Beauty: Web 3, the metaverse and ‘phygital’ in focus

By Faye Bartle |

TFWA's Beauty in Travel Retail webinars took place on 14 and 15 June.

TFWA’s Beauty in Travel Retail webinars took place on 14 and 15 June.

Tax Free World Association (TFWA) hosted two Beauty in Travel Retail webinars last week that took the audience on an educational journey, sharing lessons from downtown and looking at how brands and retailers are using digital today.

Both sessions served to highlight the role of the beauty category in the post-pandemic rebound of the duty free and travel retail market.

Sponsored by Gebr. Heinemann, the webinars were moderated by TFWA Conference Manager Michele Miranda and Oonagh Phillips, Editor in Chief of BW Confidential.

The first session, on June 14, investigated the latest data and trends on the domestic beauty market how this may shape business in duty free and travel retail in the future.

Larissa Jensen, Vice President, Beauty Industry Advisor of The NPD Group kick-started the session by sharing an insight into worldwide prestige beauty trends and the future outlook for the industry.

Larissa Jensen, Vice President, Beauty Industry Advisor of The NPD Group.

Larissa Jensen, Vice President, Beauty Industry Advisor of The NPD Group.

She took us back to 2020, when prestige beauty sales ‘went off the rails and dipped down to 2015 levels’.

However, she pointed out that 2021 ‘put us back on track’ with the highest level of sales in NPD history capping out at over $22 billion dollars.

“For the first time in history, the fragrance market became bigger than skincare,” she noted.

“The factors that drove prestige beauty in 2021 included: the recovery and creativity in make-up; the democratisation of skincare, with the impact of Gen Z on this category; luxury and new positioning of fragrance; and the premiumisation and innovation that were driving growth in hair sales,” she said.

Looking at Q1 2022, Jensen said that products for lips are rising in popularity again, with mask mandates dropping across the country.

“Lip products grew faster than face and eye products this quarter,” she said.

Consumers are also flocking back to colour, with blush and bronzer popular. As may be expected, make-up remover is also selling well as a result.

Other sub-categories ‘having a moment’ include bodycare and suncare.

Looking to H2 2022 and beyond, the big question was whether prestige beauty is recession proof.

Jensen pointed out that only beauty is posting unit growth and that it has not yet felt the effects of inflationary pressure, although this is under careful watch.

“In the US, consumers are returning to experiences in droves,” she said. “The beauty index is being fuelled by a redefinition of wellness, which has expanded from physical to mental wellness,” she said. “And only beauty can satisfy that emotional need of the consumers.”

Andy Lightfoot, CEO of SpaceNK.

Andy Lightfoot, CEO of SpaceNK speaks to Oonagh Phillips, Editor in Chief of BW Confidential.

Andy Lightfoot, CEO of SpaceNK discussed the growing online share of the business and how that is having an impact on bricks-and-mortar stores.

Lightfoot says that stores remain an integral part of the business and while the beauty consumer enjoys the convenience of online, the store is also a place for discovery.

He said the thinking has shifted from being two separate channels to becoming one ecosystem with a ‘blur of the lines’.

Lightfoot discussed the shift to stores being purely experiential, but said that there is still a desire to transact there and that the proposition should be led by the customer, rather than them being dictated to.

To better serve the costumer, Space NK utilises data, which is captured from approximately 90% of transactions online and in store. This is unified to deliver greater personalisation.

“For instance, by not serving customers with advertisements for products that they have already researched and bought,” explained Lightfoot.

He also discussed the challenges of teaming up with online players in terms of achieving a share of voice as a brand.

“There’s no motivation for us to establish a competitor by supplying them with all our amazing brands that we have spent 30 years curating so they can list them overnight,” he said.

“There has got to be this symbiotic nature of Space NK getting significant visibility in the relationship – and that’s a huge challenge. Even with retailers that want to do it.”

When asked whether Space NK’s wholesale model in the US might be suitable for travel retail Lightfoot revealed that it ‘potentially could’.

“TR already does such a good job so it’s not an area that is obvious for this type of disruption with these models as it’s already incredibly well staffed,” he said.

“So if I go back to what makes the wholesale plus model successful is generally because staffing is expensive or difficult because the densities aren’t there and the footfall levels aren’t there. Travel retail doesn’t suffer from that. It has incredibly high footfall, it’s generally very well staffed with knowledgeable staff. And fragrances over indexes in the space.

“All that said,” he continued. “It is a very interesting space and conceptually this idea of being able to bring 20+ brands together and position those as a curation could do really well. I think the brands would benefit from that, versus them being sat on different shelves.”

Space NK mirrored much of what the NPD Group has witnessed as we emerge from the pandemic, with a shift from home fragrance to personal fragrance, a resurgence of make-up and a ‘massive appetite’ for discovering new brands.

Jan Binke, Head of Category Management, Gebr. Heinemann.

Jan Binke, Head of Category Management, Gebr. Heinemann.

Next, Jan Binke, Head of Category Management, Gebr. Heinemann gave an update on how the perfume and cosmetics industry has developed worldwide and took a deep dive into travel retail and how sales have recovered.

He highlighted how perfumes and cosmetics is recovering and that Heinemann expects it to achieve its pre-pandemic performance by 2024.

He sees fragrance as the strongest category moving forward.

“In May 2022, we are having our best month and we are thinking that the end of 2022 forecast will be 75% of 2019 turnover,” he said.

He singled out four main trends on the radar. First up was the fragrance category’s resistance to the pandemic. “We saw this and tried to capitalise [on it],” he said.

Next, skincare showed the slowest recovery. However, the mascara effect delivered an uplift for the make-up segment.

The third point mentioned was how consumers are seeking sustainable beauty products. Linked to this, Heinemann’s Clean Beauty Concept, currently available at almost 40 points of sale, is set to be enlarged with make-up soon.

Lastly, newness in the form of new smaller, agile, influencer brands entering the market is important.

“We already delisted 30% of our brands due to the pandemic, so we have already done our fair share with that,” he said. “We will find the space for thee news brands. We did our homework to have the right assortment at the right time in 2020.”

For an exciting journey for the consumer, he also highlighted the need for differentiation with TREX products, which currently comprises 4% of Heinemann’s portfolio.

“We would like to be increasing this to 12-15% moving forward,” he revealed.

The company is investing in onboarding high performing Dr brands, such as Barbara Sturm and aims to introduce professional haircare within the next couple of months.

Kaatje Noens Vice President Global Travel Retail, Puig.

Kaatje Noens Vice President Global Travel Retail, Puig.

Kaatje Noens Vice President Global Travel Retail, Puig, who secured a worldwide travel retail exclusive launch of Phantom, the fragrance by Paco Rabanne, shared her perspective on the evolving consumption trends in travel retail.

She referenced how people turned to tried and tested hero products during the pandemic, fuelling a positive outlook for the company.

“We’re already above 2019 levels,” she said. “I believe this is truly the channel that will rise above – this is a very cool opportunity.

“The vast majority of travellers currently are Gen Z and they spend way more in beauty than the average traveller,” she said, mentioning how the future will be all about being agile and transparent with retailers.

She cited new brands and SKUs as the ‘biggest opportunity’.

“Travel retail is in a position to become the ultimate elevated experience channel,” she said. “That is what I believe is the opportunity for growth.”

In particular, she sees niche fragrances as a big opportunity, with digital tools, such as the Magic Monocle, offering the consumer the power of choice between a no-touch and in-person experience.


The second webinar, on June 15, explored how brands and retailers are using digital today, the influence of social media, and how technology is helping to drive footfall and penetration in travel retail.

Speakers gave a forward thinking view of the channel, highlighting a number of pertinent topics, from Web 3.0 to O+O+O (Online + Offline + On-Chain) and Points of Experience (the new Points of Sale).

WITH Consultancy Travel Retail Consultant Xue Guo.

WITH Consultancy Travel Retail Consultant Xue Guo.

WITH Consultancy Travel Retail Consultant Xue Guo was first to take the mic, putting Hainan in the spotlight as the ‘lighthouse’ for worldwide travel retail and the place to be for brands.

She pointed out how China will be responsible for 30% ($27.8 billion) of global travel retail sales by the end of 2022 and that Hainan in itself is expected to possess an 18% ($15.5 billion) share of the GTTR market.

“Over 60% of people would return to Hainan for duty free shopping and more than 40% seek to increase their spend next time,” she added.

Drawing on case studies from brands including Jo Malone London and Lancôme, among others, Guo highlighted post pandemic trends as: connecting the online to offline strategy to increase awareness of brands and products among travellers; identifying opportunities for cross over collaborations between diverse brands; and testing and learning from new initiatives.

L’Oréal Travel Retail Global Retail & Digital General Manager Sophie Neyertz-Ehrsam.

L’Oréal Travel Retail Global Retail & Digital General Manager Sophie Neyertz-Ehrsam.

L’Oréal Travel Retail Global Retail & Digital General Manager Sophie Neyertz-Ehrsam shared how the company is leveraging digital and what lies ahead when it comes to digital transformation for the industry.

She talked about the ‘fascinating new era’ for digital frontiers with 2021 as a tipping point for the ‘new digital reality that’s permeating our lives’.

She talked extensively of the metaverse and the emergence of Web 3, which is all about ownership and space and represents a move from Online + Offline (O+O) to Online + Offline + On-Chain (O+O+O).

“This means consumers and creators will converge on emerging platforms to participate in the new economy.

“Web 3 is going to offer us infinite possibilities and immersive experiences, with new models and consumer and community engagement and we really need to be ready for that as it is just starting,” she said.

She described beauty and digital as the perfect match, pointing out how e-commerce comprises 25% of the beauty market worldwide and that it is predicted to reach 50% of the market within the next four to five years.

She also identified an opportunity to target the ‘two thirds of airport travellers who never enter the beauty duty free shop – 80% of who never buy’.


Perfect Corp Executive Vice President & Chief Strategy Officer Louis Chen.

Perfect Corp Executive Vice President & Chief Strategy Officer Louis Chen gave a hugely informative presentation on his company’s vision of beauty in the metaverse.

He said that consumers are more willing to try out unconventional brands, alternative ways to buy and innovative systems of value such as NFTs than they have been at any point over the last 20 years.

‘Brands are primed to capitalise on this appetite for the unexpected,’ he said.

He gave said that virtual try-on is a critical interactive experience in the metaverse.

Oonagh Phillips, Editor in Chief of BW Confidential and Szentia CEO of Ignacio Longarte.

Oonagh Phillips, Editor in Chief of BW Confidential and Szentia CEO of Ignacio Longarte.

Szentia CEO of Ignacio Longarte continued discussions of Web 3 and the metaverse, explaining its great potential for beauty brands.

“But you need to have a strategy,” he said. “We are moving towards a world that’s totally immersive where there are blurring lines between the physical and the virtual. Every brand will have to decide on its correct roadmap.”

When asked if he viewed the metaverse as a revenue generator for the beauty industry his response was “absolutely”.

He said: “Beauty is about experience, efficacy and enlightening the consumer and there’s endless possibilities but the point is aligning them to your brand and brand values, as with this we can make the consumer feel better and connect them with others.”

Tribe Dynamics Co-founder Conor Begley and Anastasia Beverly Hills Senior Director of Influencer Relations and Social Media Alanah Dixon.

Tribe Dynamics Co-founder Conor Begley and Anastasia Beverly Hills Senior Director of Influencer Relations and Social Media Alanah Dixon.

The final part of the session featured an in-depth conversation between Tribe Dynamics Co-founder Conor Begley and Anastasia Beverly Hills Senior Director of Influencer Relations and Social Media Alanah Dixon on how brands can grow and find ways to advance their approach.

The duo provided a vibrant insight into the ‘wildly entertaining’ platform of TikTok and how to create content that resonates with the audience.

“As a brand, pick and choose what you want to be a part of,” said Dixon. “It has to make sense for you and the consumer. If you’re not jumping on every trend, it just means it wasn’t right for you in that moment.”

She highlighted the influence of the platform as a sales driver.

“TikTok makes you feel like you need a product immediately or you will die,” she joked. “At the end of the day you’re a brand; you want to pursue sales.

“It’s about how are you are connecting with the consumer in way that makes sense, is super authentic and not pedalling products just for the need to do it. You need to create that FOMO [Fear Of Missing Out] for someone to buy on TikTok.”

Main image: Cosmetics area at Taiwan Taoyuan International Airport Terminal 1.

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