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Japan brand Shiseido adapts to changing retail with Chinese tourists

With Chinese customers, “triangle touch points” is central to Shiseido’s strategy: connecting the Japan organization, the China organization, and travel retail to create valuable synergies.

Nearly 50 percent of Chinese tourists who buy the brand’s products on vacation in Japan come back to the companies stores in China, making a consistent strategy that works across borders crucial for Shiseido.

The Moodie Davitt Report had an interview with Shiseido CEO Masahiko Uotani. The following is an excerpt from the interview:

How are you seeing this sector, the travel retail channel?

In the three or so years I have been at Shiseido, probably the best decision I’ve made is to put more investment and focus into the travel retail business.

My colleagues convinced me that there was a great opportunity in the travel retail sector that, in the past, we were kind of missing out on.

Travel retail is a showcase for us so I’m always using travel retail as an example when I talk to other regions: “Look at them. They are working hard, they are showing us we can do it” and it has motivated the whole company. So I’m happy but we must keep it going.

It’s obviously an important volume and value channel in its own right but it’s also playing a wider role for the group. All those domestic customers flying around the world, seeing Shiseido, hopefully, at your best. That has to have a big knock-on effect on your domestic markets?

Yes, I agree. Our domestic business was kind of flat-lining for five or six years in the past.

At the same time, I emphasized the fact that Shiseido is a Japanese company originally and we must honor that heritage.

This has worked well and our pure domestic business is also growing now. On top of that, we have a lot of tourists, mainly Chinese travelers, coming into Japan and our Japanese business is enjoying double-digit growth. There is a great synergy between what I call these triangle touch-points.

Triangle touch-points? How do you mean?

Obviously, we have a strong, and growing, presence in Japan in the prestige business. Then in China, we have been there for 30 years, and that prestige business is really growing too. We are making big progress in terms of market share.

And then, travel retail: When people travel from China, from Japan, to other Asian countries, to America, to Canada (a lot of Asian consumers are now travelling to Canada), what they see and hear about our brands should be consistent with what they see at the airports when they come to Japan.

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