A robust performance within Hainan island’s offshore duty free sector spurred Japanese beauty house Shiseido’s travel retail performance in Q4 2020, amid profoundly difficult conditions elsewhere in the channel.
The “robust” Hainan market showing helped offset a troubled performance in Japan, where there were no signs of traffic recovery and limited passenger numbers and operations elsewhere, including Europe and North America. Hainan continues to drive growth, Shiseido noted, which resulted in increased investments in travel retail-exclusives.
Travel retail sales in Q4 (see chart below) were down -19%, which was better than the projected -22% fall. For the full year, travel retail sales decreased -18%, which was one point better than earlier expectations.
Full-year revenues in the channel reached ¥98.5 billion (US$931.3 million), down from ¥122.8 billion (US$1,154 million) in 2019. A commendable performance in such a calamitous year for travel retail globally and a showing that underlines the role and value of Hainan.
The star of the show group-wide was China domestic, where sales grew by +11% year-on-year (+40% in Q4).The sales outlook for travel retail shows an +8% year-on-year growth in 2021 over a troubled 2020. Shiseido is projecting travel retail sales of ¥106.5 billion (US$1,007 million) in 2021, compared with ¥122.8 billion in the pre-pandemic year of 2019.Company-wide, Shiseido hopes to be back on a growth track in 2022 – when it celebrates its 150th anniversary – and into a full recovery in 2023.
Travel retail saw a continued focused investment in Asia on skincare brands, with Clé de Peau Beauté, IPSA and Elixir all turning in solid performances. Shiseido also celebrated its first collaboration with China Duty Free on the YiZhiBo livestreaming platform.
Shiseido’s strong digital commitment in both communication and commerce was underlined by a rise in Asian ecommerce business of more than +80%.
Looking at travel retail prospects for 2021, Shiseido said that the number of international flights has been drastically reduced with a resultant drop in travellers mainly from China, that will not recover this year.
However, duty free sales in Asia, primarily in Hainan, will continue growth and contribute to an overall gradual recovery in travel retail from the second half onwards.