Travel retail, L'Oréal's sixth continent
2013 Annual Report
L’Oréal has high hopes for the particularly dynamic channel of travel retail, which resembles a sixth continent with its capitals, its own economy, its flows and its inhabitants.
What is travel retail?
Travel retail is the business undertaken in all the shops located in duty free areas or any areas dedicated to travellers. This market should double in the next ten years to reach 100 billion US $(1). With 30% of total sales, beauty - fragrances and cosmetics - are the best-selling products in this channel(2).
Find out more about the breakthrough of the travel retail business by distribution channel(3).
What is the sixth continent for L'Oréal?
"The travel retail distribution channel is a strategic market for the development and visibility of our brands, and contributes to the quest of one billion new consumers."
Barbara Lavernos, Managing Director of L’Oréal Group Travel Retail
Travel retail contributes to maximize the exposure of travellers from around the world to L'Oréal brands, to increase customer loyalty but also to recruit new customers.
An ideal location to come into contact with highly qualified consumers, travel retail is for Kiehl's, for example, one of the markets that has most contributed to the brand’s growth. Its counters give the ability to recruit new consumers: more than 20% of travellers discover there the American accessible luxury brand's experience. Explaining this new phenomenon: the democratisation of travelling. In the New Markets, the middle class is keen to travel. This new influx of travellers transforms the travel retail market, which is evolving from a business model focused exclusively on luxury towards a more diversified offer.
The creation of the Travel Retail Division, which gathers all divisions' brands, demonstrates the group's confidence in the huge potential of this distribution channel. Thanks to the notoriety and diversity of its brands portfolio, L'Oréal is well-positioned to offer travellers from all over the world all the products they want, whatever their beauty rituals or their purchasing power.
Who are the global shoppers?
The travel retail's consumers are global shoppers: they are not only shopping where they live but wherever they are, both in their local and destination markets and when travelling.
To meet with the aspirations of these travellers, whether they be Brazilians, Chinese, Russians or Middle Eastern, L'Oréal is developing a personalised approach, according to languages, cultures and beauty rituals.
To better engage these global shoppers, wherever they are, L'Oréal is targetting its offering, services and merchandising. For example, Lancôme offers exclusive products to celebrate the Chinese New Year in Waikiki (Hawaï), where numerous Chinese customers travel to.
Are you interested in this topic ?
To find out more about this sixth continent, watch the full presentation by Barbara Lavernos, Managing Director of L’Oréal Group Travel Retail, given at the Annual Financial Information Meeting.
(1) Source: Generation forecast. (2) Source: Generation data, sales in value. (3) Source: Generation research institute.