Our submission to L'Oreal Brandstorm 2014. Topic: Travel Retail for Lancome

1. | Travel Retail
Team Red Bricks

2. Travel Retail –The Market
What it offers?
AVAILABILITY
STATUS
PRICE
Growth (2000 – 2016)
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-
5
10
15
20
25
30
35
40
45
50
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1.09 Billion
aviation passengers globally in 2013
1.4 Billion
projected aviation passengers globally by 2020
$ 48 Billion
spent on travel retail in 2013
$100 Billion
projected spend on travel retail in 2020
73% Projected growth in travel
retail sales by 2019
7% CAGR in the duty free
retail market since 2000
1950
1980
2001
2013
Birth of a new
retail concept
The Value Chain
Glamour of Travel
Exclusive
Differentiation
Captivation
Retail Cathedrals
Spoilt for Choice

3. 1
4.8
9.1
1.3
4.2
5.4
8.1
12.6
4.2
8
0
2
4
6
8
10
12
14
Americas Middle
East
Asia
Pacific
Europe Global
Historic
CAGR
Forecasted
CAGR
10%
28%
7%
15%
40%
Fashion and
Accessories
Alcohol
Confectionery
Tobacco
Beauty
40%share of the Beauty
segment in travel retail
category
21% L’Oreal’s share in the Travel
Retail Beauty segment;The
Market Leader by far!
5.5%Annual Increase In Passenger
Volume over next 3 years
3% Increase in Average Spend
per passenger over next 3
years
Travel Retail Segments
Expenditure Growth
Beauty in
Travel Retail
Chanel
Dior
Chanel
Chanel
Dior
Estee Lauder
Bvlgari
Nina Ricci
CK
CK
CK
Hugo Boss
Best Selling Fragrances by Region

4. Passenger numbers
Retail space
Tax and import
controls
Regulations Passengers
Retail SpaceLuxury Goods
Cultural Diversity
Seasonality
HugeOperatingCost
Upper Hand ofAirport Management
UnforeseenContingencies
Economic Recessions
Changes in CustomAllowances
Customer Focus on Exclusivity
Threats | Challenges Drivers | Opportunities

5. Young, 25 + Shopper
Relatively High Income
Targets Male, Female, even Kids
NarrowTG; Narrow Product Line
High Education; HighTaste
High Shopping Budgets
Shop at least once in 3 Months
Boundary Less, Global Positioning
Super Luxury Customer
Wide Diversification
Deliver Premium Brand Experience
NarrowTG; Narrow Product Line
Depth in Product Service
HighTouch Retail
Avoids Low Price,Trendy Products
Avoids Aspirational Products
Competition

6. Designer led, Super luxury
Brand
Exclusivity is the BuzzWord
Don’tTarget Big,Target
Exclusive
Identified a NewTG, ‘New
Wealth’
YoungWomen; Significant
Money
NetWorth > $ 1 Million
Cutting Edge FashionTastes
Technologically
Advanced
High Performance
Products
30 + High End Consumers
Middle Aged Women
Less Price Sensitive
High Shopping Spends

7. Decoding theTravel Retail Consumer Profile
Global Duty Free Shopper
44% 56%
Business
19%
Leisure
81%
Low (0 – 3) 48%
Regular (4 – 6) 34%
Frequent (7+) 18%
21 – 35 years 48%
36 – 55 years 42%
56+ years 10%
Global Duty Free Non - Shopper
49% 51%
Business
22%
Leisure
78%
Low (0 – 3) 38%
Regular (4 – 6) 43%
Frequent (7+) 19%
21 – 35 years 44%
36 – 55 years 37%
56+ years 19%
Global Buyer Ratios
Asia Pacific
49%
Middle East
55%
Americas
43%
Europe
49%

8. Gender
66%
Male
Travel Purpose
38%
Business
Frequency
Medium
Travel Class
67%
Economy
Gender
70%
Male
Travel Class
70%
Economy
Gift Shoppers
Very occasional shoppers
Shops only when absolutely necessary
Like to live a simplified lifestyle
Little emphasis on material possessions
Only interested if unique, special articles available
Airport Shopping Benefits: Local products,
Limited/ special editions, Local touch
Main Reason to buy Luxury Products: Good bargain
(66%), High quality (58%), Special something that
they don’t find anywhere else (56%)
Prefer buying articles someone recommended
Gifting is the key reason of buying
Visit duty frees to avoid shopping during trip
Like to get advice from staff
Require gift packaging
Airport Shopping Benefits: Gift packaging,To use
during trip, Better advice, Pleasant shopping, Good
deals
Main Reason to buy Luxury Products: Good bargain
(56%), Brands available (44%), Limited edition (28%)
Veritable Product Seekers
Travel Purpose
67%
Leisure &
Business
Frequency
Medium

9. Gender
58%
Female
Travel Purpose
43%
Leisure &
Business
Frequency
Medium
Travel Class
48%
Business
Indulgent High Spenders
Gender
62%
Female
Travel Purpose
99%
Leisure
Frequency
Low
Travel Class
79%
Economy
Bargain & Deal Seekers
Looking for chance to buy localized products
Buy for choice, quality, service (not price!)
Buy products that catch attention
Enjoy buying; Intensive shoppers
Like to buy well known brands
Airport Shopping Benefits: Limited & Special
Editions, Guaranteed quality, Gift Packaging, Local
touch
Main Reason to buy Luxury Products: Exclusive,
Limited Edition Products (60%)
Very careful how to spend money
Usually buy only what needed
Conventional attitude & behaviour
Browse around airport shops looking for offers
Buy only if cheaper than downtown shops
Simple lifestyle
Airport Shopping Benefits: Cheaper prices,
Guaranteed quality, Pleasant shopping
Main Reason to buy Luxury Products: Good
bargain (77%)

10. Low Appeal
BetterThingsTo Do
Not Impressed Confused
So much to carry! Overcrowded Stores
What’s special?
NoTime to Spare
Identifying theTravel Retail Barriers

11. Create Shopping Destinations
Awareness of Limited Edition Products
Drive Local Identity
Disrupt other Activity
Clearly CommunicateValue
Drive Footfall
Overcoming the
Barriers
At Home
Booking
Airport
Process
In Store
Activity
On Board
Retail
In
Destination
Tailored Offers & Rewards
Personalized Communication
Clear and Meaningful Benefits
Extra Services to Loyal Customers
Customized Tiered Programmes
Address Regional Heterogeneity
Multi Channeled Approach
Constant Re - Evaluation
Locking Loyalty

12. Personal Helpline
Track Our Stores
RealTime Alerts
Settings
Bookings
Special Offers
CustomizeYour Product
My Profile
Digitizing
Travel Retail

13. Innovation
Exclusive Range for travel Retail
Customized Service by Nationality
Multi lingual Material
Adapted Product Assortment
In Shop events as per Nationality and Cultures
Aggressive Advertising
Premium Products
High Operating Expenses
Niche Player
Inflexible Image
Aims at 35+ women
Plethora of Products
Strengths Weaknesses
SWOT

14. Emerging Markets: Middle East, India
Products forYoung Demographic
Men’s Product Line
Tween’s Product Line
Popular Product Segment
Explore Gifts’ Category
Middle ClassTravelers
Gift with Purchase offered by Competition
Presence of New Players
Global Economic Slowdown
Organic Products
Over Promotion
Opportunities Threats
SWOT

15. | Travel Retail
Thank You!