BW Confidential - Issue #10 - May/June 2012 - (Page 68)

Travel retail credit: istock Asia Pacific regional analysis Asia stands tall The duty-free agenda in Asia is widening as more nationalities are having an impact on the channel by Kevin Rozario A sia is all about skincare, especially in some of the most influential northern Asian markets like South Korea and China. But developing markets such as Indonesia, Malaysia and India may begin to change the status quo in the duty-free business. As these countries start to get richer, their nationals are traveling more in the region and affecting the category balance, with fragrance becoming a more important focus. In addition, travel patterns have shifted in the past year and the best growth in arrivals has been coming from some of these more southerly emerging markets (see table). Two of the biggest hubs in Asia Pacific, Singapore Changi (traffic 46.5 million in 2011) and Hong Kong International Airport (traffic 53.9 million in 2011) , both acknowledge that skincare is king thanks to the ever-growing numbers of mainland Chinese travelers, but both have been quick to also take the fragrance route to woo their customers. Skincare & scents At Hong Kong International Airport (HKIA), where Nuance-Watson Asia operates all the main beauty concessions, Alessandra Piovesana, regional managing director of Nuance-Watson Asia tells BW Confidential : “Skincare and make-up have always been top sellers that have 68 consistently appealed to Asian travelers and we see this trend continuing along a similar path in the near future. But, crucially, fragrances inspire a very high proportion of impulse purchases. They generate interest among female and male customers, for both self indulgence and giftgiving purposes.” She adds: “Recent years have seen fragrances become increasingly popular among Asians, with mainland Chinese, Taiwanese and travelers from Hong Kong, in particular, seeing them as being one of the most affordable and attractive of all luxury gift choices.” To capture this potential, the company invested several million dollars in introducing a new set of fragrance gondolas with the aim of refreshing the presentation of the fragrance areas in all of its Temptation duty-free stores at HKIA. “The new fragrance areas at the front of the stores help to further attract passers-by and encourage impulse purchases,” adds Piovesana. The main beauty operator at Changi, NuanceWatson (Singapore), has also been active in promoting scents, although growing this category at the same rate as beauty overall remains an uphill battle. Senior category manager Chillie Por says: “Last year fragrance grew in single digits only over 2010, while our cosmetics grew in robust double digits.” Nevertheless the company has stayed focused on fragrances to create excitement and develop footfall. Recent exclusive scent launches included John Varvatos USA and Taylor Swift’s first fragrance Wonderstruck both from Elizabeth Arden, Fan Di Fendi from LVMH and Lancôme’s Ô de L’Orangerie. At Changi, mainland Chinese travelers are now the number-one beauty customer accounting for one fifth of all sales. But, looking to the future, Por says: “Indonesians are our number-three tourist segment. They have been growing at good double digits, although the growth rate has slowed down in 2012 and 2011 versus 2010. Malaysians and Vietnamese segments also show very strong double-digit growth, although they are still a small part of the mix for us. Local Singaporeans, our number- two nationality, will remain a key focus.” Targeting the Chinese The travel-retail channel in Asia overall has been in a sustained ‘boom’ period for the past 18 months. Revamped stores, like those at HKIA, plus new ones at expanded terminals and also brand new airport locations have had a positive effect on beauty sales as more brands have come into some locations and markets. A shining example is the duty-free operation of China Duty Free Group at Sanya on the island of Hainan May-June 2012 - N°10 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #10 - May/June 2012

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Clinique global brand president Lynne Greene
Insight: Skincare
- Category overview
- Retail technology
- Retail viewpoint
- The latest trends
Wellness
- Spas & healthcare
- Spa case studies
Retail
- Inspiration from Apple
- Store concepts
Market watch: China
- Country overview
- Industry viewpoint
- Prestige retailing
- Taobao & the internet
Digital focus Social media strategies
Strategy spotlight Case studies to inspire
Travel retail: Asia Pacific
- Regional overview
- India
- Interview: Delhi Duty Free Services coo Arun Barathi
Radar Six up-and-coming beauty brands
Packaging
- Make-up packs
- Innovation showcase
Last word Metis Insights director Stéphanie Morou

BW Confidential - Issue #10 - May/June 2012