‘One Shiseido, one travel retail’ – beauty group unifies operations

As Shiseido Travel Retail we have high ambitions going forward. We want to strengthen our position in travel retail and be a key growth driver for the Group, by reinforcing our innovation capabilities, sell-out drive and retail operations excellence.
Philippe Lesné
President
Shiseido Global Travel Retail

Shiseido Group is creating a unified travel retail division for its cosmetics and fragrances business, effective 1 May, The Moodie Davitt Report can reveal.

The unified division – Shiseido Travel Retail – marks a key step in Shiseido Group’s Vision 2020 corporate strategy, spearheaded by CEO Masahiko Uotani. It sees the unification of the Japanese group’s cosmetics-led Shiseido business in travel retail, with that of the designer fragrance house Beauté Prestige International (BPI), a subsidiary since 1990.

The consolidated portfolio includes skincare brands Shiseido, Clé de Peau Beauté, Anessa and Aupres; make-up brands NARS and bareMinerals; and fragrance brands Issey Miyake, Narciso Rodriguez, Elie Saab, Alaïa and Zadig & Voltaire as well as niche fragrance Serge Lutens and the distribution of Burberry in selected Asia Pacific and European travel retail markets.

Shiseido Travel Retail President Philippe Lesné told The Moodie Davitt Report: “We believe that the total will be bigger than the sum of the parts. We are aiming to create synergies and to explore new opportunities.

“We want to strengthen our position in travel retail and be a key growth driver for the Group, by reinforcing our innovation capabilities, sell-out drive and retail operations excellence.” [Note: In the next edition of The Moodie e-Zine we’ll bring you an extended exclusive interview with Lesné conducted on the eve of the announcement. See below for a shorter version.]

Shiseido Travel Retail is one of six regional entities in a revamped organisational matrix under the Vision 2020 plan. The plan is designed to rejuvenate Shiseido Group and increase its responsiveness to fast-changing markets and consumer demands, driving growth and profitability.

Adopting the theme ‘One Shiseido, One Travel Retail’ globally, the unification will bring Shiseido and BPI brands under a single management in global travel retail, creating what the group says will be a streamlined organisation with balanced strengths across all three axes of beauty: skincare, make-up and fragrances.

Shiseido said the move is driven by four key objectives:

1. To become a truly global organisation that can speak with one voice
2. To reinforce partnerships with retailers
3. To boost retail operations excellence
4. To create strong and innovative brands

”A truly global organisation that can speak with one voice”

The formation of Shiseido Travel Retail signals “a rebirth of the Shiseido Group in travel retail”, the company said, with all regions moving forward as one. “The structural reform will take place on all levels, creating an agile organisation that can quickly respond to market changes, driving sales productivity and operational excellence,” it said.

Philippe Lesné will lead the global organisation as President, reporting directly to Shiseido Group CEO Masahiko Uotani, with a new-look management team as follows:

Elisabeth Jouguelet, Vice President – Marketing
Kenji Calméjane, General Manager – Travel Retail Asia Pacific
Olivier Decazes, General Manager – Travel Retail Europe, Middle East & Africa
Vincent Baland, General Manager – Travel Retail Americas

Shiseido Travel Retail will have 210 employees worldwide.

Click on the graphic to view the enlarged image

Relishing the opportunity ahead: Shiseido Travel Retail President Philippe Lesné and Vice President – Marketing Elisabeth Jouguelet
Elisabeth Jouguelet, Vice President – Marketing; Kenji Calméjane, General Manager – Travel Retail Asia Pacific
Olivier Decazes, General Manager – Travel Retail Europe, Middle East & Africa; Vincent Baland, General Manager – Travel Retail Americas

Reinforcing partnerships with retailers

To better serve its retail partners, Shiseido Travel Retail is introducing a key account management system with dedicated regional sales, marketing, merchandising and training teams supporting the sell-through and relationships with its key customers. The regional teams are also creating new business analyst positions to track and improve performance.

In addition to the global marketing team, Shiseido Travel Retail will establish a new Business Development function to explore growth opportunities and value creation initiatives at a global level.

Shiseido Travel Retail at a glance

• Effective: 1 May 2016
• Headquarters: Singapore
• Number of employees: 210 worldwide (excluding Japan)
• Beauty consultant network: Almost 1,000 (excluding Japan)

Boost retail operations excellence

The new organisation will see an alignment of marketing, merchandising, training and sales functions. The team plan to work in closer partnership to deliver “a more comprehensive counter experience and trade activities”.

Going forward, retail managers will handle the entire portfolio of brands, while beauty consultants – now numbering almost 1,000 worldwide – will benefit from the sharing of best practices and a common management.

Create strong and innovative brands

The global marketing team will lead the brands’ travel retail strategy. Brand managers, organised by axis (skincare, make-up and fragrances), will work closely with multi-brand specialists dedicated to fostering innovation and expertise in several key functions: Consumer & Market Intelligence, Retail Design & Visual Merchandising, Travel Retail Exclusives (TREX) development, Communication and Digital.

The portfolio of brands named earlier will benefit from Shiseido Group’s ‘Centers of Excellence’ worldwide, created to drive the development of globally competitive brands and accelerate category innovation.

The Centers of Excellence lead core competencies such as product development, strategy planning and information collection, with the results applied in marketing activities around the world. They are established where Shiseido’s key brands are based and expertise is found: the Center of Excellence for skincare is in Tokyo; the Centers of Excellence for make-up and digital in New York; and the Center of Excellence for fragrances in Paris.

Three core categories offering a well-balanced mix of strengths by different geographies

Lesné said: “This is an extremely exciting time for Shiseido Travel Retail, as we witness the actualisation of our CEO Masahiko Uotani’s ‘One Shiseido’ vision in the dynamic travel retail channel. The landscape has seen an unprecedented level of change in recent years, with retailer consolidation and mobile and digital technology creating a truly global territory of global operators and global shoppers. We are also seeing a major shift in growth towards Asia, a region that is at the heart of our strategy for travel retail and where our skincare expertise is based.”

Lesné continued: “We want to create new synergies between our cosmetics and fragrance businesses, and become a more agile and efficient organisation to better serve our consumers and partners, speaking to them in one voice through a coherent global travel retail strategy.

“The unification brings together BPI’s expertise in fragrances with Shiseido Group’s strengths in cosmetics, creating a comprehensive three-axis portfolio which enables the sharing of best practices and resources to drive growth.

“Looking ahead, I believe Shiseido Travel Retail will provide a powerful global showcase and profitable growth driver for Shiseido Group on its roadmap to achieve Vision 2020, as well as being an agile, entrepreneurial and strategic partner for travel retail operators in all corners of the globe.”

(Above and below) Shiseido Travel Retail President Philippe Lesné breaks the news in an exclusive interview with The Moodie Davitt Report Founder & Chairman Martin Moodie

(Above and below) The new organisation brings together a star-studded line-up of cosmetics, make-up and fragrance brands, formerly controlled separately by Shiseido and BPI, respectively. Pictured above is Aupres at T Galleria By DFS (Chinachem)

Bare Minerals at Heinemann Duty Free, Sydney Airport

Clé de Peau Beauté, China Duty Free Group, Haitang Bay, Hainan

Issey Miyake, King Power International Group, Suvarnabhumi Airport, Bangkok

NARS, T Galleria Hong Kong (DFS Hysan Place)

Shiseido, China Duty Free Group, Haitang Bay, Hainan

Burberry, World Duty Free, Heathrow Airport T5, London

QUESTION AND ANSWER WITH PHILIPPE LESNÉ*

The Moodie Davitt Report: What has driven the integration of the BPI and Shiseido travel retail teams now, given that the group has for so long advocated the merits of separate operations?

Philippe Lesné: The unification is very much an internal reorganisation, bringing together the Group’s cosmetics and fragrance businesses to create a more efficient entity and a more well-rounded beauty portfolio to better serve our customers and drive growth.

BPI was created as a subsidiary to grow Shiseido Group’s fragrance business in 1990 – a very different time when globally consolidated beauty groups did not really exist. In an effort to develop our fragrance expertise, BPI was established in France, the historical centre of perfume at the heart of the category’s biggest region, Europe.

The different dynamics between the Japanese and French markets necessitated a localised strategy, hence the notion to have BPI as a separate and autonomous fragrance entity. This independence enabled BPI to successfully launch and develop iconic brands, including Issey Miyake and Narciso Rodriguez, and focus on being a pure-player fragrance business until today. Likewise Shiseido has focused on cosmetics and our regional strengths as the largest Asian company in the industry.

Perfect 2020 Vision

Secondly, we have seen huge changes in the travel retail industry landscape, especially in recent years. Retailer consolidation has created truly global operators, and consumer trends have seen the rise of global shoppers.

We’re seeing exponential growth in air travel, increasingly connected global consumers and a shift towards Asia as a growth centre. We need to adapt to this new reality and become a more agile and efficient organisation that can keep pace with the fast-changing tides of the market. This is the impetus behind Vision 2020, and one that’s even more relevant for the dynamic travel retail channel, where change is a constant factor.

We – as Shiseido Travel Retail – have high ambitions going forward. We want to strengthen our position in travel retail and be a key growth driver for the Group, by reinforcing our innovation capabilities, sell-out drive and retail operations excellence. We want to create new synergies with our cosmetics and fragrance businesses, leveraging the additional scale to be more competitive commercially, and hold our own among the biggest beauty players in travel retail globally.

We want to become a lean, streamlined and efficient organisation to better serve our consumers and partners, speaking to them in one voice through a coherent global travel retail strategy. Our globally aligned structure will facilitate the exchange of information and insights into consumer behaviours and retailer trends, allowing us to develop an even better understanding of travelling consumers and how best to target them.

With the overall expansion in headcount, we also hope to create new opportunities for career advancement, and instil shared values and a vision for success among all our employees.

We have seen huge changes in the travel retail industry landscape… we need to adapt to this new reality and become a more agile and efficient organisation.
Philippe Lesné
President
Shiseido Global Travel Retail

Can you talk us through the structure and how it will work?

The newly unified division will be called ‘Shiseido Travel Retail’, with one voice and a focus on ‘One Shiseido, One Travel Retail’.

Under the new structure, cosmetics and fragrances will come under one management, and Travel Retail split into three regions – Asia Pacific; Europe, Middle East & Africa (EMEA); and Americas – and these regional teams will be working very closely with the global travel retail functions.

At the global level, we have Marketing, Human Resource and Finance, and we are creating a Business Development function. This role will encourage the exploration of all avenues with each of our brands and as an exciting portfolio to optimise synergies and find new ways to engage with consumers and drive growth.

To optimise brand development, the brands’ travel retail strategy will be led by the global marketing team. Brand managers, organised by axis (skincare, make-up and fragrances), will work closely with multi-brand specialists dedicated to fostering innovation and expertise in several key functions: Consumer & Market Intelligence, Retail Design & Visual Merchandising, Travel Retail Exclusives (TREX) development, Communication and Digital.

• Consumer & Market Intelligence: grow the knowledge of our global shoppers to better address their needs; track beauty and travel trends to support brand development

• Design Center: create the perfect showcase and brand experiences for our consumers through inspiring retail design and visual merchandising

• Travel Retail Exclusives: create real value with products and offers specially designed for travellers

• Communication and Digital: manage internal and external communication to drive awareness among press, trade partners and consumers, with a focus on digital and mobile technology

To better serve our trade partners, we are introducing a key account management system with dedicated regional sales, marketing, merchandising and training teams supporting the sell-through and relationships with our key customers. The regional teams are also creating new business analyst positions to track and improve performance.

To deliver a more comprehensive counter experience and trade activities on the shop floor, there will be a closer alignment of the marketing, merchandising, training and sales functions. Retail managers will handle the entire brand portfolio, and our beauty consultants will benefit from the sharing of best practices and a common management.

The Philippe Lesné view*

On the value of integration: “Certainly we believe that the total will be bigger than the sum of the parts. We are aiming to create synergies and to explore new opportunities.”

On exclusive channel launches: “We have already started bringing a lot of units to the market and there are a lot more coming. It’s clearly been received extremely well by operators and, more importantly, by consumers. Travel retail exclusives are absolutely key to our strategy.”

On geographic and category balance: “The unification with BPI, a pure-player (100%) fragrance company, will boost the overall offer and create a more well-balanced three-axis portfolio, with skincare making up 55%, make-up 13% and fragrances 32%.”

On Digital media: “Clearly a huge opportunity. We are working on a pretty ambitious plan.”

* Full interview later this month

 

Given the historical relationship with BPI, and the fact that Shiseido’s and BPI’s TR teams shared common values being part of the Shiseido Group, we expect the alignment of functions such as finance, human resources and supply chain to be efficient; the same goes for the formation of new regional structures and the assimilation of the different axes.

We will be focusing on bonding the new teams in each region and fostering a global unity that will help set us apart in the way we conduct ourselves in travel retail worldwide. We want to be seen as a company with an entrepreneurial mind-set, which should give us confidence for the future.

Singapore remains the headquarters for Shiseido Travel Retail, as well as our Asia Pacific Travel Retail team. Sitting with us in our brand new office in Singapore are our Shiseido Asia Pacific colleagues, creating further synergies and collaborative opportunities with our domestic counterparts.

How will you position the two entities and their respective portfolios? And how will you manage them in travel retail?

We’re one entity – Shiseido Travel Retail – with a consolidated portfolio now organised by axis.

There are obvious differences but clear synergies between the cosmetics (skincare + make-up) and fragrance categories that I believe will benefit Shiseido Travel Retail and position the Group better to grow a multi-axis portfolio in the future.

In terms of data, skincare was the biggest contributor for Shiseido pre-unification in FY2015, making up 80% of travel retail sales, followed by make-up (18%) and fragrances (2%). The unification with BPI, a pure-player (100%) fragrance company, will boost the overall offer and create a more well-balanced three-axis portfolio, with skincare making up 55%, make-up at 13% and fragrances at 32%. This effectively puts Shiseido Travel Retail in a stronger position in the global travel retail channel.

The cosmetics and fragrance segments bring different but complementary skill-sets together. The effects of a fragrance are immediate; a consumer can tell quite quickly whether they like a scent or not. Skincare products, however, require a period of trial to assess their efficacy and suitability. Make-up kind of falls in between.

With fragrances, we are selling a dream, an aspirational idea, so we need to appeal to the consumers’ desires. This category is very much marketing and advertising/promotion driven – based on a ‘Pull’ model, led by strong, highly visible media investments.

Click on the graphic to view the enlarged image

Success very much depends on how well you tell the story and engage your target consumer. It’s important that the fragrance accurately reflects the brand image and identity, and BPI brings a great track record for achieving that.

Cosmetics work on more of a ‘Push’ model – with a lot of the investment at the counter level. The category is more technical and sophisticated, supported by extensive research & development and scientific studies. Proper training of sales staff and communication are key to helping consumers understand how the products work and whether they are suitable for their needs. This plays to the strengths of Shiseido Group.

These ingredients combine really well; being present in both fragrances and cosmetics will allow us to build up a more comprehensive multi-axis understanding of our consumer. This also creates opportunities for cross-selling and cross-category incentives, supported by a bigger sales force on the shop floor. With the unification, our frontline staff will increase significantly, to almost 1,000 beauty consultants worldwide.

Elie Saab, World Duty Free, Heathrow Airport T5, London

An array of group fragrances at Dubai Duty Free
Issey Miyake and Narciso Rodriguez, World Duty Free, Heathrow Airport T5, London

How do you think retailers will benefit from the new structure?

Our new structure is underpinned by a ‘Think Global, Act Local’ approach designed to help us serve our retail partners better, and enabling us to build stronger and more collaborative relationships that deliver a range of benefits.

The streamlining of functions at both the global and regional levels will increase our efficiency and responsiveness, which in turn translates into retail operations excellence and the creation of stronger and more innovative brands. Performance tracking, innovation and sharing of insights are enhanced.

Having three axes under one umbrella means that retailers no longer need to meet the Shiseido and BPI TR teams separately, since each account will now be serviced by one Key Account Manager. Our portfolio is now more well-rounded and comprehensive, with continuous brand innovation supported by Shiseido Group’s Centers of Excellence. The key next steps for us are to find new ways of working with our partners to drive growth in each of the categories we now play in.

We are confident that a unified Shiseido Travel Retail will occupy a greater share of mind with our partners globally. Aside from the fact that we will command a bigger share of the beauty market, we also possess greater capacity to forge partnerships focused on growing sales in the channel and driving category growth. New expertise and capabilities in areas such as consumer insights, digital and visual merchandising are also in place to grow our brand equities across our portfolio and boost penetration, conversion and revenues of our retailer partners.

BPI is obviously a designer fragrance business with by definition a more European focus, Shiseido a beauty-led business more concentrated on Asia. Are there any issues therefore around BPI’s focus now coming from Singapore?

Not at all. In fact, we only see positivity and opportunity for developing our portfolios outside their stronghold markets. But you are right… there is strong presence in different regions – Shiseido in Asia (the region contributed 79% to FY2015 sales in travel retail) and BPI in Europe, Middle East & Africa (66%) – complementing each other well.

The unification will create a more balanced regional sales mix – with Asia Pacific at 58%, Europe, Middle East & Africa (EMEA) at 30% and Americas at 12% – and a global footprint that will facilitate entry into new or emerging markets.

Click on the graphic to view the enlarged image
Click on the graphic to view the enlarged image

We will leverage our collective expertise, consumer knowledge and vast experience in the different regions to drive growth in categories/brands that are not as optimised, and grow our three axes collectively in these regions.

More specifically, beauty trends also show great potential for growing our fragrance business in Asia and our cosmetics business in EMEA. The rising importance of personal grooming and disposable incomes among Chinese consumers, for example, have contributed to the growth of fragrances in this part of the world. Meanwhile, Asian beauty brands and trends such as skin brightening are gaining traction among Western consumers.

* The full version of this interview will appear in the next edition of The Moodie Report e-Zine.

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