Post on 11-Feb-2017
60,3 US$ billions
1,087 billion travellers
1,159 US$ billions spend
Perfumes and cosme@cs 30% of market share
Giulia Fraccaroli Anna Frontani Uroš Jovanović
BEAUTY FREE TEAM
AGENDA
6th Con@nent overview
6th Con@nent inhabitants
Lancôme analysis
Conclusions
Roots of beauty
6th Con@nent overview
$ 120
$ 60
2011 2012 2020
Market size and trends
$ 37 $ 56
$ 46
2013 2010 Travel Retail size
[billion]
DDF
New (mega) airports, BM change, Aerotropolis
DDF DDF “fever” in Asia
China-‐ ‘New Caribbean’
Digitaliza@on of services
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
Travel Retail evoluMon 2014-‐2024
2014 Consolida@on Branding Legisla@on Omni-‐channel Convenience
Source: WTM Global Trends Report
Travel Retail evoluMon 2014-‐2024
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
6th Con@nent inhabitants
Global DF (non-‐)shopper
GLOBAL DUTY FREE SHOPPER
56% 44%
19% 81%
Low (0-‐3) 48% Regular (4-‐7) 34% Frequent (7+) 18%
! Duty free are preferred POS ! PromoMon ! Gicing
GLOBAL DUTY FREE NON-‐SHOPPER
51% 49%
78% 22%
Low (0-‐1) 38% Regular (2-‐3) 43% Frequent (3+) 19%
! Lost relevance ! Other acMviMes ! Value percepMon
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
Source: TFWA Global Duty Free & Travel Retail Non-‐Shopper Research Study
Where do they...
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
come from?
go to?
Travel retail segmentaMon
Travel purpose
Flying frequency
Gender Age [years]
Income [$/month]
DF purchase frequency
Categories
Bargain seeking self-‐indulgers
<35 1000 -‐5000
Low income promoMon swayed
<30 <2000
Low budget gic shoppers
<35 <2000
EmoMonal high seekers
<30 1000-‐6000
ConvenMonal deal seekers
>50 <5000
ExecuMve pre-‐planners
46-‐60 >9000
AuthenMc product seekers
All ages
>6000
InspiraMon seekers All ages
<5000
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
Source: TFWA The Travel Retail Industry's 1st Global & Cross-‐Category SegmentaMon Study
China, Russia & Brazil ! Most ac@ve social
media community ! Maximize savings ! Needs:
engagement, experience and trust
! Imitate the preferences of the West
! Looking for high quality foreign products
! Huge untapped market for foreign travel
! Spending overseas (129 US$ billions)
! Awareness of product offer and latest trend
6° ConMnent inhabitants
6° ConMnent overview Lancôme analysis Conclusions Roots of Beauty
Lancôme analysis
Lancôme Brand & Heritage
Armand Pe@tjean
Fragrances
Luxury and femininity
Happiness & Smile
The French Touch Le Château
de Lancosme
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Digital strategy
Official web site tools Viral strategy
Virtual mirror Elite Rewards CRM
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Lancôme Performances
Brand Value 6,811 US million
dollars
Market Share 8,5%
L’Oréal Luxe sales +7,5% (stable growth)
Digital Strategy
Lagging in introducing TR
Division
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Source: L’Oréal Annual report
Porter’s 5 Forces
Intensity of Rivalry 6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
! Worldwide reputaMon ! Belonging to LVMH ! More than 200 wholly owned POS
! Specialized in Asian skincare ! Strong presence in Japan ! Low group performances
! Highest brand awareness ! Strong heritage ! TesMmonials
! Longer experience in travel retail ! Strong brand reputaMon ! Geographically diverse business
Lancôme CompeMMon
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Travel retail experience
Beauty assistant touch Hand luggage burden No taste provided
Being special Buying a gic Time pressure
Shop assistant voice Music Outside noise
State-‐of-‐art POS Excellent visual experience Screens and ads CompeMtors products and ads
Shop fragrances
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Lancôme in Travel Retail
Loyal to brand, planned purchase, knows exactly what she wants
Lancoyal
Impusive shopper, fashion vicMm not loyal to specific brand
Beautymo@onal Buying gic for partner, no loyalty, interested in fragrances
Serial girer
Showing their new status, not decided on the brand, needs assistance
6th cont. immigrants
Placement & Physical Evidence
PromoMon Product & Price PersonalizaMon & Personnel
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Conclusions
Strengths S trong posiMon on the market
T ravel retail experience provided
R etail POS state-‐of-‐art
E xclusive travel retail porsolio
N oterworthy markeMng acMviMes
G reat digital strategy
T ailor-‐made approach for different naMonaliMes
H igh brand awareness
S upport of L’Oréal
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
W orld shopper database missing
E ffect of intermediary sales channels
A besence of more natural ingredients
K ey relaMonship formed with some compeMtors (LVMH)
N ot too much direct point of sales
E xperience needed in young populaMon cosmeMcs
S hould have integrated social media channels
S ide effects of L’Oréal relaMonship
Weaknesses
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
OpportuniMes O pening of new assets and concession space (airports)
P erfumes and cosmeMcs category is N°1 and growing
P urchaising power and middle class is rising in emerging markets
O pportunity of acquaring new consumers
R elevance of air-‐travel increase
T “ravelling = shopping” consumers’ mindset
U nleashed power of digitalizaMon
N ew DDF shops opening in Asia
I ncreasing interest in beauty products
T rend of beauty EuropizaMon among Asian consumers
Y oung populaMon targeMng
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Threats
T ravel retail growing complexity
H igh profitability could ayract new compeMtors
R ole of facilitators is crucial E nvironment requirements’ spread
A uthoriMes impact
T ransformaMon of conusmers needs
S ocial media can have a negaMve impact 6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of Beauty
Roots of beauty
Roots of beauty idea
Unapeđenje Časova fizičkog
3. General mission of ayracMng and acquring new consumers from emerging countries
1. Provide an unique travel retail experience to Lancome consumers
2. No integrated consumer database with info about travel shoppers
1. Exclusive and once in a lifeMme experience provided
2. Elite Rewards loyalty CRM database expanded specifically with travel shoppers
Post-‐event promo@on
Pre-‐event campaign
Ac@vity Issues Outcomes
3. InnovaMve special event that could be repeated annualy with great viral potenMal
Roots of beauty event
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of
Beauty
Roots of beauty event
Roots of beauty
6° ConMnent inhabitants
6° ConMnent overview
Lancôme analysis Conclusions Roots of
Beauty
BEAUTY FREE TEAM THANK YOU FOR YOUR ATTENTION
KPI for TR industry
Region / KPI [percentage growth]
Middle East
Africa Asia Americas Europe
Travel retail value (US$) 10,2 2,1 5,6 5,6 1,6
Real GDP growth 4,8 6,1 5,8 2,6 2,7
Arrivals 6,9 5,5 5,5 3,6 2,8 Incoming Tourist receipts
value (US$) 10,0 6,5 5,9 6,3 1,8
Air transport value (US$) 8,8 5,9 7,3 6,5 1,6
Table 2: Key performance indicators for travel retail industry (Growth in %, 2014)
Table 3: Es+mated Air traffic Size and regional growth (2014-‐2034)
PoliMcal
! Tension between Europe/USA and Russia regarding situaMon in Ukraine (Trade embargo in Russia)
! Regional (South Korea-‐North Korea, Israel-‐PalesMne, Serbia-‐Albania) and local poliMcal tensions (Hong Kong, Mexico, Burkina Faso)
! Government poliMcs towards free economic zones ! Different countries policies towards travel documents’ release
! North Africa’s civil wars ! Middle East civil wars
Economical
! Emerging markets’ strong economic growth (BRICS)
! The 2008 world economic crisis ! VariaMons in taxaMon policies ! GlobalizaMon ! Growing cost of energy and transportaMon ! Interest and exchange rates values
Social
! Demographical changes (increase of ageing populaMon in developed countries and younger populaMon in undeveloped ones)
! Rise of the middle class in BRICS ! ServiMzaMon ! Growing complexity in consumer behaviours and needs ! Internet as the main source of informaMon ! Different concept of beauty different countries ! Fear of Ebola epidemic spread-‐out and terrorist acMons ! Cultural differences in travel retail shoppers ! Health and wellness consciousness
Technological
! DigitalizaMon ! Sustainable transportaMon trends ! New technologies and venues introduced in airports to control traffic (Aetropolis concept)
! Expansion of e-‐commerce tools ! Shorter product life-‐cycle ! Growing importance of R&D acMviMes (innovaMons and patents)
Environmental
! Rising awareness on environmental polluMon reducMon
! Growing importance of “green” technology in transportaMons
! Consumers` awareness about eco-‐friendly products/services
! Climate changes and global warming ! Increase of the volume of the exploitable oil reserve
Legal
! Different regulaMons regarding duty free areas throughout world
! Growing restricMons on tobacco industry (i.e. cigareye ban in Australia)
! Different restricMons on what passengers can bring on the plane (liquids, gels and aerosols)
! RegulaMons on products’ ingredients ! Presence of anMtrust laws ! Consumers and employees laws
Air-‐travel trends
Region Asia Pacific
North America
Europe La@n
America Middle East
Africa
Market size 2.9 billion 1.4 billion 1.4 billion 605
millions 237
millions 294
millions Annual avg. growth rate
4.9% 3.3% 2,70% 4,70% 4,90% 4,70%
Table 3: Es+mated Air traffic Size and regional growth (2014-‐2034)
Porsolio and its SWOT Porsolio’s Strengths
Good cleansers; Almost all of the sunscreens contain either avobenzone, ecamsule (Mexoryl SX), or Mtanium dioxide for sufficient UVA protecMon; Several excellent foundaMons with beauMful shades for almost every skin color; Lancôme is known for their mostly outstanding mascaras; Some fantasMc lipsMcks and automaMc lip liner.
Porsolio’s Weaknesses
Expensive for what amounts to mostly mediocre to below-‐average products; Silicones and Parabens present in almost every product; No AHA or BHA products; No products to effecMvely treat blemishes or lighten skin discoloraMons; Several foundaMons with sunscreen do not provide complete UVA protecMon; RelaMvely unimpressive makeup brushes.
PercepMon map
Threat of new entry ! Government & Legal Barriers: Different laws and regulaMons on cosmeMcs ‘composiMon
according to the countries (FDA RegulaMons in U.S.A, (CE) n. 1223/2009 in Europe, CFDA in China).
! Duty free & travel regulaMons (APTRA in Asia-‐Pacific, ETRC in Europe) ! Economies of scale and scope used by umbrella companies such as Procter&Gamble,
Estée Lauder and L’Oreal. Many large scale cosmeMc firms which enjoy economies of scale make it a barrier to entry especially for middle and small scale firms
! Product differen+a+on: the huge variety of products that are already present in the beauty market
! Absolute cost advantages that the major firms of the beauty industry can exploit ! Access to the distribu+on channels: the massive presence of elder and established
brands in distribuMon channels ! High capital requirements needed to enter in the travel retail market ! Retalia+on by established producers: possible lobbying acMons ! Barriers to exit include the high development and research costs. Due to the high costs
associated with developing cosmeMc products, it is difficult for firms to leave the industry without achieving the costs for producMon.
Threat of subsMtutes
! Buyer propensity to subs+tute: on average, women in the U.S. keep the same makeup style for 11 years and conMnue to use their favourite brand or item of makeup for about 4 years
! There are many cosmeMc products which are tailored to meeMng the needs of different market segments so the consumers can easily switch products
! Performances of subs+tutes: emerging trend of natural and organic beauty products’ usage
! Possibility for the consumer to buy diverse gicing opMons (indirect compeMMon)
Bargaining power of buyers
! Price sensi+vity: personal care market’s elasMcity is -‐1.28 that is relaMvely elasMc (demand is affected to a greater degree by changes in price)
! Bargaining power: the growing complexity of markets made customers’ choices more diversified. If the firm is not able to understand customer’s needs, there will be losses in profitability
! Bargaining power: social networks have become new measurements systems of the customers’ saMsfacMon. Nowadays the customer can deeply influence companies’ image through reviews and opinion sharing
! Due to the huge supply, consumers have the power to influence the market prices as opposed to the suppliers
Bargaining power of suppliers
! Bargaining power: high number of market players and large supply of diverse products to the market
! The renMng of physical points of sales (airports’ spaces, retail shops, on plane sales, downtown duty free shops, cruises retail spaces) are managed by external enMMes
! The cost of switching suppliers is not high because there are many cosmeMcs companies that manufacture and create their own makeup using their own ingredients
! Bargaining power: being a relevant source of profitability for the companies that are responsible for the stocks in points of sales (limited stocks and shelves space)
Key segments descripMon
G Age
Travel reason
and frequency
Disposable income for beaut
y
Purchase process Looking for
Loyalty to the brand
Lanc
oyal
F 35-55 Business
(frequently)
Medium to High
Planned shopping, know what they want, do not require too
much need or assistance
Skincare Makeup High
Seria
l G
ifter
s
M All ages Business
(frequently)
Low Interested in buying a gift, need
assistance and persuasion Fragranc
es Low
Bea
uty
mot
ion
al
F < 35 Leisure (often),
travelling High Impulsive shopping, need assistance
persuasion Make up Skincare Medium
6th
cont
inen
t im
mig
rant
s F All ages
Leisure, not
traveling often
Medium to High
Confused, not decided on the brand, want to show their status by buying
premium products, need assistance and persuasion
Exclusive goods Low
CompeMMon analysis
L’Oréal LVMH Estee Lauder Chanel Shiseido No. of beauty brands 38 16 32 32 23 Travel retail market
coverage P&C P&C, F&A,
W&S P&C P&C, F&A P&C
Employees 77500 110000 40000 1270 47100 Group Revenue [millions
EUROS] 28784 36515 10182 7892 4583
Group Revenue growth [%] 2,29% 3,70% 4,82% -‐ -‐0,69%
Net profit (loss) [millions EUROS] 2964 4304 1020 1954 -‐101
Opera@ng margin [%] 16,90% 21,00% 15,30% -‐ 3,80%
ROE 14,90% 12,87% 18,05% -‐ -‐5,10% Beauty Travel retail market
share 21,30% 8,70% 7,02% Est. around
5% 3,16%
Brand comparison Average price (Italy)
[€] Patents
(2009-2014) Target Core
competence
Forbes’
World’s most Valuable
Brand [ranking] E-shop Retailers
(Sephora)
125 36 70+
120 35 65+
20
• Women between 30’s and 40’s
• Men
Skincare Makeup
#90
151 34 65+
114 30 45+
39
• Middle aged Women
• Men
Skincare
-‐
140 40 65+ -‐
130 29 70+ -‐
48 • Women • Middle
aged Men Fragrances
#79
115 31 55+ -‐
110 30 50+ -‐
7 • Women • Men Fashion
-‐
Estee Lauder SWOT
Chanel
ChrisMan Dior
Loreal Luxe performance
Performance
References 1. Resource pack data and
hyp://www.dufry.com/idc/groups/dufry_investors/documents/dfy_en/dufry_ar13_140307_web.pdf 2. hyp://www.wtmlondon.com/files/wtm_global_trends_2013.pdf 3. hyp://www.thenuancegroup.com/investors_and_media/Annual-‐Reviews/ 4. hyp://www.aerotropolis.com/airportCiMes/aerotropolis-‐the-‐way-‐well-‐live-‐next 5. (
hyp://centreforaviaMon.com/analysis/inside-‐the-‐worlds-‐biggest-‐airport-‐construcMon-‐projects-‐in-‐201314-‐147024)
6. (hyp://gizmodo.com/6-‐new-‐mega-‐airports-‐that-‐will-‐compete-‐for-‐the-‐worlds-‐b-‐1470892771) hyp://www.iata.org/pressroom/pr/Pages/2014-‐10-‐16-‐01.aspx)
7. (hyp://www.reuters.com/arMcle/2014/10/08/us-‐southkorea-‐dutyfree-‐china-‐idUSKCN0HX12020141008) 8. (hyp://www.mulMvu.com/mnr/65003-‐asian-‐duty-‐free-‐travel-‐retail-‐industry-‐booming) 9. hyp://news.xinhuanet.com/english/indepth/2014-‐09/02/c_133612638.htm 10. (
hyp://www.guestlogix.com/files/PDF/in-‐the news/guestlogix_in_the_news_onboard_hospitality_oct_november_2013.pdf)
11. (hyp://www.cruising.org/sites/default/files/pressroom/Market_Profile_2011.pdf) 12. hyp://www.wtmlondon.com/files/wtm_global_trends_2013.pdf 13. hyp://www.tnooz.com/arMcle/travel-‐retailing-‐in-‐2023-‐a-‐brief-‐look-‐into-‐the-‐future/
#sthash.xL0jaQn8.dpuf)
References 14. hyp://www.thenuancegroup.com/Content-‐Images/Investor-‐RelaMons/Annual-‐Reviews/Annual-‐Reviews/2013-‐
Annual-‐Review-‐The-‐Nuance-‐Group.pdf 15. hyp://www.forbes.com/sites/sap/2014/08/08/airport-‐retail-‐the-‐golden-‐hour-‐and-‐4-‐missed-‐opportuniMes/
(hyp://www.swa.com/duty_free/fileadmin/user_upload/ap/conference-‐workshops_2012/3. GarryStasiulevicuis_-‐_TFWA_Chinese_Passenger_Research_Study_PresentaMon_SIN_0412_-‐_GS_FINAL.pdf
16. (hyp://www.swa.com/duty_free/fileadmin/user_upload/ap/conference-‐workshops_2012/3._GarryStasiulevicuis_-‐_TFWA_Chinese_Passenger_Research_Study_PresentaMon_SIN_0412_-‐_GS_FINAL.pdf )
17. (hyp://blogs.ncr.com/travel/travel/becoming-‐retailer-‐part-‐2-‐access/-‐ See more at: hyp://blogs.ncr.com/travel/travel/becoming-‐retailer-‐part-‐2-‐access/#sthash.B3vTEg21.dpuf)
18. (hyps://press.hotels.com/content/themes/CITM/assets/pdf/CITM_UK_PDF_2014.pdf) 19. (hyp://press.hotels.com/en-‐gb/files/2013/11/RITM_FINAL_WEB_V3.pdf ) 20. hyp://www.rwguide.com/russian_women_cosmeMcs_preferences.cfm 21. hyp://www.rwguide.com/russian_women_cosmeMcs_preferences.cfm 22. hyp://russiansearchmarkeMng.com/domesMc-‐foreign-‐product-‐preferences-‐russia/ 23. hyp://www.etoa.org/docs/default-‐source/presentaMons/2013-‐wtm-‐presentaMon-‐brazil.pdf?sfvrsn=2
hyp://www.travelretailpr.com/media/pdf/press_review/javierlabartabwconfidenMalmars2014.pdf 24. hyp://www.m1ndset.com/content/documents/201210%20%20TFWA%20Daily%20Cannes%202012.pdf 25. hyp://www.paulaschoice.com/beautypedia-‐skin-‐care-‐reviews/by-‐brand/lancome?
sort=brand&direcMon=asc&pageNumber=1&pageSize=25&brand=lancome 26. hyp://www.loreal-‐finance.com/eng/news-‐release/first-‐half-‐results-‐2014-‐972.htmhyp://www.loreal.com/
brands/loreal-‐luxe/lancome.aspx
References
27. hyp://www.lancome-‐usa.com/on/demandware.store/Sites-‐lancome_us-‐Site/default/Search-‐Show?cgid=discover-‐lancome&bookmark=7716
28. hyp://www.mckinsey.com/insights/consumer_and_retail/winning_the_bayle_for_chinas_new_middle_class
29. hyp://www.pagesdigital.com/lancomes-‐virtual-‐mirror/ 30. hyp://www.adweek.com/news/technology/lanc-‐me-‐ge�ng-‐60-‐monthly-‐acMon-‐rate-‐new-‐
loyalty-‐program-‐159333 31. (hyp://www.vault.com/company-‐profiles/personal-‐care/chanel,-‐inc/company-‐overview.aspx) 32. 33. L’Oreal annual report 2013 34. hyp://www.industrysourcing.com/news/304223.aspx 35. L’Oreal annual report 2013 36. LVMH S.A. annual report 2013 37. Estee Lauder S.A. annual report 2013 38. Shiseido Co. annual report 2013 39. hyp://www.wwd.com/beauty-‐industry-‐news/beauty-‐features/the-‐2013-‐beauty-‐inc-‐
top-‐100-‐7824155?offeset=0