Introduction: Japanese beauty company KOSÉ Corporation has been making big moves in travel retail in recent years with key brands – DECORTÉ and SEKKISEI in particular – investing significantly in the channel and particularly in Hainan.
Its VISION 2026 roadmap sets out a bold ambition that sees KOSÉ move beyond Asia Pacific and into a global powerhouse. Key to this vision is the travel retail channel. In 2020, the company created a dedicated subsidiary in KOSÉ Travel Retail, led by President and CEO Shu Shibue.
Shu, who joined the company in 1992 and led its Japanese department stores business until 2020, has successfully navigated KOSÉ Travel Retail through the COVID crisis. Shu bet big on Hainan with dynamic blockbuster campaigns such as ‘DECORTÉ and I’ turning the island purple over recent years and even winning its fair share of Moodies awards.
Below, Shu talks about the biggest milestones since taking the reins at KOSÉ Travel Retail. He outlines the huge potential of the KOSÉ portfolio, which includes prestige cosmetics brands DECORTÉ, SEKKISEI and Jill Stuart among others. He also discusses the important role that travel retail plays in KOSÉ’s ongoing internationalisation, offers his keen insights into the health of the business today and previews what lies ahead for the Japanese beauty company.
KOSÉ Travel Retail was founded in 2020, at the peak of the COVID crisis. What have been the biggest challenges to overcome, plus the key milestones since then?
With the advent of COVID crisis, there were virtually no customers overnight. There were no customers in downtown duty free or airport duty-free counters alike. So, we had to think of ways to connect with our customer base while making sure we were recruiting new customers to choose us and our products post pandemic.
Specifically, we changed our focus to adopt a more digital-first communication approach. This was the biggest learning and biggest challenge as well, since the market was extremely dynamic and so we had to stay up to date.
Like a lot of brands, we were struggling to connect meaningfully with our customers in the pandemic. This is when we then realised that it was important to connect with them at any given point of their travel journey. We now want to create as many opportunities as possible to convey our brand image.
More than anything, 2020 was the time of learning for us. Some of the key milestones include the opening of various counters in Hainan and even Europe. Other milestones include the successful launch of our DECORTÉ LIPOSOME Advanced Repair line in Hainan and even receiving two Moodies for DECORTÉ and SEKKISEI.
KOSÉ Travel Retail currently has a big focus on DECORTÉ and SEKKISEI. In your view, what do these brands offer amid a competitive beauty category in travel retail? What does the next wave of innovation look like for these brands?
Our overall mission is to provide our customers with beautiful skin through attractive brands.
DECORTÉ is a brand that constantly pushes the boundaries on science and technology and enriches consumers’ lifestyles through luxurious but simple cosmetics.
As for SEKKISEI, it is an identity of Japanese skincare. It offers high-quality, innovation-led ingredients and skin benefits with a proud Japanese heritage.
We want to create brand experiences now in the travel retail channel to really showcase our brands and enhance our customers’ lives with our products. We want to carry this forward across generations, genders and globally.
Our beauty partnership ethos is the perfect example of our innovation drive. For example, our renewed AQ series puts the customer’s wellbeing and mental wellbeing front of mind by working with scents and textures that ease customer skin concerns.
We also recently renewed our bestselling SEKKISEI Lotion, and we are excited to roll this out in the travel retail channel soon.
Do you see the other brands in the KOSÉ portfolio – JILL STUART, tarte, ADDICTION and others – launching in the channel too?
Most definitely. We want to highlight the appeal of each brand in line with the KOSÉ brand portfolio with trusted duty-free business partners.
What role does travel retail play in driving KOSÉ Corporations ambitions beyond Japan/Asia and to become a global leader in beauty?
I think travel retail plays an important role in KOSÉ’s global ambitions. This channel has a special ability to connect brands with customers from all over the world, so it is a key growth engine for us.
Travel retail helps us connect with customers throughout their journeys and through tourism. There may be customers who had seen or heard about our brands before, but with travel retail they now have a chance to interact with us.
We hope that through travel retail, we can recruit new customers and fans who will eventually repurchase our products in their home countries or at other duty-free counters throughout their adventures. I think this ability to recruit and convert customers from all over the world is travel retail’s biggest strength as a channel.
How do you assess the state of health of your business in the travel channel today? How does performance compare to a year ago, and what are your travel retail priorities?
In terms of our business, we are in phase two of our long-term corporate strategy for KOSÉ Travel Retail. Phase one was the period in 2020, when the pandemic was still affecting all our businesses and markets.
While those times were challenging, it taught us that we no longer had to rely on solely face-to-face interactions to engage and convert customers. It showed us the power of the digital world to connect with our customers. Through digital, we could give them a sense of our USP, so they can look forward to visiting us in person.
However, because of the impact of the discussions associated with the release of treated wastewater from the Fukushima Nuclear Power Plant and the sluggish business in China, our performance last year struggled. Despite this, our overall customer interactions increased in the last year and so we could really feel the value of our brand to our customers.
In phase two, our biggest priority is to elevate our brand experience. After building up our digital presence, we want to now focus on connecting more deeply by providing tailored experiences for our customers.
Our priority is to empower and train our support staff and beauty consultants to provide the best services and product experiences 365 days a year. As for online, we have launched digital education programmes for our beauty consultants so they do not have to miss out on a more personal connection with us and our products.
Mainland China, and particularly Hainan, has been an important growth channel for KOSÉ Travel Retail. What are your plans for further expansion in the duty-free hot spot? Also, China has restrained even higher growth for many beauty brands recently. How is China performing for you both in terms of local market and travel retail?
Hainan is an important channel and a battleground for us, so we will continue to partner up with our trusted retailers now and in the future.
Hainan works especially well for us because of the sheer space it offers. The large complexes and store spaces in Hainan allows for a freer expression of our ethos, brand values and strengths.
It is a playground for marketing. We opened our first conceptual counter in Hainan, which was a roaring success. This gave us more confidence to adopt bolder strategies and I believe that our stores in Hainan now convey the DECORTÉ brand universe perfectly through state-of-the-art displays and experiences. We also have VIP and treatment rooms where we provide more holistic beauty experiences that resonate strongly with our customers.
Like most of our contemporaries, we are riding the ups and downs of the Chinese travel retail market. However, our goal is to collaborate more and more with the Chinese local market to create synergies with our approach.
Our next immediate priority is to increase CRM in China with the help and support of our local market teams. In my view, travel retail can help connect with new customers but the local market is where we turn them into repeat customers.
KOSÉ Travel Retail, and DECORTÉ, is well known for its dynamic pop-up campaigns particularly in Hainan. What role do these beauty blockbuster animations play in your overall travel retail strategy?
Our latest pop-up in Hainan ran in July 2023. We had a stunning summer-themed campaign called ‘DECORTÉ and I’, which ran across Haikou and Sanya. The response we got went above and beyond expectations. Like I said, Hainan is such an important market and these blockbuster beauty animations are like show windows for us and what we can do.
Through these dynamic campaigns, we get to offer the best services, best products and the best experiences. These events are the culmination of 365 days of in-store activities. They serve as a litmus test of whether our activities through the year have been successful. For example, our latest promotion was a reflection of the first six months of 2023. I also see these pop-ups as an opportunity to receive evaluations from customers and as a place to understand their needs.
KOSÉ Travel Retail made its TFWA Cannes debut in 2022, marking its first time in Europe, and has since opened a DECORTÉ counter at Samaritaine Paris with DFS Group. Can you give us some insight into KOSÉ Travel Retail’s expansion plans beyond Asia Pacific?
Until recently we have focused our efforts to grow in Asia. However, in the future we want to grow not just in China and Asia but also in Europe and the USA. It is important to expand internationally while leveraging the brand awareness we’ve already developed in Asia.
Our next geographical priorities are Europe and Asia but we will expand slowly and surely with our trusted partners to reach new heights in these new markets.
What do you see as the keys to creating a better, stronger travel retail sector?
I think there are three main elements to this: attractive stores, balance of online and offline, and great hero products.
Attractive, well-balanced stores can really elevate our channel. My experience in store creation has taught me that they are key areas of connection with customers, so by focusing on enhancing the in-store experience we can create more meaningful connections with them.
Online can be used to engage with customers seamlessly, but there are limits to this channel because customers cannot feel or touch the product. This is where offline comes in as it can convey the brand story through beauty consultants, but it may be hard to establish loyalty once they leave. So, a balance of both is important.
Deciding what are a brand’s hero products is important because it helps to set proper targets.
How would you sum up your own business philosophy?
Simply put, my motto is I am one of the customers. always think of myself as a customer first. The goal is to work for our customers, to make them happy, and for our company to grow together with our customers.
I always ask myself and encourage my team to think ‘How can we create attractive customer contact points and provide a customer experience – as a customer?’
What are your biggest priorities for the year ahead?
The first is to develop and open attractive counters and stores in Europe and the US. The second is to provide an attractive experience with an emphasis on balance between online and offline communication.
Finally, we want to connect our customers, who have become fans through travel retail, to our local markets.
A final message for the industry?
Travel retail will continue to evolve as the world changes. Through it all, I hope we can all stick together and work together to give the best experiences for our customers.
The travel retail industry offers a special opportunity to connect with customers with no boundaries, so our goal is to leverage this to its full potential.
At the upcoming TFWA Asia Pacific Exhibition in Singapore, we will continue to work with reliable duty-free business partners to create attractive brands. We look forward to welcoming you all at Level 1, L-15 Marina Bay Sands. ✈
