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Cruise retail offers a big opportunity with Asia Pacific an emerging region for travel |
Starboard Cruise Services is planning to expand its business with a focus on global reach, innovation in merchandising, supply chain expertise and partnerships with leading brands.
Its growth plans, outlined to The Moodie Report in a major interview with our Cannes Print Edition, come amid a period of strong growth in the cruise business.
Ocean-going cruise passenger numbers reached 22.1 million in 2014, up from 21.3 million in 2013 and a sharp rise on the 2009 figure of 17.8 million, according to Cruise Lines International Association (CLIA). The numbers are forecast to continue rising, with 23 million passengers worldwide expected in 2015.
That offers a solid base of consumers for Starboard, which provides retail services onboard many of the leading cruise lines, including Royal Caribbean, Carnival, Crystal Cruises, Holland America Line, Celebrity Cruises and Costa Cruises, among others.
The company manages stores on 100 ships around the world, with a 300-strong team at its Miami headquarters handling merchandising, marketing, store planning and design, visual merchandising, human resources, IT, and finance. The cruise retail team comprises 1,500 employees around the globe, including leadership teams in Europe and Asia. All told, it’s a business worth close to US$850 million in annual sales, The Moodie Report estimates.
Starboard’s strategy, as Vice President of Merchandising Benito Mendez noted, is to provide “discovery, entertainment and memories” through the shopping offer.
He said the business is built on five key pillars, naming them as “innovation in product at all price points, delivering value to our guest, a focus on duty free pricing, driving brands (global, discovery and private) and developing stronger strategic partnerships with our cruise line partners.”
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“Surprise and discovery” are key elements in the Starboard strategy |
It’s a business that has evolved in size and quality over the past decade, from a time when fewer than ten million people took cruises.
Mendez said: “There is lots of innovation, such as shipbuilding with regard to larger ships, more exotic itineraries and growth in Asia and Australia. This evolution has afforded us tremendous opportunities as a retailer. Starboard has capitalised on this and was the first to introduce numerous brands and concepts at sea.
“Starboard was the first to bring and deliver stand-alone concepts for brands like IWC, Kate Spade, Michael Kors, Kiehl’s, Armani Jeans and Hublot, to name a few. Next month we are launching Tiffany & Co. – another first at sea.”
The business is built around prestige retail, but there are other elements that will define its future too. Mendez said: “We have been successful in driving premium and luxury sales across various categories, such as Swiss timepieces, handbags, fine jewellery, beauty and spirits.
“We also see tremendous opportunities in exclusive items and price points under US$100. Starboard is delivering new cruise line logo programmes, continuing to innovate with our private label accessories brand, Cruise Club; and we are excited to launch Newport News apparel, available exclusively on our ships.”
The last named is a reference to lifestyle fashion brand Newport News, which has entered a partnership with the cruise retailer, effective from this Autumn. Starboard will offer the brand’s latest products through its ship concessions worldwide on an exclusive basis.
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Maritime debut: Hublot is one of many brands introduced to cruise passengers by Starboard |
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Michael Kors: Another hot global brand within the Starboard Cruise portfolio |
The strategy for innovation around retailing, supply chain expertise and choosing the best brands to populate its stores means Starboard can bring its expertise to bear on a global scale.
He said: “We have great teams, global reach and support, innovation in merchandising, and expertise in supply chain unlike any retailer. We literally have stores moving around the world, so all aspects of our business are international.
“We’ve established solid relationships with brands to provide exclusive products, which in turn drive more people to shop at sea.
“Being part of LVMH enables us to be globally strategic, providing support and business intelligence from their immense portfolio of brands and infrastructure.” The company is investing for the future too. Starboard recently launched a new, 225,000sq ft distribution centre to support its business.
That has helped the company improve its demand planning and ordering system – one of a number of new initiatives. These include the launch of custom TV shopping channels that highlight brand stories and feature onboard team members and guests sharing their best shopping memories.
Mendez added: “This past year, we’ve invested significantly in our store environments with renovations and “˜marketing refreshes’ to better highlight our brands and engage the guests onboard. “We’re also very excited about the new ship launches in 2016 for Holland America (MS Koningsdam) and Royal Caribbean’s Ovation and Harmony that will have exciting retail elements.”
All of this comes as the business extends to new territories. The USA is the largest source market, accounting for around half of all passengers, followed by Germany and UK/Ireland. But a key trend today is the rise and rise of Asian cruising: the Chinese are now already the seventh largest nationality by volume, at close to 700,000 in 2014. The industry is now responding to this trend with vigour.
Senior Vice President Luxury Cruise Retail and Asia Office David Goubert said: “We see Asia as the market with the highest potential growth. Currently it is our second most important market; the Caribbean still leads in terms of number of passengers and ships. However, as more ships are deployed to Asia and built especially for the market, we expect to see Asia increasing its share dramatically.”
And that also means tailoring the store design and offer to cater to a new type of cruise traveller.
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Upscale look: Starboard has invested heavily in its store environments and marketing, says Benito Mendez |
“Retail theatre is extremely advanced in Asia compared to the rest of the world,” noted Goubert. “It is also a market that is evolving fast and we need to make sure our retail environment keeps up with the pace. It’s no longer enough to have stand-alone stores for one product, we need to have multi-brands and work outside the four walls of our store. For example, we have had great success with shopping talks about products and with jewellery auctions.”
The cruise business has been a story of robust growth, though there are some challenges too.
Mendez said: “Obviously, there are macro-economic factors such as fluctuations in currency exchange rates plus geopolitical issues that affect spending and ship deployment. The good news is that our cruise line partners move the ships to help mitigate these external factors.”
Finding the best people to serve the diverse passenger demographic is no easy task either. Mendez says: “Our people are our most important asset. They’re the ones interacting with guests every day around the world. So, recruitment of top talent globally and providing them with the best tools and training will always be a key focus for us. Another challenge will be to optimise global planning and distribution – again, thinking of the guests’ needs first and ensuring we always have what they want when they want it.”
The cruise retail environment is a channel on the rise, and one that is grabbing the attention of more brands. They should be optimistic about the prospects too, said Mendez.
“Cruise shipbuilding and capacity are at an all-time high. The ships are becoming destinations and new players are coming in. For instance, Richard Branson announced plans for Virgin Cruises to enter the market in 2020 with three new ships.”
He concluded: “The retail business is exciting and dynamic. We have the best customer any retailer could want – a guest who is on holiday, who is in a celebratory mood and who has the luxury of time in which to shop and connect with our shops.”
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Exquisite timing: The Regalia fine watches store on Quantum of the Seas |
