BW Confidential - Issue #8 - October/December 2011 - (Page 70)

Travel retail Sector analysis Pulling rabbits out of hats Retailers are seeing a return to boom times in travel retail, but will they last? by Kevin Rozario cross the globe, regardless of regional differences in economic growth, travel has bounced back from the slowdown in 2009. That has been good news for duty-free retailers both last year—when beauty grew by 11.4% to break the $12bn barrier—and into 2011 (source: Generation Research). Key operators canvassed by BW Confidential were upbeat about their beauty performance, particularly in Asia Pacific. In South Korea, the biggest dutyfree beauty market in the world, The Shilla Duty Free, one of the two largest operators of airport and downtown duty-free shops, has seen high double-digit growth in the first half of the year. “Beauty showed 21.1% growth compared to the same period in 2010,” says merchandising team manager Seok-Ho Hong. “Skincare had the highest growth rate among the beauty sectors, up 24%, while make-up and perfume were solid at 14% and 15% respectively.” Further south at Singapore Changi airport the pattern is similar. June year-to-date sales saw high double-digit gains, especially in the skincare category at a robust 20% compared with 2010. “This is largely A thanks to a strong increase in Chinese visitors, our number-one tourist segment and growth contributor,” says Chillie Por, senior category manager at airport operator Nuance-Watson Singapore, which runs the beauty outlets at Changi. Changi continues to enjoy PRC growth, yet its nationals still only account for “ Both fragrance and cosmetics have seen good year-on-year increases, with cosmetics growing at a faster pace than fragrance during the first half travelers, enabled the women’s cosmetics category (skincare and make-up) to grow twice as fast as women’s fragrances and extend its lead over perfume in the annual category listings complied by Swedish analyst Generation Research. Cosmetics toppled women’s fragrances from its perch as the biggest category in travel retail for the first time in 2009. The Chinese impact The influence of the Chinese is so extensive that even outside Asia—in Europe, the Middle East and the Americas for example—they are being credited for growth in categories like skincare. Nuance North America category manager fragrances and cosmetics Gorana Vojvodic says: “Overall beauty is performing at a very impressive level this year, with our sales showing double-digit growth. We are seeing the highest growth from skincare, followed by fragrances and then color. This growth is mainly down to the increase in Chinese passengers who demand luxury skincare and branded products, as well as our price positioning when compared to other markets.” At the world’s largest single airport retail location Dubai Duty Free manager- Travel retail market 2010 Aldeasa-WDF chief commerical officer Eugenio Andrades Global travel retail & duty-free sales: $39bn Perfumes & cosmetics global travel retail & duty-free sales: $12bn, +11.4% vs 2009 Asia Pacific perfumes & cosmetics travel retail & duty-free sales: $2.99bn, +25.3% vs 2009 Source: Generation Research around one fifth of Nuance-Watson’s beauty business. “This means our perfume and cosmetics offer caters to a very diverse nationality profile,” notes Por. “That said, our sales and growth generally was driven by Asian passengers who consume more cosmetics and skincare than fragrances.” In 2010, this type of consumption, coupled with the rising influence of Asian ” 70 October-December 2011 - N°8 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #8 - October/December 2011

- Brand & retail news recap
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
- The latest in fragrance, skincare & make-up
- Estée Lauder Companies group president international Cédric Prouvé
Insight: Fragrance
- Category overview
- Retailer roundtable
- Retailing strategies
- Rare fragrance brands
- Launch roundup
- Spa chains
- Spa case studies
- E-commerce
- Store concepts
Travel retail
- Sector analysis
- Hainan & China Duty Free Group
- Retail concepts
- Passenger habits
- Industry experts on harnassing the power of social networks
- Six up-and-coming beauty brands
Market watch: Russia
- Country overview
- Prestige retailing
- Industry viewpoint
- Market outlook
- Sustainabilty
- Trends
Last word
- Buyology Inc president & co-founder Donna Sturgess

BW Confidential - Issue #8 - October/December 2011