The EdP is available in three sizes: 30ml (€57.50), 50ml (€84) and 80ml (€109). It was first launched in travel retail in the Americas, Middle East and Europe in July and rolled out to other markets in September.

People

L’Oréal has appointed Emmanuel Goulin as Travel Retail Asia Pacific managing director. Goulin succeeds Eva Yu, and was most recently gm fragrance division France. The company has also named Yannick Raynaud as Travel Retail Americas md. Raynaud, who replaces Javier Labarta, was previously md Active Cosmetics in the UK and Ireland.

Switzerland-based La Prairie Group has appointed Jean-Marc Loi as regional director for Travel Retail Asia. Loi was most recently general manager of DFS Group’s T Galleria Beauty Causeway Bay in Hong Kong.

Groupe Clarins has named Christophe de Pous president of Asia Pacific and North America. De Pous was most recently chairman and ceo of Gucci North America.

UK-based fragrance house CPL Aromas has named Yousef Yasmineh general manager for CPL Aromas Dubai. Yasmineh was most recently Givaudan area sales manager for the Middle East & North African market. n

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BW Confidential reports on what’s being said about beauty on social networks

Net

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The latest cushion foundation launches by Western brands have been winning the approval of bloggers, with some noting an improvement in formulas compared to earlier launches. The products are liked for their practical compact formats and long-lasting coverage.

Health and beauty chain Boots’ Beautiful You consultation service has been praised on the blogs. The book-in consultation service offering complimentary skin analysis for personalized product recommendations was singled out for the impartial and free advice it offers consumers. The service is also said to help consumers tackle the overwhelming choice of beauty products on offer.

Danish organic beauty brand Kjaer Weis is liked in the blogosphere for its luxury take on organic and sustainable cosmetics. Product performance is said to vie with that of non-organic brands, but on the downside the items are too pricey for many reviewers.

US-based department store Macy’s announcement that it would close 100 stores has been described as “crushing” news by bloggers. However, some commentators used the news to discuss the poor service and unfriendly staff in Macy’s stores, while highlighting what they see as a better-quality shopping experience in beauty brands’ standalone stores, which are proliferating.

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The Shilla Duty Free director of Travel Retail Cosmetics & Perfumes Changha Shin

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The Shilla Duty Free director of Travel Retail Cosmetics & Perfumes Changha Shin talks about growing competition in Korea, the company’s beauty progress and international expansion

How is beauty performing for The Shilla Duty Free? Shilla’s sales increased by 13% to $1.9bn from January to August compared to the same period last year. Sales in cosmetics and perfumes also increased by 13% over the same period to $1.05bn, accounting for 54% of Shilla’s total sales excluding overseas stores and the Shilla I’Park Duty Free [a downtown outlet in Yongsan, Seoul].

What categories, passengers, price points and brands are driving growth? The growth of the cosmetics category has been outstanding considering the reduction in space at the Seoul Incheon store in September 2015 and the termination of business at the Seoul Gimpo outlet in August 2016. The growth of cosmetics at the downtown stores in particular led Shilla’s total growth (Seoul: 49% increase, Jeju 42% increase). [Sales of] K-Cos products have increased by 16%, due to the Chinese buying influence, while international cosmetics sales are up 7% [from January-August 2016]. The most improved product category in cosmetics was make-up. The make-up sector has increased by 23% and YSL, Giorgio Armani and Givenchy showed an outstanding performance. In perfumes and cosmetics, the mix of Chinese travelers was 56% last year, but it has risen to 70% this year. Korean passengers account for 22%, which decreased by 12% from last year. Over the next few years, Chinese consumers are expected to play a pivotal role in Korea’s duty-free market. This might pose a risk for duty-free operators because the current dependence level on Chinese customers is extremely high. To solve this problem, Shilla is developing marketing strategies to attract more Korean customers.

Your Korean airport sales have fallen due to reduced floor space, how can you boost your airport business? Shilla’s operations in Incheon airport’s concourse were terminated in September 2015. The operational area in the terminal has also been downsized and the competition with new retailers has begun. Operations at Seoul Gimpo airport were also terminated in August 2016. Considering the accumulated deficit in the two airport shops, it seemed a rational decision to take the decrease in sales volume and ensure internal stability.To strengthen its position, Shilla is in the process of expansion overseas. More diverse

and stable channels are necessary since Korean duty free is highly dependent on Chinese customers and sales transitions to the online channel are accelerating. International developments include the introduction of a downtown duty-free store in Phuket in September 2016 and the opening of a downtown duty-free outlet in Shinzuku [Tokyo, Japan] in the first half of 2017. The investment in DFASS is part of Shilla’s new strategy that goes beyond Asia.

Korea moves

To strengthen its position, Shilla is in the process of expansion overseas. More diverse and stable channels are necessary since Korean duty free is highly dependent on Chinese customers and sales transitions to the online channel are accelerating

“

”The Shilla Duty Free director of Travel Retail Cosmetics & Perfumes Changha Shin

CONFIDENTIAL CONFIDENTIAL CONFIDENTIAL

Over the next few years, Chinese consumers are expected to play a pivotal role in Korea’s duty-free market. This might pose a risk for duty-free operators because the current dependence level on Chinese customers is extremely high

“

”The Shilla Duty Free director of Travel Retail Cosmetics & Perfumes Changha Shin

s The Shilla says it has seen strong growth in beauty, despite the reduction in space at the Seoul Incheon store in September 2015 and the termination of business at the Seoul Gimpo outlet in August 2016

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How will increased competition following last year’s government licence additions impact your beauty business? Korea’s duty-free market has increased since December 2015 due to new operators entering the market. The size of Korea’s duty-free sector was $5.5bn from January to July 2016, up 26% from the same period last year. The sales volume of downtown stores in particular has increased by 37% due to the addition of new duty-free stores, while sales at airport outlets decreased by 5%. The arrival of new operators has resulted in a more competitive environment. Therefore, this has increased Shilla’s investment, promotional and discount costs, which produced a negative effect on profits. This is particularly the case with online, which allows customers to compare prices at any time. The online duty-free market has become a lot more competitive, so existing duty-free store operators must invest more to secure their customers from competitors’ aggressive marketing promotions.

How do you see increased commissions costs of Chinese travel agents? Since the advent of newcomers on the market, the competition to recruit customers has intensified and therefore the commission paid to tour agencies is increasing unbearably. As it is crucial to cooperate with them to increase sales, this structure is expected to remain unchanged for a while. Newcomers are raising the commission rate to secure market share during this early phase; however, we expect to see less competition later when they start taking action to reduce the deficit range.

How is your beauty assortment changing?Chinese customers quickly embrace brands that become well-known through viral marketing. They are also very price sensitive, and many customers use their mobiles to search on-site. To keep up with changing brand preferences, Shilla has enlarged the K-Cos zone and given make-up brands prime locations.

What are you doing to improve the in-store experience? More customers are purchasing online and it accounts for around 30% of the sales mix within Shilla’s total cosmetics offer. Offline shops need to strengthen the customer experience, and to do this we are focusing on different in-store promotions that can only be executed on-site. We are enabling brands to take more promotional opportunities by increasing HPP and SPP zones. Also, through VIP invitations, beauty classes and make-up events, offline stores are becoming more active and energetic. In terms of discounts, we separate the online and offline channel, and provide more specialties to customers who visit the store. However, since customers constantly compare prices, this may not only trigger competition among competitors but also stimulate competition between the online and offline environments. n

The Shilla Duty Freel Full-year sales 2015: $2.56bnl Global market share: 6%Source: Vontobel Equity Research

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From the off-airport channel, millennials and digital, to new category opportunities, beauty in travel retail is bursting with potential growth areas

Retailers and brands are looking to push the development of the travel-retail beauty category to new heights. It’s a segment that bucked the industry trend last year to

show growth of 2.5% to $19.7bn, despite a drop in sales across all other duty-free and travel-retail categories, according to Generation Research.So where are the new opportunities? This year, the men’s fragrance category has

performed particularly well, showing potential while other segments remain flat, according to research from Horizon Consumer Science. The company’s founder and president Ian Cesa comments: “Overall, the opportunity that seems to be growing, while others are stagnant is men’s fragrances, which is the third-fastest growing category—behind chocolate and men’s fashion.” In 2016, 26% of men bought fragrances, compared with 20% in 2014 and 23% in 2012, according to a study by Horizon. Women’s fragrances are purchased by more travelers, but sales are decreasing: around 28% of women bought fragrances in 2016, compared with 30% in 2012.

Color cosmetics boomThe color-cosmetics segment is set to flourish in travel retail and has been hailed as the one to watch by many beauty houses over the next five years. Digital developments and new product innovation will propel its growth and it is set to tap into spend from the highly sought-after millennial travelers. Lip items are particularly strong as the price point is lower compared with other make-up sub-segments, skincare and fragrances. n n n

New opportunities in travel retail

Pastures new

Insight

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Digital will unlock further growth in the beauty category by enabling the opportunity for personalization in the segment

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”CiR managing director Garry Stasiulevicuis

credit: istock

However, development is not without its challenges as price, sku and space issues need to be considered to accommodate the pace of its progress.By far the most dominant type of products that consumers want to buy in duty-free

shops are famous brand names, according to Cesa, followed by items that are exclusive to duty-free stores. “Beyond these, there is lukewarm interest in a number of product concepts, such as multi-packs with discount and new products not available elsewhere,” he notes. “The least popular things to buy are products that are exactly the same as those that can be purchased on a traveler’s home territory. Consumers are taking advantage of expected price savings to buy things they probably would not be able to afford at home.”Horizon’s report indicates that Chanel continues to be the strongest beauty brand in

airports, and it has strengthened its position as the most likely brand to be purchased. Gucci and L’Oréal Paris are also growing in popularity. From artisan and niche scents to high-end collections, many players have heralded

the importance of haute parfumerie. Brands and products in vogue are Armani Privé, Memo Paris, By Kilian, Lalique Premier Noir collection and the Guerlain private collection, according to UK staffing and travel-retail specialist Blackjack Promotions. The demand for certain types of rare ingredients such as oud and amber, combined with refined luxury and story-telling, is also pushing growth in the segment. Blackjack Promotions senior beauty account manager UK Kim DeVito points to new

store concepts encouraging a boutique-feel to make the passenger shopping experience more luxurious and personalized. She says the new haute parfumerie concept for World Duty Free in London Heathrow terminal 4 feels like it is a boutique even though it is technically in the retailer’s main store. “Passengers wanting ultimate luxury from their fragrances can browse a niche selection of scents containing fine and rare ingredients in one boutique outlet,” she comments.Premium haircare has been touted as the next travel-retail trend. Revlon has outlined

the potential in travel retail for its Uniq One salon brand, while Moroccanoil and Aveda are also developing in the channel. L’Oréal Travel Retail is rolling out treatment brand Kérastase and Unilever International’s styling label Toni & Guy is continuing to expand with mini-styling sessions as part of the Hair Meets Wardrobe Style Bar concept.Health and well-being brands within the skincare category are growing in momentum

too, alongside more traditional labels. This ranges from the dermocosmetics segment covering brands such as Vichy and La Roche-Posay (with the Dermacenter concept) to natural labels such as Nuxe and L’Occitane; there is potential for smaller brands such as Ren and Korres. Well-being brands such Rituals, are growing in popularity and brands within the sector have also noted travel retail’s potential.

Off-airport & passenger profilesOff-airport beauty buying increased from 35% in 2012 to 40% in 2016, according to figures from Horizon Consumer Science, while beauty purchases at the airport are declining from 28% in 2012 to 24% in 2016.“There are two phenomena we have seen that are driving off-airport purchases,” remarks Cesa. “First, major shopping centers are becoming a higher priority for travelers, while airport duty-free shops are declining in popularity, particularly among young consumers. Consumers are choosing their shopping locations based on the concentration of the brands and products that they want to buy. Second, in the beauty category, travelers are finding that off-airport shops, like department stores, are offering very generous samples, and this seems to be driving some

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In the beauty category, travelers are finding that off-airport shops, like department stores, are offering very generous samples, and this seems to be driving some of the footfall, so this results in a stronger perception of value for money

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”Horizon Consumer Science founder and president Ian Cesa

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Niche fragrances, haircare and well-being are seen as key areas for future growth in travel retail

of the footfall, so this results in a stronger perception of value for money.” In terms of travelers, Horizon indicates that passengers from Thailand, Indonesia, Saudi

Arabia, Italy and the US are the nationalities driving the fastest growth in beauty. The Chinese are also strong beauty buyers; however, the number of Japanese travelers buying beauty has dropped by almost half from 57% in 2012 to 34% in 2016.As for demographics, millennials are more likely to peruse cosmetics and skincare

categories than older generations and they are significantly more likely to visit an arrivals store. This was among the key findings from travel-retail research agency Counter Intelligence Retail (CiR) from its Global Beauty Report 2016 on millennial shoppers. In terms of brand recruitment, 20% of millennials bought a beauty brand for the first time in duty free, according to CiR. But post-millennials buy more items and spend more, driven by fragrance.

Doing digital & prices issuesMillennials are now undoubtedly the most digitally engaged consumers, making digital strategies ever more crucial. CiR managing director Garry Stasiulevicuis believes that the roll-out of beacon technology and geo-specific apps will continue to develop, enabling better demographic targeting. “We believe digital will unlock further growth in the beauty category by enabling the opportunity for personalization in the segment, from offering monogrammed packaging to developing a bespoke skincare profile or make-up coloring profile,” states Stasiulevicuis. Meanwhile, Blackjack Promotions’ DeVito suggests that virtual reality is creeping into UK travel retail with some good successes. Despite all of these growth areas, the big and long-standing issue for brands and

operators in airports is still value for money, and it’s one that is becoming harder to deal with as consumers are better informed. Beauty shoppers, particularly women, appear to be the most price-sensitive traveling group, according to Cesa. “If the airport retailer does not have a price that is competitive with the consumer’s best price then a lot of sales will be missed,” states Cesa. “It is important to understand where target consumers are getting their information about price and to comprehend what avenues are open to travelers for buying, or taking delivery of goods while they are on a trip. For instance, Chinese travelers are shopping in the duty-free shops on departure from China, pre-ordering products they want. They are still shopping for the same products while away, but only buying if the price is better than what they have already obtained with their pre-orders. If they can’t find a better price than the pre-order price they simply don’t buy and pick up the pre-ordered product on their way home.” The prospects for beauty in travel retail may be bountiful, but considering price and availability will be core factors in the sector’s growth in the future. n

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s Analyst viewpoint

Barclays analyst Lauren Lieberman

Morningstar senior equity analyst consumer packaged goods Erin Lash

Ohana & Co managing partner Ariel Ohana

Brand Growth Management principal Kelly Kovack

How do you see the performance of beauty at present?LL: The resilience of the category globally is fascinating, even though there has been a slowdown in skincare, particularly triggered by slower trends in Asia. [What] social media has meant for make-up is remarkable, [as is] what it is starting to mean for skincare; for example, the notion of instant benefits, masks and contouring creams. Even if anti-aging is taking a bit of a break, I think that will come back. I’m intrigued by how fragrance may develop.EL: This year, category growth has moderated. There are significant competitive pressures not only from other nationally branded players, but also from local peers. Major players have discussed making sure their products are on-trend, and in some regions they have fallen short in that regard and fallen victim to intensified competition from local players. Growth in make-up has been outpacing skincare, and that’s a trend that we expect will persist.AO: Beauty players are showing an incredible appetite for acquisitions—a sign of their optimism. This appetite can be measured by both the number of acquisitions and the valuation multiples; on both indicators it seems we are going to beat historic records for the past 10 years [in 2016]. But this appetite is not across all geographies and product categories. When looking more carefully some very clear trends appear which tell us how the large beauty players are positioning themselves for the next five to 10 years. For instance, in fragrance, the market had long been animated by acquisitions of licenses of fashion brands, then by celebrity brands. Recently, key acquisitions have been essentially niche perfume houses.KK: It’s a tough time in many respects. Retail is still tough. There are some interesting trends that are opening up new category opportunities. Millennials approach glossy ads with a lot of skepticism and are into expressing themselves and have this “it’s good enough” mentality. It’s more about optimizing the aging process as opposed to striving for perfection, and that sits well for companies that are naturally positioned.

What are the key challenges and opportunities for beauty players?LL: Beauty will remain a business with a fickle consumer that likes to experiment. That’s where the challenge for brands will remain. In Latin America, economic hardship makes things a bit more challenging and it’s already a very well-penetrated market for beauty. Asia is developing in terms of being an untapped opportunity for make-up. Fragrance is interesting to watch and I think skincare will come back. Travel retail is a tremendous environment, and many companies have done a great job of bringing more service and experience to that channel. But there are a lot of airports that don’t look like Heathrow Terminal 5 yet; I still think travel is a big opportunity.EL: Making sure that products stay on trend and aligned with consumer interests

BW Confidential talks to four industry analysts about the state of the market and what lies ahead

What’s next for beauty?

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is key. The emergence of e-commerce and social media has given a leg up to smaller niche competitors, and intensified that competitive landscape, and that is a challenge. Obviously the core traditional department-store channel has been under pressure, specifically in North America, so making sure the distribution of products is diversified and having them in front of where consumers are shopping is key. AO: There are changes in what the consumer wants (specialist brands over generalist brands), how the consumer is influenced (social media over traditional media) and how and where the consumer shops (physical retail versus online). KK: Challenges are the integration of digital and online into the rest of [brands’] business; it’s still very siloed. Everyone recognizes that it needs to happen, but there are still challenges around that. [Digital is] something that everyone is grappling with: how to do it without impacting the rest of the business? Often it still feels a little disjointed. The industry has a flow of spring and fall, maybe loosely inspired by what’s happening on the runway. Today’s consumers, especially millennials, don’t want to be told that two times a year the looks are going to change; it’s much more fluid. I don’t know if those structures that have driven the industry are going to work long term; they feel a little stagnant.

How do you see the recent wave of M&A impacting the industry? LL: There will be more. I see Coty being more acquisitive. L’Oréal has publicly said that having such an active start-up market is good for the big companies as it shows it’s a vibrant, growing category that people want to participate in. It creates opportunities for the big companies to consolidate and be part of that growth.EL: [Market players] will continue to look to snap up small niche players that offer entry into specific categories or geographic regions.AO: The indicators are very positive. Valuation multiples are at their highest historic level. Many families who had planned on keeping their companies in the family for generations are compelled to question this strategy given the current opportunity/threat scenario: the opportunity to benefit from a high valuation versus the threat of competing for shelf space with brands owned by large groups. Unless there is a major geopolitical event, we should continue to see the same level of activity.KK: [Megadeals] will play a large part in defining what beauty will look like. There’s no way we can sustain the number of transactions that have happened in the past three years. There aren’t that many brands left that fit the traditional criteria for a transaction. Either businesses don’t want to be sold or there is another reason—financial or otherwise—why they are not appealing targets, and some of these [potential target] businesses just aren’t big enough. n

There has been a slowdown in skincare, particularly triggered by slower trends in Asia. [What] social media has meant for make-up is remarkable; [as is] what it is starting to mean for skincare

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”Barclays analyst Lauren Lieberman

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Crème de la Crème opens haute parfumerie duty-free store at Vilnius airport

Lithuanian prestige retailer Crème de la Crème has expanded into travel retail by opening what it claims is the first duty-free store dedicated to high-end niche

fragrances. Located in Vilnius airport, Lithuania, the 24m2 (258ft2) store opened in May. The retailer, whose stores aim to offer hard-to-find brands in a luxury setting, opened

the new store due to what Crème de la Crème parent company Alteus partner Andrius Remisevskis describes as “the unmet need of premium travelers for more exciting shopping in too standard an airport environment”. The store features pink marble, and the group collaborated with scientists in the field of

neurophysiology to create a custom green color, chosen for its calming qualities. In terms of offer, the store aims to draw in consumers with travel-retail exclusives. “We are the first in the world, for example, to carry Editions de Parfums Frédéric Malle in travel retail,” says Remisevskis. As a land retailer and distributor which won the concession directly with the airport,

Crème de la Crème faces competition from dedicated niche corners in the stores of big duty-free players. However, Remisevskis notes: “For larger players, despite immense buying power, [the] haute parfumerie segment is often managed [in the same way] as regular mass selective brands; there is little effort to make haute parfumerie brands stand out and many of the corners are poorly serviced and poorly designed, as well as [being] located too close to mass selective brands.” To compete with major operators, Crème de la Crème says it will focus on a varied

product range and service as opposed to aggressive price promotion. There is a strong emphasis on staff training too. Crème de la Crème is looking to expand the concept in the travel-retail channel, and

is aiming for locations in the three Baltic countries of Lithuania, Latvia and Estonia. Remisevskis adds that he is considering partnerships with some airport operators, which often find niche brands too complex to handle on their own, and is also looking at the possibility of entering larger airline lounges. n

High-end duties

Store visit

Crème de la Crèmel Location: Vilnius airport,

Lithuanial Size: 24m2 (258ft2)

l Special features: Travel-retail exclusives; emphasis on

service and training; decor features a specially developed

green color, created in partnership with scientists for

its calming effects

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s The store’s decor features pink marble and a shade of green that is designed to be calming and was developed with scientists in the field of neurophysiology

s The store aims to offer exclusive and hard-to-find brands in travel retail, such as Editions de Parfums Frédéric Malle and Byredo

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