Lagardère Travel Retail Duty Free Global Fragrances & Cosmetics Merchant Director Guillaume Robert tells BW Confidential how the group’s perfume and cosmetics strategy is evolving amid the COVID-19 crisis
How is Lagardère Travel Retail managing the crisis?
Thanks to our geographical footprint, we were able see the impact of the COVID-19 crisis very early on (we have 88 stores in Wuhan) and with the responsiveness and agility of our teams, we were able to take drastic action very early too. This has enabled us to mitigate the drop in sales over our operational results. However, in order to help us get through the current crisis and best position ourselves for the recovery, we have launched a major transformation project: LEAP Forward. Its purpose is to increase the group’s commercial and operational performance and expertise, to strengthen our agility, as well as to find short-term efficiencies to cope with lower volumes. LEAP will be driven by locally empowered teams and will create a nimbler and stronger Lagardère Travel Retail to capitalize on returning traffic.
In this difficult context, we pay more attention than ever to maintaining our operational excellence on all the key commercial levers: Stock, assortment, merchandising and training. It is crucial to keep on delivering the same level of service, even if there are fewer travelers.
The sanitary measures led us to challenge our existing models and processes. One of them was about the number of beauty consultants in the field; the question of versatility of the P&C staff usually assigned by brands was raised. So, when we prepared the re-opening of the shops, we empowered the beauty consultants to be able to sell all the P&C brands. It was quite a big move in terms of organization and training but essential at least as long as the sanitary situation remains uncertain. We reoriented our activation strategy at the re-opening of the shops by promoting overstock with higher discounts than usual. This initiative was supported by the vast majority of our brand partners.
We also refocused our merchant strategy on best-sellers and on big launches supported by media and activation. We simplified and sharpened our communication with statements such as ‘Get the best sellers at the best prices’.
How has the perfume and cosmetics category been impacted?
Despite some improvements from the second quarter, thanks to our diversified portfolio in terms of geographies, business lines and segments, we are obviously being severely impacted by the pandemic, and by the travel restrictions in place. Our third quarter revenues were down by -57.4% on a consolidated basis. That said, there is cause for optimism, with strong signs of recovery in China, where growth is boosted by the resumption of domestic air traffic and a dynamic domestic consumption. This shows that where the sanitary situation is under control, traffic and sales come back.
The P&C category experienced the same impact in terms of turnover decrease as the rest of the duty-free categories. The mix between the three sub-categories slightly evolved: Perfumes’ weight increased to the detriment of make-up due to the inability to test products, while skincare resists. We observe an average basket that is higher than before the crisis, but traffic is low.
What is your outlook and how do you plan to cultivate the perfume and cosmetics segment?
It is not possible to make predictions as to when traffic levels will return to normal. We are working according to different scenarios, from optimistic to worst case, and are adapting our operations flexibly in close partnerships with landlords and brands, and according to traffic volumes. But as I said, we are confident that as soon as the situation normalizes, the rebound can be quick and strong.
In P&C, we will prioritize actions to convert non-buyers into shoppers. We adapted our pricing strategy to reassure them on our price competitiveness. We will keep up the momentum in sourcing “niche” and trendy brands in make-up and perfume: Whereas our large portfolio is satisfactory, the selection of premium collection and travel-retail exclusives is key to be attractive.
We will also continue to develop the sustainable beauty brands to address the growing demand on natural/organic/well-being labels. We see in this context an opportunity to elevate the experience and service in our stores, particularly around the key issue of testing since the start of the health crisis. The priority today is to reassure shoppers entering in our shops and adapt ways to test all our products. Brands already work on a “digital make-up artist” solutions in store and implement scent-machines with no touching. We have to find the right balance between physical and digital, and brands help us to do so.
We are also working on digital innovations to enhance customers’ in-store experience and reach passengers before they get to the airport (Click & Collect). We have an opportunity to capture a broader audience in the travel ecosystem: Travelers who are momentarily prevented from traveling, employees working for companies in the travel environment (for example, airport staff), meeters and greeters, diplomats and so forth. The phygital experience is key to engage traditional and new customer audiences and drive greater customer-centricity.
Finally, we need to upgrade our product offering with exclusive travel-retail ranges and a greater ‘Sense of Place’. Our competitive advantage is to be able to develop exclusive concepts (not to be one-size-fits-all) and to embed a sense of localness into stores and product ranges. We still have refit projects and new store openings, so there is also cause for optimism.