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.

So, travel retail as a recruitment tool is critical for you?

Yes, particularly in the airport terminal, in the duty-free shops in the airports. Here consumers are not doing their usual day-to-day kind of shopping. The occasion of setting off on your travels and the emotions that travel shopping inspires create a special moment. The customers are enjoying shopping, looking around, buying gifts for their friends and families.

Having the three points connected – the China organization, the Japan organization and travel retail – means we can build on those sales. It’s not a case of Japan saying: “Oh no! I’m losing my business to China”. No. We are creating synergies.

Should you have a central travel retail division, for example, or run it out of each domestic region?

It’s working very well. Our global travel retail team now works very closely with their domestic market counterparts. For example, the travel retail team are very close to the China team as China is critical to the travel retail business. Equally, the team in China see the benefits of travel retail as a successful recruiter for the brand. We have seen a lot of repeat business from travel retail into the domestic market.

To facilitate this mutually beneficial way of working, I created a cross-border marketing team, reporting to me in Tokyo. It consists of people in Japan, Taiwan, China, India – a cosmopolitan team. They make sure that all our organizations are working together, coordinating via the three triangle touch-points. So, I’m hoping that this will result in more aggressively consistent advertising and a common marketing programme when we launch a new product and also around specific events such as Chinese New Year.

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