With the opening of a new Swiss distribution centre, The Estée Lauder Companies has laid the groundwork for increasing consumer demand, according to the company’s Global Travel Retail President, Israel Assa, who tells TRBusiness that ELC is ‘bullish’ on the future of travel retail.
TRBusiness spoke with Assa on-location at the opening of a new ‘state-of-the-art’ distribution centre in Galgenen, Switzerland, which ELC says will double its total output capacity, ‘enabling the flexibility necessary to adapt to the channel’s high growth potential’, it said.
“It will help us adapt to the ever-growing retail needs and all the different growth scenarios as the channel continues to recover from the pandemic and looks to the future,” Assa tells TRBusiness.
When asked if the current challenges facing all travel retail stakeholders – such as global supply chain issues driven by the pandemic and Russia’s invasion of Ukraine – makes ELC nervous about such a large investment in the channel’s future, he said: “We’re super bullish. The passenger traffic has really bounced back and frankly the spend per head of consumers who are travelling is much higher than it was previously.
STRATEGIC LONG-TERM INVESTMENT
“So the combination of traffic approaching 2019 levels and the spend per head being up means we’re bullish on the future of travel retail. This is a strategic long-term investment.”
He says he also believes market volatility to be ‘short-term’.
“Travel retail has been through a lot of ups and downs and one thing about travel retail is that it always bounces back. So, while there are always short-term issues that you have to deal with in terms of volatility – including those in supply chain – it doesn’t change our resolve to be committed to this channel and to the business.
“I think there’s definitive short-term volatility that’s being caused by the pandemic; there’s short-term volatility that’s being caused by other geo-political factors, but the truth is, this facility – and our stance overall – is that we believe in the travel retail channel and we’re 100% committed to the success of the channel.”
‘THE RISING TIDE LIFTS ALL BOATS’
When asked about the location of the new Galgenen distribution centre, he said that the company is well-placed to be able to develop talent, thanks to its ‘long-standing history in Switzerland’. “We have people [in Switzerland] that have been here for a really long time,” he adds.
In terms of a return on investment, Assa says that the centre has been built for the future; not for today. “We build facilities with the long-term in mind; to increase our ability to meet the increasing consumer demand.”
Assa believes that the positive momentum being witnessed by ELC is a good sign for the industry as a whole. “The rising tide lifts all boats. Being able to meet the demand of consumers is critical in order to harness growth potential.”
In line with ELC’s previously stated sustainability commitments, the distribution centre’s design is based on the newest standards to reduce energy and water consumption. It features total LED lighting, an energy-efficient HVAC system and the roof’s solar panels generate 1600 kilowatts at peak performance (kWp).
LEED CERTIFICATION GOAL
“Sustainability is imperative and it’s a journey that we’re tackling together,” Assa tells TRBusiness. “We’re hoping to achieve LEED (Leadership in Energy and Environmental Design) certification by the end of this calendar year.”
When the conversation turned to his recent promotion, Assa shed some light on his ambitions for ELC’s travel retail division.
“I see my role and the role of ELC in travel retail to really inspire the next generation of travellers, by thinking consumer-first and driving innovation across touchpoints in their retail journey.
“I think consumers really will expect this to evolve. [They expect] frictionless, tech-driven experiences and fulfilment of that promise is important for us in-store. I think being able to enhance that experience for the consumer is really key. We have an opportunity to help them make a memory.”