Airports have always been special for Gebr Heinemann;

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2 May/June 2006 SPECIAL TREATMENT Gebr Heinemann is aiming to establish a new special relationship within the industry as it strives to inform and educate passengers about the merits of travel retail exclusives. Welcome then to the innovative new world of Airport Specials, an initiative unveiled in late April at Frankfurt International T1. By Rebecca Mann RETAIL INNOVATION Gebr Heinemann Airports have always been special for Gebr Heinemann; now they are even more so. In late April, at Frankfurt International, the retailer unveiled a new Airport Specials campaign and corresponding promotional event, designed to raise awareness among consumers of what travel retail has to offer. The high-profile event, attended by leading domestic beauty journalists as well as the specialist travel retail media, was a watershed moment for Gebr Heinemann whose media relations until now have been distinctly low-key. Today is a great day, declared Gebr Heinemann Managing Director Kay Spanger at the start of the event. Never before have we welcomed so many press for this kind of meeting. It is something we at Gebr Heinemann never used to do, but we too are changing. The purpose of the Frankfurt event was to unveil a new initiative centred around travel retail exclusives. [These items] are a very important part of the travel retail offer, noted Spanger. But not everyone understands the term. Is it clear enough for the consumer; do travellers realise what these products represent? We think that the term Airport Specials is much more obvious and easier to understand. Hence the creation of the new Airport Specials branding, backed up by a high-profile animation located in Frankfurt Terminal 1B East. In true Trinity fashion, the initiative is also being supported by suppliers and the airport authority, Fraport. In addition to Gebr Heinemann s Spanger, the press conference featured contributions from Fraport CEO Dr Wilhelm Bender, L Oréal Produits de Luxe Travel Retail Worldwide Managing Director Vincent Boinay, and Guerlain President and CEO Renato Semerari. Each explained the importance of travel retail sales to their business and detailed their own company s contribution in terms of product, promotions and partnerships. Star quality Airport Specials have a starring role at Frankfurt literally. A five-pointed star is the concept s key design motif, inspired, according to Spanger, by the Hollywood Walk of Fame. Inside the store travellers are guided to the main Airport Specials event site via stars set into the floor, which lead to a series of dedicated merchandising units. These are staffed by beauty advisors dressed in white star-studded uniforms The Moodie Report 131

3 RETAIL INNOVATION Gebr Heinemann May/June 2006 who dispense verbal information and advice, and also hand out the Airport Specials background leaflet to passengers. Travel retail exclusive fragrances in particular are a key product focus. The brands featured include Givenchy s Lovely Prism, Guerlain s Colours of Love, Donna Karan s DKNY Be Delicious (Delicious Kisses) and Lancôme s Tropiques. In the middle of the site is a Play & Win Wheel of Fortune, which passengers can spin to win fragrance or cosmetics samples. The wheel is manned by a miked-up Guerlain grows a channel for challengers I want to bring you a different perspective, from a so-called challenger brand, declared Guerlain President and CEO Renato Semerari at the Frankfurt Airport Specials event. Guerlain is nowhere near as big as L Oréal, for example. It is a company founded on exclusivity, luxury, and specific points of distinction. It dates back to 1828, when it served the aristocracy of Europe. We started with one boutique, and remained boutique-focused for many years. Even today we have a much closer distribution than many of the big brands in this industry. So why is travel retail so important for us? Once again, size matters. Travel retail represents 13% of Guerlain s total sales more than the entire Americas, for example, which accounts for 9%. As we ve just heard, Frankfurt Airport handled 52 million passengers last year, Semerari observed. That s the size of Italy. To cover and be visible to 52 million people there I would need to be well represented in 1,500 perfumeries at least. In this airport, if I do a good job in 20 stores, I get the same result. That s quite important, especially for a company that is not as rich or as big as certain others. Travel retail is a very effective way to let customers know your brand and your product, and to develop the culture of your company. Semerari explained that Guerlain considered itself to be among the best of the so-called second tier of the market. We are not among the top five big brands on a worldwide basis, he noted. We are a challenger brand. In the airport, customers are in a different mood, and outside their usual shopping habits. Therefore they are ready for a new experience, ready to try different things. That translates into a big recruitment potential for us; an incredible tank of new customers for our brands. Travel retail gives us a fantastic opportunity to get new people trying our products. Semerari also paid tribute to the dynamism and versatility of the channel. Travel retail is an industry that is able to permanently reinvent itself. Sometimes it is forced to do so by circumstances, but the reality is that you will often find more news and more activity going on at the airport than in most local markets. He continued: I joined this industry in 1999, when intra-eu abolition proved to be a moment of transition from a pure price focus and warehouse-style stores, to a real retail entertainment experience. The speed of change I have seen since in this industry is not comparable to what I ve seen [domestically] in many European countries. And that pace has been dictated by our clients. Semerari explained how frequent fliers in particular need a constant stream of new ideas, gifts and products. They are a challenge, he acknowledged. They can be difficult to entertain. They are frequently in the same airports, and in that scenario the worst thing is routine. We need to provide an escape from that, with new activities, new services and new products. Which is where Guerlain s collection of 25 travel retail exclusives comes in. The range features our star brands such as Terracotta and Météorites, explained Semerari. It represents 20% of our business, which believe me is sizeable. Among the current flagship items is Colours of Love, the company s fourth travel retail exclusive fragrance. It is targeted at men buying gifts, said Semerari. It is meant to embody a message of love. Importantly, it also delivers a message of modernity that is important for a company like ours which is very much anchored in the tradition of the past. There s a fine line between being a brand with strong roots, and an old brand which is everything you want to avoid. Semerari concluded: Travel retail is a priority for companies like mine, and we still see plenty of opportunities within it. There are still a lot of new things we can experiment with in this industry. And we remain committed to consolidating the partnerships necessary to develop it. 132 The Moodie Report

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6 May/June 2006 RETAIL INNOVATION Gebr Heinemann Another exclusive line-up: Vincent Boinay, Kay Spanger and Renato Semerari compère whose patter includes a simple explanation of what Airport Specials are (essentially, products exclusively for travellers). Behind the wheel are two prominent make-over stations. The make-overs are shown on TV screens, both inside and outside the store, to drive up footfall. Outside the store there is also a complementary gift-wrapping station for Airport Specials purchases. The two-week Airport Specials event began on 18 April, and it will be repeated in Frankfurt in June for one month. To further support the event an Airport Specials gwp has been created; passengers who spend 50 receive a versatile star-shaped pendant. We need innovation like this, Spanger stresses. We need to give travellers a reason to shop at the airport with us, instead of on the high street. Initiatives like this, and Why travel retail? Because it's worth it What does travel retail mean to the beauty industry? That s the key question L Oréal Produits de Luxe Travel Retail Worldwide Managing Director Vincent Boinay attempted to answer at the Frankfurt Airport Specials event. Travel retail means a lot of stores, a lot of brands, a lot of activities, he noted. It is a window for us. Why? It s a big business; just look at the traffic. The top five airports in Europe Heathrow, Frankfurt, Amsterdam, Paris CDG and Gatwick handle 250 million passengers every year. To put it in perspective, that s the equivalent of half the population of Europe. That s why we need to look after our brands in this channel. Boinay also emphasised the value of the market. Travel retail is almost a 2.3 billion business in Europe, he pointed out. That s almost 10% of the total beauty business. Factor in Asia and the Americas too and you can see why it s very important for us. Citing the extensive airport study that L Oréal carried out last year, Boinay also explained the different mind-set many customers adopt while travelling and the subsequent need for different, exclusive products to meet various time and gender needs. He pointed out that gifting, added value, innovation, indulgence, excitement and convenience are all elements that must be incorporated to satisfy the needs of male and female, business, leisure and transit travellers. Boinay singled out Lancôme s Attraction Couleur make-up palette as an example of a successful exclusive (or Airport Special), claiming: It is the bestselling beauty item in travel retail worldwide. He concluded: When a brand develops specific products for a channel of distribution, it means a lot to simplify, travel retail is evolving from serving to caring. Boinay was full of praise for Gebr Heinemann for organising the initiative and the steps taken to promote the event. This is a very big deal, he told The Moodie Report. We all talk about how to increase penetration; educating domestic media so that they can in turn pass on information is vital. Local journalists don t know enough about this channel and its results. Today I have spoken to many who have been really surprised by its size and its potential. The Moodie Report 135

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8 May/June 2006 RETAIL INNOVATION Gebr Heinemann our Beauty Lounge promotion (The Moodie Report.com, 8 December 2005) which we shall repeat this year are absolutely key. The view from the top Fraport CEO Dr Wilhelm Bender gave a top-down perspective of the importance of travel retail at the Airport Specials event. He detailed the impressive results of 2005 described as a banner year for the group fuelled by record passenger numbers of 52.2 million at Frankfurt alone. Over 50% of our profits are generated by Retail & Properties, he explained. I could describe [Frankfurt Airport] as a department store with a runway attached, and I would only be half joking Obviously we have a substantial interest in expanding this business. Bender detailed Fraport s plans to increase the retail space at Frankfurt, expanding the space in T1 and T2 from 14,200sq m to 27,000sq m by The completion of T3 designed to increase annual passenger capacity by 25 million would further boost the airport s retail space to 42,000sq m, he revealed. The airport constitutes a very special market, Bender concluded. Frankfurt in particular has such an international group of customers and we are increasingly considered as the gateway to Europe by Chinese and Indian travellers. The consumer habits of the entire world are concentrated here. From Travel Value to Airport Specials: Gebr Heinemann keeps concepts and semantics simple to help passengers understand what travel retail is all about Gebr Heinemann fact file Company began trading in 1879, in the field of duty free and tax-exempt wholesaling Today supplies more than 1,000 customers in 70 countries, including Travel Value and Duty Free shops at airports, onboard ferries, cruise ships, airlines and the diplomatic sector Opened its first duty free shops in 1969 and introduced the Travel Value brand in 1999 Within retail, present in 30 airports in eight countries, where it operates 135 Travel Value and Duty Free stores Company also owns 40 brand shops, operated under licence, plus its own specialist outlets, in addition to 15 boutiques onboard cruise ships and ferries Employs a workforce of over 2,000, based in more than 30 locations in 10 countries More than 100,000 customers shop at its stores each day Product range comprises more than 30,000 items from over 100 manufacturers Turnover in 2005 exceeded 1 billion Source: Gebr Heinemann; The Moodie Report The Moodie Report 137