Introduction: Global travel retail is one of the engines of growth for the Beiersdorf-owned La Prairie luxury skincare brand. While sales in the first nine months of 2017 climbed by +13.5% across all channels, La Prairie’s performance in travel retail surged by +37% year-on-year. Today the channel accounts for one quarter of the brand’s total business and is a core element in a growth strategy that is built around service, luxury and cementing the right partnerships with retailers.

Travel retail’s vital importance gives it status at management level too. La Prairie Group Vice President Global Travel Retail Laurent Marteau is a member of the nine-strong Group Executive Management team, lending the channel a voice at the top table in-house.

Laurent Marteau: “We are growing well ahead of the market trend, 20 to 30 points above it in some cases”

Marteau talks to Dermot Davitt about performance in 2017 to date, about translating the brand’s revolutionary skincare formulas into the travel retail environment and about taking luxury skincare to the next stage with selected industry partners.

The Moodie Davitt Report: How would you describe the La Prairie travel retail performance in 2017 and what factors are driving your recent growth?

Laurent Marteau: We have seen double-digit growth for several years but this year has just been amazing. We have grown sales at +37% year to date (to early October -Ed) in global travel retail worldwide, driven by Asia, which is up by +53% and contributes 60% of sales. Europe is up by +19% year-on-year and we hope to hit +20% by year-end. The Americas is smaller overall in contribution but is coming in with solid +15% growth and the Middle East is climbing at +12%. So all regions have played a role.

Among the factors driving this is that Russians are now coming back to Europe, plus Chinese travel is strong, and those are two important passenger communities. But what’s reassuring is that we are growing well ahead of the market trend, 20 to 30 points above it in some cases. And that is not only in South America or the Middle East but in the biggest markets, even those where we are not as dependent on the Chinese or Russians. So the brand is growing very fast.

The environment is positive but we’ve also done a good job on the brand itself, with a focus on luxury collections and our strong innovations. After that it’s about all the work we’ve done on retail, notably streamlining distribution so we can provide the proper service to the end consumer. We have been spending our energy, passion, time, care and money on our Beauty Advisors to allow them to give the best service to our end consumers. Service is key and I believe we have probably the best representatives in the market right now. So if you add that alongside product initiatives and new merchandising to showcase the whole picture, it is working very well for us.

In bloom: The latest La Prairie counter concept opened in partnership with King Power at Bangkok Suvarnabhumi Airport (above and below)

What is travel retail’s importance to La Prairie? Is it a profit driver or a showcase?

Travel retail is our window to the world. Travel retail has changed a lot in the last ten years and now it’s going in the right direction for brands like ours. Most of the operators want more luxury and that means we can surf this wave.

The travel retail channel is a region in its own right at La Prairie and contributes 25% of our business, with the other four geographic regions making up the rest. But we are quite well balanced with no region taking a vast share compared to the others. We are also far above trends in the local markets. When you see both travel retail and local markets doing well you know the business is going in the right direction. We have strength for example in the Chinese local market, where skincare is growing at +19% but we are at +49%. And if you look at travel retail in China we are growing at +80% this year and we imagine that is at least 30 points above market trend. So there is correlation between local markets and travel retail, and that makes sense as you are talking about the same consumer at different points of the journey.

A focus on luxury, service and product innovation are the pillars on which the brand will continue to build, says Marteau

How are you changing the ways you engage with the travelling beauty consumer today?

The consumers are becoming smarter and smarter. They prepare their journeys well, they are digitally active, they use many platforms, they communicate with their friends constantly. They are influenced greatly by their social circle; they know pricing and they know what service they can get. They won’t be taken for fools. The more consistent you can make your brand approach, the more success you will have. We try to be consistent when it comes to local market, travel retail and online and try to showcase the same brand and the same service.

That is not easy. It’s super-hard. You can never be perfect and no matter what investments you make in training you feel it’s never enough. I’m going to triple investment in training in 2018, even having coaches travel from airport to airport to encourage higher standards. It’s a never-ending job. It’s the joy of retail but it’s the frustration too. You can always do better.

How else can you deliver luxury and service to the travelling consumer? What are your priorities in terms of your formats?

It’s about doing the same things well no matter what your format. Not every store can be a Changi duplex or a Zürich [full service] boutique where you can express the true potential of the brand.

Laurent Marteau: “For those [retailers] who are smarter, creating real partnerships can make sense, as opposed to using the brands as a cash cow”

But as a minimum we want to have a nice double back wall to showcase the assortment, one that is focused on key sellers. You can still make a full routine available, one side with skincare, which is the major drawcard, and innovation on the other.

That back wall gondola is 70% of my distribution and what you find in most airports. We want to offer at minimum a mix of foundation, complexion, sets, exclusives, key collections plus a space for consultation and service. It’s important to have these elements.

We still have conversations with some operators who don’t understand this. They complain on the one hand that we don’t give full service and that they want more luxury, but then they don’t want to provide a chair and table and offer the space. We cannot offer the right treatment to you if you are standing up in a busy environment. The consultation has to be a little hidden and in its right place. It works too: our market share is never so high as when we offer the right environment.

To achieve this, you need buy-in from the retailer, so how do you see the state of relationships between the key partners: brands, retailers and airports?

The more all parties are involved the better for us. Things can improve. You still see some retailers who are less interested in offering a good service than they are in the financial performance. But for those who are smarter, creating real partnerships with the brands can make sense, as opposed to using the brands as a cash cow to compensate for the fact that their tender bid was too high. A closer partnership model can work for all.

With that in mind, does brand owners’ heavy investment in this channel stack up well enough in terms of returns, especially in exclusives for example?

Travel retail is important so very often we create products that are not available in local markets. But we make those available only to those partners who give proper space and good locations, who want to develop the business, not those who only want cash and profit. We will continue to do that, being selective with our partners.

Grey market challenge

We asked Laurent Marteau about the impact of the grey market and how big a challenge it is for beauty brands to control and manage their distribution effectively.

He says: “If you remember what happened with fragrances ten years ago, luxury drove the business and everyone came to the airport to buy these upscale items. Today luxury fragrances are more of a commodity. Why? Because the brands didn’t take care of their distribution and too much ended up on the grey market. If brands don’t work only with people doing the right thing, then it can affect beauty going forward.”

In some markets, for example South Korea, La Prairie (unusually) does not even deal with distributors. “We deal direct with the retailers and that is rare. But then we have control and we see the real numbers. If you control your distribution it’s a different story and any growth you have is real and healthy. You cannot be short term in your thinking about your brand. I’m sure the market environment and the global economy didn’t help in recent years but dumping your brand on the grey market whether in Korea or the Americas or Australia, it is not a solution.”

How do you view consolidation within the channel and its impact on your business?

It should simplify the business with fewer players but when you have larger retailers it can be difficult to make them move as fast as we do. We are flexible, we take fast decisions to start something new or even stop something that isn’t working. To move a major retailer in a new direction fast is not easy. That is the same everywhere and we live with it. The operators need to adjust their organisations too. Some are doing it well, some can do better, but at least most of them recognise the need. In some cases the [financial] crisis was important and forced some new thinking.

How does the company’s digital strategy feed into travel retail? How big a threat is competition from the big online retailers?

Digital is a great opportunity for travel retail that nobody has tapped into yet. Digital can be scary but we need to rethink how we invest. What about allowing people to discover the brand before they travel, maybe finding out about a new treatment at the airport in advance? South Korea is a great example of how you can make digital work and it is far ahead of other markets. So it can be positive if we do it well.

What are the big priorities in 2017 and 2018 in terms of lifting conversion rates and how do you ensure the environment, activations and impact of your people on the front line are maximised?

We’ll continue our same strategy; why not when we are doing well? We’ll go deeper on service. We are reinforcing our retail structure and we will make a big step forward in merchandising. We have some beautiful pilot projects in local markets with leading retailers such as Galeries Lafayette, Printemps and others. In travel retail we are upgrading Zürich, Bangkok (see related story), Hysan Place in Hong Kong, Macau Four Seasons and then Paris CDG 2E as pilots. We’ll roll out our new design as a step forward.

In terms of retail it’s about showcasing not only the brand but also service. We have an approach that has the brand DNA but with the Swiss architecture and a very different design to anything you see.

We have some fantastic innovations coming in 2018, for example on The White Caviar Collection. We have a new whitening molecule that will make a huge impact not only in Asia but in Europe too. And we have a lovely new Platinum Serum coming up.

We have limited numbers of innovations; we want to do fewer but do them bigger and differently. We do fewer launches but we do what we do with quality and innovation. If you want to be in luxury skincare you need to be ahead of your competitors. If you’re not, you cannot justify the price points.

We will focus on the luxury collections and to partner with the operators to do new things. We have some nice projects ahead in 2018 where you’ll see something very different.

We are partnering with people who want to ensure the brand delivers and develops luxury and service. It is an element in the commercial strategy to be bespoke, personalised, customised and to have different executions expressed in different places. We are small and flexible and want to work with good partners to make the best of this great environment.

Tomorrow’s world: La Prairie’s pilot installation at Galeries Lafayette, a template for the brand’s next generation store