After concentrating its global duty free and travel retail marketing operations in Singapore last October, Japanese global beauty house Shiseido will officially establish the new entity, Shiseido Travel Retail (STR), in the island state from 1 May. It is tasked with achieving sales of ¥18.5bn/$169.6m in this financial year.

The unit combines all three beauty axes of skincare, make-up and fragrances in DF&TR worldwide and will have 210 employees worldwide, plus a beauty consultants network of almost 1,000 (both excluding Japan). The existing TR business generated sales in 2015 of ¥17.2bn/$157.7m, up +7.6%.

The combining of all axes was expected following the shake-up of the company by CEO Masahiko Uotani last year. The ex-President and Chairman of Coca-Cola Japan was the first outsider to take the top job at Shiseido on 1 April 2014.

One of the key changes was the creation of an umbrella management for Europe [with one CEO] for its previously separate domestic operations of Shiseido Europe [the cosmetics business] and subsidiary Beauté Prestige International [the fragrance business].

$900M IN GROUP OPERATING INCOME BY 2020?

This, as well as a new matrix management structure, will drive Uotani’s Vision 2020 strategy to rejuvenate Shiseido, internationalise the business much more, and produce operating income of ¥100bn/$917m in FY2020 – that is more than double FY2015’s result (¥44.3m adjusted).

Uotani also wants to lift the fragrance weighting of the overall business which is dominated by skincare at 78%, followed by make-up at 18% and fragrance at only 4%. By 2020, he expects these ratios to be 70:20:10.

STR is one of six regional entities in the new organisational matrix about which TRBusiness has previously reported and it will be led by Philippe Lesné as President, reporting directly to Uotani. His management team consists of a marketing head and three regional heads as follows:

* Elisabeth Jouguelet, Vice President – Marketing

* Kenji Calméjane, General Manager – Travel Retail Asia Pacific

* Olivier Decazes, General Manager – Travel Retail Europe, Middle East & Africa

* Vincent Baland, General Manager – Travel Retail Americas

Lesné says: “The unification brings together BPI’s expertise in fragrances with Shiseido Group’s strengths in cosmetics, creating a comprehensive three-axis portfolio which enables the sharing of best practices and resources to drive growth.

STR says that to reinforce partnerships with retail operators it is introducing a key account management system with dedicated regional sales, marketing, merchandising and training teams supporting the sell-through and relationships with its key customers. The regional teams are also creating new business analyst positions to track and improve performance.

In addition to its global marketing team, STR will establish a new business development function to explore growth opportunities and ‘value creation initiatives’ at a global level. Going forward, retail managers will handle the entire portfolio of brands, while beauty consultants “will benefit from the sharing of best practices and a common management”.

POWERFUL BRAND PORTFOLIO

The consolidated brand portfolio is a strong one, especially in fragrance [despite the fact that BPI lost the Jean Paul Gaultier business from January]. The line-up includes skincare brands Shiseido, Clé de Peau Beauté, Anessa and Aupres; make-up brands NARS and bareMinerals; and fragrance brands Issey Miyake, Narciso Rodriguez, Elie Saab, Alaïa and Zadig & Voltaire as well as niche fragrance Serge Lutens and the distribution of Burberry in selected travel retail markets in Europe and Asia Pacific.

STR’s global marketing team will lead the brands’ DF&TR strategy. Brand managers, organised by axis (skincare, make-up and fragrances), will work with multi-brand specialists in functions such as consumer/market intelligence, retail design/visual merchandising, travel retail exclusives development, and communication/digital.

Lesné comments: “This is an extremely exciting time for Shiseido Travel Retail. The landscape has seen an unprecedented level of change in recent years, with retailer consolidation and mobile and digital technology creating a truly global territory of global operators and global shoppers. We are also seeing a major shift in growth towards Asia, a region that is at the heart of our strategy for travel retail and where our skincare expertise is based.

“I believe Shiseido Travel Retail will provide a powerful global showcase and profitable growth driver for Shiseido Group on its roadmap to achieve Vision 2020, as well as being an agile, entrepreneurial and strategic partner for travel retail operators.”