Prologue: Don’t expect the usual stock corporate answers when you interview Filip Sedic, the charismatic serial entrepreneur and disruptor who founded Swedish beauty-tech brand Foreo in 2013.
Today, Sedic and Foreo reveal the latest in a long line of ground-breaking innovations, intriguingly entitled FAQ™ (see panel below), at the inaugural Virtual Travel Retail Expo. They are calling it, ‘the world’s most powerful anti-aging brand’ and on the eve of the launch Sedic spoke to The Moodie Davitt Report Founder & Chairman Martin Moodie not only about the new product but about his deep commitment to creating a better world.
In fact don’t expect anything too conventional at all from a man who labels himself Chief Imagination Officer and resolutely resists being pigeon-holed by any standard business definition.
An interview with Sedic is a philosophical and semantic sojourn that leads down multiple byways, stopping at various junctures to discuss product, passion, and the planet.
Asked whether he would define his creation, Foreo (the name represents ‘for everyone’), as a beauty tech company or a lifestyle brand, he replies: “To be honest, I would prefer not to define myself at all, because all my life I have been trying to fight definitions. That’s because I believe definitions are one of the big problems for the progress that we are making in the world – when you define something, you lock something.”
It’s that spirit of refusing to be straitjacketed by traditional business wisdom that has driven the extraordinary rise of Foreo, the brainchild of the Bosnia-born, Zagreb-educated, Sweden and now Hong Kong-based Sedic. Foreo’s story traces back to when Sedic’s wife, Ivana, complained that the well-known facial cleanser she was using actually had an adverse effect on her skin due to the nylon brush accumulating dirt and bacteria. Having failed to identify any acceptable alternative, the husband and wife team decided to create one.
Their rationale was simple, the end-result profound. Women’s skin is thinner and more delicate compared to men’s, so instead of harsh nylon bristles, medical-grade silicone – notable for its antibacterial qualities – was chosen. While not the overnight success that it is sometimes portrayed as (it followed a ten-year development that drew on talents from a multi-disciplinary team of dermatologists, cellular biologists, dieticians, and aestheticians), its ultimate emergence in 2013 as the Foreo Luna range of brushes was a revelation.
There was more to it than raw material though. After developing the prototype, Sedic started to wonder whether the product could make cleansers more effective. Were all the beneficial ingredients in the cleansers actually penetrating the skin or just sitting on the surface? How to ensure that all surface dirt was actually being removed effectively from the face?
Noting that the traditional way to ensure a deeper cleanse starts by using a hot cloth – the warmth of the cloth opens up the pores and allows the product to absorb more effectively – he decided to take the concept to the next level by eliminating the need for the cloth, as it had bacteria-breeding potential. Sedic settled on what he dubbed T-Sonic technology (transdermal sonic technology). In simple terms the pulsations from the brush are channeled through the soft silicone touch-points to better remove any existing surface dirt, and to assist the cleanser in performing better.
That technological breakthrough in turn spurred a realisation that such research and development required a dedicated research-driven enterprise. The Foreo Institute was born, an avenue for Sedic and his team of researchers to continue breaking barriers and explore different ways to promote innovation.
“The Foreo Institute is very important for me, because it’s a kind of a think tank – a broad base of everything,” he says, talking to The Moodie Davitt Report by Zoom from his home in Deepwater Bay, Hong Kong. “That’s because we believe that everything in nature works according to the same kind of principles. Sometimes it’s very hard for us to see the pattern in this but everything works in following the natural laws.”
The Foreo Institute aims to improve the day-to-day life of millions of people worldwide with ‘paradigm-shifting’ products. An impressive three percent of revenue is ploughed into research, driving over 2,500 patent applications in 2017, a number that has since risen annually since the company began to incorporate AI technology into its products, notably the LUNA Fofo (dubbed the world’s first 2-in-1 smart facial massage and cleansing solution).
Innovation in the time of a pandemic
Roll forward to 2020, a year that will forever be synonymous with the COVID-19 crisis. But while the pandemic has had a devastating impact on global society and countless businesses, Sedic also identifies opportunity in the crisis in terms of improving humanity and the way we live.
“This break that Corona gave us is a golden opportunity to stop a little bit and think about what we are doing and why we are doing it,” he reflects. “Where are we going? Do things need to be the way they work now? Do we really want to simply recover back to the same economy that we had? Or do we want to use this opportunity to build something new that will last another 100 years?
“I’m not saying that this economy that we were living in was bad; after all it has served us well for the last 100 years. But anything that has served you well for 100 years is a little bit old and cranky and bad – the same as us, yes?! That’s how it is. Nothing should last forever. So, I think it’s a great opportunity to really change things and grow us for the next 100 years.”
Foreo’s wellbeing foundations
“Foreo was created in the context of wellbeing of the mind,” Sedic explains. “Yes, we started with the beauty aspect but the whole idea about Foreo is to create a holistic wheel of wellbeing that I like to draw. It started with beauty and the face because that reflects on your self-confidence, and the way that you see yourself, and how others see yourself.
“But already for 15 years now, we have been researching a number of very important wellbeing parameters, starting with simple ones like what we eat, and how this reflects on our mood and wellbeing. We have studied air and water quality – our studies find, for example, amazing results in terms of how the air quality, the temperature and humidity of the air, and pollution can affect our mood directly.”
Hormones are another key, though complex component. “Hormones impact our lives so much that is impossible to not include them,” says Sedic. “Especially for us men, there are really simple solutions in terms of how we feel and how we function through very easy control of testosterone and oestrogen.”
“Wouldn’t it be better to make it something that they want to do instead of having to do? Then there’s a much better chance that people will do it.”
Smell, lighting, even sexual wellbeing are other areas of exploration by the Foreo Institute. “You can make people who are feeling bad or tired become happy and enthusiastic by altering smell. And lighting – in terms of quality, direction, colour or temperature – can alter your mood in a positive direction. Before sleeping, we can have one mode; in a relaxation area, it’s another; if you want to be work-efficient and thinking, it’s a third one. So the light impacts us a lot. When I walk out on my balcony here in Hong Kong, and I experience the sun and reflection from the sea, it immediately lifts me.”
All those elements form a virtuous circle of wellbeing, Sedic says, and while you don’t need to get all of them right to feel good, three or four alone can make a huge difference. “That’s where for everyone came from. I cannot solve everyone’s individual problems, because by definition not everyone has that problem. But if we can use technology and innovation to improve the quality of life in those aspects that are universal for all human beings, these other problems might hopefully disappear or definitely will be more manageable.”
At its essence, wellbeing is about how people feel, and Sedic says he wants his products to make people smile, to provoke “a kind of happiness and personal relationship with these products”. Talking of the Foreo ISSA Sonic Electronic Toothbrush, for example, he says, “A routine of spending two minutes twice per day brushing your teeth is not something that we as human beings look forward to. So, wouldn’t it be better to make it something that they want to do instead of having to do? Then there’s a much better chance that people will do it.”
The ISSA device is as valid for adults as kids, he says. “We see adults simply as older kids because there’s a kid in each of us. So that, in the same way we want to make the kids brush their teeth, by making the brushing fun it’s equally applicable for us – the grown-up kids.”
Nurturing the creative spirit
Sedic is both serial entrepreneur and serial inventor. His mind, I suggest, must be constantly whirring like a windmill, always on a journey of exploration to discover the next big thing. “Absolutely,” he responds. “It’s way beyond beauty and other things we have developed. I find opportunity in everything that hasn’t changed for quite some time. The opportunity lies in that we can make things better, because in our lives and through technology, everything has changed so dramatically in just the last couple of years, not only the last 20 and 30.
“And it is really important to reevaluate every single segment of our life. Can we make it better? Can we make it more efficient? Can we make it so that more people can participate, make it more equal, make it more environmentally friendly? Make it more socially friendly?
“We believe that everything in nature works according to the same kind of principles. Sometimes it’s very hard for us to see the pattern in all this but everything works in following the natural laws, everything is interconnected.”
FAQ™ – dealing with an age-old concern
And so to FAQ™, the latest but most certainly not the last concept to roll off the seemingly endless Foreo innovation line (see panel below for full FAQ™ details)
“I see all these products as a milestone in the life journey,” Sedic says proudly. “So, every product has its own place and position in terms of a higher goal. With FAQ, the idea with the brand – if you start from an ideological point of view – is that I believe we have to put efficiency of life, and not efficiency of production first.
“If you look at industry, it’s always efficiency of production that is put in the front line.
“As humans, we are always trying to be more productive, to find a way to produce more energy, or more bottles, creams, chemicals or whatever. It was a great concept that came out of the industrial revolution, of creating very specialised jobs whereby everyone would be far more efficient in production.
“So you have people specialised in all these jobs and of course that has done so much for society in pulling us out of poverty, but I think we have gone far too far with this constant focus on efficiency. If you look at the beauty business, it is about what is efficient. So, if I am doing cream, then I’m doing the lotions, the moisturizer, the cleansers, the anti-aging cream, the acne cream, this serum, that serum!”
That spells a vertical approach that Sedic believes is neither attuned to nor desired by most consumers. Something as important as anti-aging – an eternal human concern – cannot just be about a cream or a mask, he argues. Aging, or trying to combat it, is a much more complex subject.
“The idea with FAQ™ was, ‘Why not challenge the whole concept of these vertical brands with a horizontal brand, one that will cover all the most powerful proven solutions – plus some of our new invention solutions? This will create a holistic picture of how you can tackle your anti-aging needs.” [Main interview continues after panel below]
|FAQ™, ‘the world’s most powerful anti-aging brand’, unveiled
At this week’s Virtual Travel Retail Expo, visitors will be able to discover FAQ™, the latest product from Foreo.
Technology has resulted in the ability to have everything in the palm of your hand – and beauty products are no exception, Foreo says of its new invention. Limitations such as time and accessibility have become non-existent in the light of research and technological advancements, leading to the creation of what the company claims will be the world’s most coveted anti-aging device, FAQ™.
Described as the first brand to truly harness the full power of clinical machines into a sleek, handheld form, FAQ™ offers the world’s first hybrid professional beauty devices. These are designed to be used in the comfort of the user’s home, whether they are a professional conducting in-home treatment or someone simply looking for powerful clinical results.
The company says: “FAQ™’s unique hybrid designs are made to work as powerful home beauty devices featuring a wide range of cutting-edge solutions for all skin types and beauty needs. However, when combined with the app, the devices transform into professional clinical machines, providing powerful rejuvenation results from the very first treatment.”
In its determination to make cutting-edge technologies and results available to everybody in the comfort of their own home, FAQ™ has made it their mission to professionally train all of their users on how to safely and effectively perform non-invasive clinical rejuvenation treatments “on themselves, by themselves”. The mission is based on the brand’s belief that although aging is an inevitability, everyone holds the power to control how they age.
The FAQ 100 Range is a series of three devices that feature a combination of Power-RF (powerful heated radiofrequency waves that boost the production of collagen).
FAQ™ says that it the only brand to have managed to successfully concentrate true clinical power (which can be dangerous if used incorrectly) into its devices. As a result, it insists on training users how to use their devices and the accompanying technologies correctly, to ensure maximum safety and efficiency at all times.
The higher-level intensities of each technology remain locked on an FAQ™ device until users have gone through the full training program on the app. After the intensive training is complete, the device’s clinical-level intensities are unlocked and available for all future uses.
By refusing to stick to a ‘one solution fits all’ concept for skincare or aging, FAQ™ 100 Range devices allow users to create their own customised treatment that is specifically tailored to suit their needs.
By offering a wider range of intensity levels than their competitors, FAQ™ enables users to personalise their routine by adjusting the intensity levels of EMS-Pro, Power-RF, and T-Sonic™ pulsations and allows them to pick their preferred LED-Pulse colors via the app.
The app then automatically syncs the user’s personalised treatment routine to their device, so that whenever the device is turned on in the future, it will follow the routine designed by them.
Where next for Foreo?
As a deeply fascinating discussion nears an end, I ask Sedic where he sees this remarkable journey taking him and Foreo in say five or ten years? His answer reveals that the candle of ambition and imagination continues to burn as brightly as it did all these years ago when he and Ivana began to conceive the original Foreo device.
“As I explained earlier, Foreo actually had all the aspects of wellbeing in mind from the beginning. But you know, it’s impossible to do everything at once, they have to be done in a certain order. It’s very important for us that every single product, every single brand that we do, fulfils one very important, innovative role.
“I feel like the whole point of being an entrepreneur – besides making money – is actually to give you freedom to do the things that you want to do without the need to reach consensus and ask the banks and investors and so on”
“With research, you can study around one area for decades, and still not find the thing that will move the needle. In other areas, it can take just a couple of months and you suddenly have this moment where you discover a huge improvement, compared to what we are using today. So, to not limit ourselves, we create a very wide area of research.”
Sedic likens the process to a game of Jenga – a stacking game, which involves removing wooden blocks one by one from a tower construction and placing them on top of the tower without the whole structure toppling.
“We are all the time looking for things that give substantial impact and asking which innovations could improve people’s life in a more significant way,” he says. “We are playing with a whole field of different things that we believe can have a very important impact.”
Underpinned by the relentless spirit – and the freedom – of the entrepreneur, Foreo is not shackled by city expectations and quarterly results nor by a set in stone mission statement.
“I feel like the whole point of being an entrepreneur – besides making money – is actually to give you freedom to do the things that you want to do without the need to reach consensus and ask the banks and investors and so on,” Sedic says. “Instead, we can do it ourselves, and focus on whatever we think has a fair chance to succeed.
“We can just kind of experiment, and find a way to do it, regardless if it is in a beauty segment, or in terms of how we function as a company. If you are innovative in product, you must be innovative in other ways – in how your HR is working; how your sales, marketing, and inter-people connection in the company are working – you have to be innovative in everything. I can’t believe that someone can create innovative product if the company looks like any other company. It can’t be real.”
Backing those who would change our world for the better
Notably, Foreo’s entire success has been based entirely on in-house product development, never by acquisition. “It’s very deliberate,” Sedic comments, as he reveals his next big plan. “We don’t consider any acquisition. It’s not that we don’t want anything to help us to achieve some goal or achieve some possibility. But instead, we are going to create something that is neither a philanthropic venture, nor is it impact investing. It’s an investment arm that will invest into projects and companies which offer the possibility to have substantial ecological or social impact.
“So, no return on investment would be required in terms of money, but instead return of investment will be measured in terms of ecological or social impact.”
It’s a big idea, which even Sedic, a man who barely recognises barriers, admits is ground-breaking. “Nothing similar like this exists. It is not about wanting to earn more money, and it’s not profit-based. But we all have to think about the environment more. So, instead of doing acquisitions and taking away the power from inventors and creative people, we want to just help them to do their own thing, without any demands on the financial return.”
If not an acquisitor, could Foreo ever be an acquisition target itself? After all, given the company’s stellar record of innovation and commercial success, Sedic must inevitably have people knocking on his door, I suggest.
“I don’t want to say never because we don’t know what life will bring and how things will develop,” he responds. “But right now, the answer is definitely no because I want to use the big, wide Foreo organisation that we have created to be the springboard not only for our new projects such as FAQ but also for this impact venture arm.
“We want to help others take off. Because we noticed a lot of brilliant ideas, and a lot of brilliant, creative people often very quickly get deactivated and stopped because of the very simple reality checks, such as regulatory and legal barriers and costs.”
“Creators of beauty products, for example, have to be able to organise and fund clinical studies, without which no such product would get off the ground. “But to be able to make a medical study, you need to have just, say, 300-400 prototypes. No factory in the world wants to produce this for you, because it is peanuts quantity for them.
“So, Foreo can manage not only our internal experimentation and external research but can also act as an external springboard. We can provide the legal, regulatory, production and product development assistance – not just give capital – to the future entrepreneurs in the whole area of ecological frontiers.”
Is there a thought that keeps Sedic awake at night, a common trait of entrepreneurial spirits? “For me, the non-sleeping thing mostly comes from trying to solve some problem that I believe must have a solution,” he replies. “I know it’s there and yet we don’t see it. So then, I can spend the nights turning things upside down, studying from all possible angles, and try to see where the pattern lies to bring a solution.
“But if you mean in terms of annoying things, then it’s really that I can’t understand why we as a people are so wasteful of the resources that this planet is providing us. I can’t understand how the system that we are living in can be so wasteful in producing things that we don’t consume… in how we don’t take care of resources, and the water and food that we are throwing away. It really makes me sometimes lose faith in the humans.”
And what most excites him, motivates him more than anything to start work in the morning? “There’s a moment when you wake up in the morning and you go sit in front of the computer and see the overnight charts and results from our projects and you get almost addicted. It’s worse than following the stock market. It’s following all the projects that we are doing and trying to see if maybe tonight will see the breakthrough in one of the areas.
“Because I’m originally a computer science engineer, the whole company is kind of computer database algorithm-steered. So we are constantly playing with things during the night as well, while we are sleeping.”
Who have been the biggest inspirations in his life and why? “It’s a lot of things, it’s complex. My father was an engineer in telecom. He was extremely interested in technology and a believer in it. And my mom, she studied, biology and chemistry. She ended up as the head of the computer center at Sarajevo University. So I got very early access to things like the IBM 1132, which taught me not only how to think, but also about being efficient in the way we use resources.
“With those big computers… you had to programme very efficiently, to try to make great things by using as few resources as needed. So, my inspiration is more in the people that keep to this principle. So, it’s not [Amazon Founder & CEO Jeff] Bezos, because while he has absolutely great creativity and great innovation… the most important factor is for which purpose you are using it.
“For me, innovation would be more like Tesla, in terms of doing the right thing. What the Bill & Melinda Gates Foundation is doing now is fantastic. It’s something that I wish that he started doing about 20 years earlier because far more would be done by now.
“I think [Tesla co-founder] Elon Musk has great potential but he’s not using his invention in the right direction yet. It’s more for his own glory and power. But I believe that will come, same as Bill Gates, with age.
“So, I’m impressed by people who are very giving and generous and do things for others. People who use their talent and their creativity and innovation in the right direction. Just because you have a talent doesn’t really mean anything. The most important thing is what you are using your talents for.”
During his career journey of yours, is there a single moment that Sedic would pick out? “I’m not sure about the single moment, because I believe that this single moment is somewhere in the future,” he replies. “I don’t like looking back. Instead we should focus on what we can do, what will tomorrow be, what we can do in 10 years or 20 years.
“Return of investment will be measured in terms of ecological or social impact”
“Don’t misunderstand, I’m very, very interested in history, but we should just look to history as a lesson learned thing, more technical than emotional. So, I believe that this wow moment that you’re asking for is something, somewhere ahead of me, and not in the past.
“I hope I will be able to influence enough people in our organisation to carry on this mission. Because it’s very important for me that it’s not only my effort but a collective effort to try to inspire and educate as many employees and others that we work with. Inspire them to have a more open-minded and more futuristic view of what else we can do instead of focusing on what we have done, and how to make money out of that.
“I want to focus more on the ideas and inspiration than on me as a person. I think it’s important not just for this conversation we are having, but to get more and more people to influence and challenge this establishment and see if we can do something together.”
Sedic has three daughters, aged 7, 11 and 15. Would he like to see them enter the business one day? “I would love them to be happy. So if that happened it’s cool, if not it’s cool too. They have been a lot of inspiration for me, I actually learn more from them than they learn from me at the moment, because I love observing this young generation! And that gives me hope in these bad moments when I get disappointed about the human race and wastefulness. I see these young kids and how they live and what their values are, and I get optimistic again.”
|FOREO FACTS AND FAQ™
Tell us more about founder, Filip Sedic
Filip Sedic always had an aspiration to connect the ideal, futuristic lifestyle with innovative, forward-thinking technologies. He headed one of Sweden’s first digital marketing agencies, and later led the development of early mobile 3G networks for Ericsson.
His mission when he founded Foreo was simple – to create a device that not only suits the young, but can benefit the middle-aged, and the more mature. He set out to shake up the entire beauty industry by providing devices that were not only effective and affordable but challenged the norms of seemingly ‘accepted’ and ‘traditional’ routines.
Foreo opted to go online before selling in-store. How did the brand gain initial consumer traction?
For the past seven years, Foreo has relied heavily on the power of word-of-mouth. This encompasses everything from satisfied customers recommending its products to their friends and family, to collaborating with digital influencers to provide the company with marketable, reliable, and knowledgeable content on each new launch.
Foreo relies on story-tellers to engage their unique audiences in ways that the company is unable to. This way it manages to capture many different markets effectively.
Trusted celebrities and influencers, who notoriously only provide content for products they are satisfied with, often incorporate ‘product hacking’ elements into their content.
Filip Sedic relates the story of a Korean influencer last year who created a YouTube video showing how she used the Foreo UFO to combat her stretch marks from pregnancy. It is this type of content that shows just exactly how multi-functional our products are, and why we have such a loyal customer base to begin with, he says.
The company believes passionately in the power of word-of-mouth. It cites a Nielsen study conducted in 2017 which showed that 92% of customers trust suggestions from family and friends more than they do advertising. “That has come to include influencers who are well-known in the beauty industry, that their followers have come to trust and love,” the company says.
Since its launch in 2013, Foreo has grown from a team of two to 3,000, remarkable progress. What have been the keys to that success and how do you sustain the original values as you scale up so rapidly?
Our main keys to success, apart from innovation and boundary-breaking products, is that our products are a one stop solution you purchase it, and that’s it. There are no extra add-ons or frills, no replacement parts you need to buy to continue using it effectively, no special sets to complete.
We understand that most brands look to increase basket size by forcing customers to be repeat customers, and to ensure that the customer actively needs to come back to them time and time again. But we think what Foreo customers appreciate about the brand is that we don’t participate in such marketing activities.
They know and understand that we provide simplistic designs and effective products which stand on their own, thus saving time and money. As Foreo continues to expand, we hold tighter to the aim of making people’s lives better. We believe, and as do millions of others, in our tried and tested products that ensure that the best solutions are not just made for the wealthy few.
Filip Sedic once said, “Foreo does not even have a Brand Manager. We are into Imagination, Innovation and Design – I am Foreo’s CIO – Chief Imagination Officer.” Tell us about that philosophy and the company’s approach to brand development and company leadership.
Every product that we come up with is from dreamers who are constantly pushing their own limits and boundaries when it comes to thinking up new and innovative inspiration.
We encourage active participation at Foreo – any and all ideas are welcome from our employees as we strive to redefine the beauty-tech industry as we know it. We are always open to ideas from our employees on how to best develop the presence of the brand in their respective markets.
Filip Sedic envisions a flat hierarchy where people can easily approach him to pitch their ideas on how Foreo can venture on the next step to be even better.
Foreo itself is managed by everyone – we all contribute different roles and responsibilities and wear different hats when it comes to getting the job done. The Foreo family is passionate first and foremost – to us, nothing is more important than sharing our beloved brand with the entire world.
You’ve progressively developed a complementary offline and online strategy in recent years. How do you balance that online/offline mix?
As a result of more and more people shopping online, distribution will definitely change. Foreo has taken this [crisis-hit] time to offer special deals on our website to encourage first-time and recurring customers. This is not to say that brick and mortar stores are obsolete, however – we still rely heavily on personal customer interaction that enables the consumer to feel, touch, and try the product themselves.
When investing in higher price products, there is still a percentage of consumers who are wary and need to experience the product hands-on before being convinced to buy. We understand that this is part and parcel of retail, and we want to be able to cater to this percentage of customers as much as possible.
We hope that through being able to convince the consumer to purchase their first product from a retail store, any recurring products they choose to purchase are from our ecommerce channels. Of course, we offer discounts for first time purchases online and also free shipping to make the entire process more attractive and less complicated.
How badly has the Foreo business been hit by COVID-19? What are the lessons you are taking out from this crisis? Has it accelerated your ecommerce development?
In such an unprecedented global pandemic, it’s safe to say that everyone got knocked off their feet. No one was prepared for such an economic downturn, and with the climate still being as unstable as it is, we can’t be quite sure what the future holds, and what kind of long-term repercussions to expect as a result of the COVID-19 outbreak.
During the beginning of the crisis, Foreo immediately assembled an internal team to look into different strategies to keep our beloved brand afloat. We increased marketing activities online by tenfold, with consumers being unable to move about their day-to-day activities as usual, shopping online became an escape mechanism for them, and something they felt they were able to control in their lives.
Online revenue is still climbing steadily even as the lockdown restrictions begin to ease all over the world, however, we are constantly changing our sales and marketing strategies to cater to new angles and points of view.
Many countries did not allow the opening of beauty salons, so our current focus is pushing our range of products as a perfect fit for the customer who is missing their professional spa care treatments.
This theme has been applied to digital and content marketing, and as a result, our online retail channels have enjoyed an increase in demand. Foreo.com has seen an 100% of GMV increase while Korean e-commerce enjoyed 123% growth during February to June as compared with the GMV from September 19 to January 2020.
However, it has definitely not all been smooth sailing for us – our travel retail segment numbers dropped by a drastic 80%. This was definitely inevitable due to border restrictions and travel lockdown measures taken globally, but with such restrictions beginning to ease, we are hoping for a comeback in Q4 of this year.
To encourage duty free shoppers, Foreo released the new ‘Peach’ product at Hyundai Duty Free, which proved to be a smart move, as the product sold out.
This is the time for brands to focus on ecommerce to ensure a steady supply of goods, but also prepare stores for the time when lockdown and travel restrictions will be completely eased.
Travel retail has been a key channel for Foreo, one in which you have enjoyed tremendous success and great visibility. Tell us how you see the role of the channel.
Travel retail is indeed one of our highest-growth channels, encapsulating growth, and innovation for many different aspects of the brand. It gives us a really unique opportunity to interact with the customer and converse with them, who, unlike the traditional consumer, likely has more browsing time on their hands.
The market itself offers an array of high-quality products by well-known brands at great prices – in such an environment, anyone and everyone could be a potential spending customer. As a brand, we are focusing on increasing premium brand experiences, and have put this into motion by introducing new product releases first and foremost through travel retail channels.
However, the success of the channel is highly dependent on many external factors, one of which we have come to see is pandemics such as COVID-19. This has forced the entire industry to look at things with a fresh perspective and see that possibly things do need to be shaken up a little.
For example, CDFG has launched a new app this year that will allow customers to shop without a departure ticket. Not only is this incredibly convenient, it allows anyone to have access to duty free prices and products without any plans of travelling. It is this kind of innovation and forward-thinking that will help us prepare for any future roadblocks.
Before FAQ™, your latest recent innovations included the Bear and Bear Mini micro current devices and Peach. What was the creative spark and why did you choose to adopt a travel retail-first approach to these launches?
With the Bear and Bear Mini, we had seen a dramatic increase of the ‘V-shape’ trend globally, initially made popular by the Korean market.
With many aesthetic clinics offering treatment packages to sharpen the jawline and erase fine lines and wrinkles, we wanted to offer a more holistic approach to getting the side profile of your dreams. Not only does stimulating microcurrent tone the skin, the entire process is completely painless with absolutely zero downtime.
For the Peach, we were banking on a summer release to coincide with the increasing demand for IPL treatments. We wanted to provide an at-home solution which is equally as effective, cost-saving, and eliminates the need to visit an aesthetic clinic.
Travel retail has first dibs on new releases as we see that Chinese consumers are typically the ones to hype up a product to the point of it selling out – with platforms such as WeChat, affordable and effective products such as ours typically go viral from the Chinese tourist.
The power of the Chinese market is undeniable, and we have seen many positive results and reviews as word begins to spread across the globe.
Recently, Foreo has seen an encouraging recovery within China’s domestic travel retail market, notably Hainan but also through CNSC. How critical is the China market – and the Chinese traveller – to Foreo today?
As mentioned before, the Chinese consumer is typically the one to set the trend when it comes to product purchasing.
With China being far by the first country to get back on its feet and re-stimulate its economy post COVID-19, domestic flights have come back strongly as you have reported.
Hainan has no doubt a crucial role in the domestic travel retail market, with a wave of supporting policies recently being introduced such as the tax free shipping policy, and the corporate income tax and personal income tax preferential policies which have made Hainan a hot-spot to facilitate free trade, investment, and cross-border capital flows in the province.
In the first three months after the implementation of the enhanced offshore duty free shopping policy on 1st July, duty free sales on Hainan Island surged by +227.5% year-on-year to RMB8.61 billion (US$1.27 billion), compared with RMB13. 61 billion (US$1.98 billion) for the whole of 2019.
With the Hainan Free Trade Port set to become China’s open flagship store, Hainan is on track to become a global duty-free shopping mall.
It hasn’t just been about China. You have a strong presence in travel retail in South Korea, in Thailand, Singapore and elsewhere. You’ve now targeted Europe. What’s the vision for the channel globally and do you see it changing as a result of COVID-19?
The Asian market has always enjoyed incredibly year-on-year growth. South Korea, Hong Kong, Thailand, and Singapore are our key hubs for our travel retail channel. We have dedicated teams that manage our Asian travel retail accounts directly from these markets.
However, there are some Asian countries that we have not fully explored, such as Indonesia, Vietnam, and Cambodia. As we recover from the economic downturn from COVID-19, we are looking into expanding our reach into these markets beginning 2021.
In 2019, we started to look into Europe, and we managed to partner with Heinemann. With Dufry, we started in Asia first, and we are currently planning for Europe and the Americas with them in 2020, post COVID-19. On the high seas, we are partnered with MSC, and they are such an incredible team to work with. We feel very blessed and fortunate to have such supportive partners worldwide.
It has undeniably been a slow season for the travel retail industry globally, but this channel will be the first one to recover once the pandemic has eased off. This is why we have not stopped reinforcing all channels we have, both online and offline, to prepare for the upcoming recovery period.
Domestic travel retail has become a significant area of focus for us too, as we wait for international travel restrictions to be lifted completely.