Travel retail – and the retail sector in general – has been paying close attention to the disruption taking place in Hong Kong over many months now.
Public protests, disorder and unrest against the government’s now suspended extradition bill, mixed with the persistent chorus of pro-democracy voices and the resultant clampdown from Hong Kong’s authorities have peppered international media headlines.
Indeed, at press time multiple outlets are reporting that several eminent activists including Joshua Wong and Agnes Chow from the Demosistō party were taken into custody today (30 August) ahead of further mass protests expected this weekend.
As reported extensively by TRBusiness, flight cancellations and terminal barricading at Hong Kong International Airport (HKIA) this month resulted in dislocated passenger flows and delays, with an unsurprising knock-on effect to operations for incumbents Gebr. Heinemann, CDF-Lagardère and The Shilla Duty Free.
In conversations with all three, the resilience of their respective operations and the support received from staff and Airport Authority Hong Kong during an obviously testing time – one that by no means is likely to settle in the immediate term – has been the consistent message.
For The Shilla Duty Free, all this came a mere month after it celebrated the first anniversary of its Beauty&You stores at Hong Kong, where it emerged victorious in the fashion, accessories and beauty tender in 2017. The result cemented a triumvirate of key duty free beauty concessions at three of Asia’s main gateways: Incheon, Singapore Changi and Hong Kong.
Last year, Changha Shin replaced Alice Woo – an important architect of the Beauty&You concept – as Managing Director of the South Korean travel retailer’s Hong Kong division.
Just shy of 10 months into his new tenure, he speaks to TRBusiness about management, retailtainment, digitalisation and plans to indelibly stamp Shilla Hong Kong into the consciousness of travellers.
How would you describe your management style and how do you seek to extract the best from your teams?
In the travel retail business, collaboration is key. I would say I am result-orientated in a way that allow teams to suggest different effective and efficient ways to achieve business goals. To help the company grow and remain a strong competitor in the industry, the key is to trust the team’s professional insights, encourage them to share their thoughts, ideas and suggestions.
Nonetheless, support from The Shilla Duty Free’s head office, the partnership with the Airport Authority Hong Kong and the ingenuity of our team are all invaluable assets to that contribute to Beauty&You’s achievement today.
The Shilla Duty Free recently celebrated the one-year anniversary of the Beauty&You stores at HKIA. What are your objectives for the rest of this year and into 2020?
From the beginning, our brand Beauty&You symbolises The Shilla Duty Free’s commitment to travellers’ entire beauty experience. We want to appeal to customers who are interested in beauty products and fashion products, but also those who would be interested in a wider offer. ‘Beauty’ represents our core skincare, cosmetics and perfume offer, but also the notion that beauty is not only about skincare and cosmetic products – rather, a broader and far reaching association that includes fashion and accessories.
The ‘You’ in our brand represents our consumers, their individuality and the idea of a tailored offer. Our goal is to continue giving our customers a unique offer at Beauty&You that goes well beyond expectations of an airport retail beauty and fashion store. By providing a chance to mix and match unusual product combinations, we will continue giving our customers a personalised and holistic beauty retail experience that is ‘all about you’.
Over the past year, Beauty&You has been positioning itself at the forefront of the experiential retail trend, incorporating an immersive retail environment to deepen customer engagement in store and at the curated zones.
With ever-changing digital markets and the experiential retail trend, it has become even more important to cement digitalisation as part of our strategy. Currently we are in the midst of planning, negotiating, programming and scheduling a strong, coherent visual communication with over 100 LED panels, digital pillars, and interactive commercial tools. At the same time, we will continue to work closely with our brand partners to strive for their support in bringing new digital initiatives for customer engagement activities and service experiences.
Beginning our second year at HKIA, we will leverage all we have learned in our first year, including the strategic incorporation of retailtainment activities and new-to-HKIA brands. In the past 12 months we have introduced new brands like Balenciaga Eyewear, Find Kapoor, OLENS, as well as new brands in the fashion and accessories category.
In addition to introducing a variety of brands and product categories new to HKIA, presenting them via exclusive pop-ups with attractive offers, we also work closely with the airport authority to design special and tailor-made shopping experiences and offerings.
Customising offers for the very diverse customers at HKIA, one of the busiest airports in the world, has been a top priority. Recently, we have introduced ‘Super Price of the Month’, a year-round initiative offering attractive savings for our great product selections on a monthly basis, creating the momentum to encourage customer spending.
In terms of an immersive shopping experience and with the advantage of The Shilla Duty Free’s regional presence, we have recently introduced our global membership programme ‘S.Rewards’, in which members can earn points with their purchases at our stores in Hong Kong, Korea and Singapore, and redeem as cash for their next purchase.
At the moment we are also discussing the launch of incoming brands at Beauty&You. We intend to refresh our New Generation concept zone to harmonise our assortment of products. These new brands and pop-up stores scheduled to open by year two will surely bring new excitement to HKIA and satisfy different shopping needs of a wider customer base.
Looking at Shilla Hong Kong, which beauty areas would you like to strengthen? Will there be a heavier sway towards international brands moving forward or are you trying to angle the ratio towards Korean or domestic market brands?
One of Beauty&You’s strength lies in the unique mix-and-match of cosmetics & perfume and fashion accessories categories – a strategy that hasn’t been previously explored by any of the airports that The Shilla Duty Free operates in. Nevertheless, we have been tirelessly experimenting to find the right balance where we can maximise the synergy between two different categories and our approach at HKIA has proven to add value to customer’s shopping experience at our Beauty&You stores.
In addition to bringing 60 new brands when we first launched at HKIA, we have further invited 14 new-to-HKIA brands to Beauty&You permanently or as exclusive pop-ups in the past year, ranging from international brands like Balenciaga Eyewear, House 99 and Filorga to Korean brands like OLENS.
We noticed that brands that were new to HKIA performed well in their own specific category, for example Cosme Decorté for skincare, Find Kapoor for fashion accessories, NARS and Gucci Makeup in the makeup category, Atelier Cologne for perfumes, etc. These new-to-HKIA brands have efficiently utilised our curated zone to promote their brand identity via innovative displays in the space, alongside strong promotional strategic programmes such as free sampling and travel exclusive items and savings.
We currently have over 200 brands available at our stores. At the moment, we are in discussion to launch over 10 new-to-HKIA brands before the end of 2019, ranging from Japanese premium skincare brands to independent fragrance brands. For the fashion category, we are looking to invite affordable to entry-level luxury brands to expand our customer profile.
The Shilla Duty Free grew its revenue by 16% in the second quarter to KRW1,226.5bn [Source: Hotel Shilla]. Year-to-date (August), how is the Hong Kong business performing?
Since our grand opening, the goal is to establish a sustainable business and satisfy customers. We initiated and rolled out a series of collaborations and crossovers with different retail, F&B and travel lounge operators within the airport community, providing add-on shopping privileges to targeted passengers.
To further enhance the shopping benefits of customers, we have also launched strong joint promotion campaigns in partnership with payment providers such as Union Pay, Alipay and WeChat Pay, and also offering great shopping incentives to drive traffic conversion and sales during peak and low travel seasons.
From our first year at Beauty&You, we have achieved over KRW380bn in sales. And in the first quarter of 2019 alone, our sales result has exceeded KRW110bn.
The majority of customers at Beauty&You are from China, however, we have been seeing the growth of other international customers and target to expand the local Hong Kong demographic at the same time.
For customers from China, price comparison is a common practice. There are multiple channels where customers are exchanging information, such as price, promotions and events. Seeing this, we have also strengthened our social media strategy at Beauty&You to cater to these customers.
Like any other China–driven market, skincare has been key to sales in Beauty&You’s perfume and cosmetics category. In the first quarter of 2019, our top 10 products are all skincare sets, including iconic products from major international brands such as Estée Lauder, Lancôme, SK-II, Shiseido, and Clarins.
We are constantly expanding our product lines and exploring synergies between product categories to ensure we are giving our customers the full ‘Beauty&You’ experience.
In addition to bringing new brands, we have also brought over 60 customer engagement activities and new initiatives to HKIA via our curated zones and instore engagement zones.
This includes makeup shows with brands such as Y.S.L, L’Oréal Paris, MAC, Makeup Forever and NARS; fragrance layering workshops with Diptyque, the Grand Turismo racing virtual reality game by Tag Heuer, the ‘Art of Perfection’ skincare service by La Prairie, as well as collaborations with various brands’ mega campaigns such as Armani Cinema, Y.S.L Make it yours and ‘Men’s Grooming Lifestyle’ pop-up by L’Oréal group.
With our strong partnership with brands and the introduction of new, innovative digital initiatives and settings of our stores, we are able to increase sales and also improve customer experiences at the same time.
This report originally appeared on TRBusiness.com in late August. For the benefit of those who missed it, we are happy to re-publish it again in full here aligned with lead coverage in the October edition of TRBusiness, available from the press racks during this week’s TFWA World Exhibition & Conference.
Asia & Pacific,
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