L’Oréal Travel Retail Asia Pacific Managing Director Emmanuel Goulin shares his views with BW Confidential on the inaugural Hainan Expo and how he sees business in the travel-retail hotspot of Hainan evolving
What do you hope to get out of your participation in the first China International Consumer Product Expo in Hainan?
The Hainan Expo underlines an important message in building Hainan into an International tourism and consumption center. As a major partner at the expo, we hope to demonstrate our commitment to further develop business in this strategic region and offer exclusive beauty experiences to travelers.
Tech is a key feature of your pavilion at the event. To what extent has digital, e-commerce and tech impacted your travel-retail business in the region and how big do you see online sales becoming for the channel in the region?
Chinese shoppers are ultra-connected in their domestic market as well as when they travel. Digital and tech are therefore instrumental in reinventing a more personalized and connected shopping experience in travel retail. We are of course leveraging all the digital opportunities, such as livestreaming for instance, to better serve and engage travelers. We are also rolling out in the region some of the most advanced technologies such as ModiFace which enables make-up virtual try-ons.
E-commerce is obviously a key growth driver in the region. The online sales boom of Hainan over the last year or so has been spectacular and shows the capacity of the travel-retail industry to accelerate on e-commerce. There is still a lot we can do, and the potential is there in APAC with online sales which should represent the greater part of the travel-retail business in a few years from now.
Can you provide figures on the size of your Hainan business at present and how you see this business developing?
Hainan is getting bigger within travel retail Asia Pacific and has been the main growth contributor in 2020 and Q1 2021. Chinese travelers have developed more aspirations for higher-quality and safer products during the pandemic, and our brand portfolio is responding well to this need. However, consumers nowadays not only want the most efficient products and shopping experiences, but they also want the most meaningful ones. This is why it is important for us to put sustainability at the heart of our business model, and our ecologically designed pavilion at the Hainan Expo is one concrete example.
We currently have 15 brands in Hainan travel retail. Some of them have been in Hainan for more than a decade and some have been launched very recently, such as SkinCeuticals. Our ambition is to keep expanding our brand portfolio in the region. Valentino for example, will be showcased at the expo and be launched in the coming months in Hainan.
Do you expect Chinese consumers to continue to shop at home and in Hainan once they can travel again?
Hainan will remain an attractive destination for Chinese travelers even when they can travel abroad again: while there were 65 million Chinese tourists visiting Hainan in 2020, it will continue to grow as we see great potential behind the development of Hainan’s Free Trade Port. All in all, Hainan will continue to be an important growth driver post-pandemic together with e-commerce.
How can you offset the risk that Hainan becomes a hub for the gray market in China?
We place travelers who are beauty buyers at the heart of our business, and we want to be where travelers are. It is about being present at every touchpoint of their journey, from brick-and-mortar stores at airports and downtown, to e-retail stores. This does not mean our group will be present everywhere. On the contrary, we will continue to be selective when distributing our brands to ensure we keep creating value in the Hainan ecosystem together with retailers.
Differentiation of our offers with travel-retail exclusive sets, formats and product mix is also a way to limit brand equity dilution and diversion. For example, our Kiehl’s loves Hainan campaign launched last November created a sense of place for travelers in Hainan. We focused on offering a one-of-a-kind journey, such as exclusive packaging, retailtainment and travel-relevant products that are exclusive and unique for Hainan travelers.
How do you see the state of the travel-retail business in the rest of Asia, outside Hainan currently? What is your outlook for the rest of the year?
Consumers’ appetite for both traveling and beauty consumption is intact; with the rollout of vaccination campaigns, it is progressively improving the sanitary situation. Domestic travel is the only real possibility in Asia Pacific at the moment and this explains the boom we currently see in Hainan with Chinese travelers or in Jeju with Korean travelers. Macau SAR has also been accelerating over the last few weeks with the relaxation of travel restrictions with Mainland China. A few travel bubbles have been created, such as the one between Australia and New Zealand that is already in place, or between Hong Kong SAR and Singapore to be launched in May. We will need to be prepared once international travels take off, and we are confident it will rebound strongly.