Tao Zhang, Managing Director, L'Oréal Travel Retail Asia Pacific.
The Interview
Tao Zhang, Managing Director, L'Oréal Travel Retail Asia Pacific.
12 minutes read
Introduction by: Peter Marshall
This is a very special feature. Tao Zhang is leaving her position as MD of L’Oréal Travel Retail Asia Pacific at the end of this week. It is therefore only fitting to profile the extraordinary achievements of Tao and her team in what has been a fairly tumultuous period. This is her last interview whilst in the travel retail community and it is also the most comprehensive published. It reflects the unique dynamic of L’Oréal’s business in Asia Pacific and Tao’s clear understanding of the complexities of the region and how to master them. It is a fascinating interview as she leaves us with her positive thoughts on the enormous potential for Travel Retail.
Peter Marshall (PM): Tao, welcome to TRunblocked.com. This feels like a hello and goodbye because it’s your last interview whilst working within the Travel Retail business and before you move to pastures new. I wish you continued success.
As I understand it, you’ve had a very rich career at L’Oréal Luxe, starting in the local China market, then moving to international marketing at Lancome during the creation of the stellar La Vie Est Belle brand, and then onto YSL marketing. You are now Managing Director of L’Oréal Travel Retail Asia Pacific.
So, different brands, different roles. How did these two combine to serve your leadership?
Tao Zhang (TZ): As you know, Peter, L’Oréal is a very big international group. We move people to and from different markets so that we have a complete knowledge of this business’s ecosystem – the domestic market, brand development and Travel Retail.
I’m happy that I landed in the Travel Retail role after learning so much from domestic marketing. I definitely used my knowledge from the domestic market and core brand development to think about Travel Retail in the context of this ecosystem. And it was tremendously useful – especially after what happened recently.
PM: So there were clear learnings from the domestic market. How many did you apply to Travel Retail?
TZ: How many? I wouldn’t count because, fundamentally to make things simple, it’s all about understanding from a consumer point of view. That is what is guiding everything we are doing today in Travel Retail.
I do think it’s also about time we rethink Travel Retail post pandemic. We still have to go back to something quite essential about this beauty business, which is essentially a consumer-centric business.
PM: Exactly. Moving on, I always think about the contrast, and arguably the conflict, between international creative marketing versus Travel Retail, which seems to operate in a cocoon. You are in a position to compare, so how do you think TR could be more creative to regalvanise the business model and actually deliver more growth? Because, as you know, conversion is now less than half what it was years ago – we’ve got a long way to go as a business and we have not really grown in the way that we should have.
TZ: What you are saying is very true. There are problems that we are facing. But I have a different point of view. You know, when you talk about the potential conflict between brand development or creative marketing versus Travel Retail, well I don’t see this as a conflict. On the contrary, I do see that if you understand how exactly you can realise a synergy and mindset as to how any brand should be designed at its core – and already having Travel Retail as part of that design – then you do not think about conflict, you think only about synergy.
And this is how, again, it goes back to my background working at the centre of the brand. In the case of L’Oréal, Travel Retail is the driving voice. The brand development, for example, with a counter retail concept.
Let me give you two very concrete examples. The latest one is what we are opening in Haitang Bay, Block C Project.
This is a massive new retail concept for Travel Retail. The boutique is vast and stretches across two floors. A duplex site like this does not even exist in the local market. And we work hand in hand with the brand to bring out the very best for the channel.
In fact, in Hainan, we worked really close with our domestic market and they were inspired.
Also, what we are doing is a brand new concept called the Agora concept. Here, a new rose designed for the first time in a long time for Lancome in the local market.
So, you see, we do have a lot of new concept development dedicated and tailor-made for Travel Retail, providing real theatre.
PM: Yes, but of course you do have the advantage of the space there.
TZ: Yes, that’s what we’ve got. But here comes my second example. In this case we really don’t have that much space, and this is at the new Kansai airport. Here we worked with the Lagardere team and it was a new walk-through concept.
You know airport passengers – they stay a precious few minutes in that walk-through. So it’s all about quick conversion. But in the modern way. You need to grab them, yes, but you cannot keep them too long. It’s about engagement. In this space we even managed to do a Lancome beauty skin diagnosis area.
So, in all cases, you have to think about the space, its limitations, which actually inspires greater creativity. You work on both. And on both projects we worked directly with brand headquarters in Paris to bring the new concept tool to our retail. So we really do know how to navigate between these ecosystems – from creation to execution. We can actually build a lot of synergy and create even more value as a channel.
PM: Interesting, so it’s all about managing the experience, isn’t it?
TZ: Yes. It’s a very different experience in Haitang Bay compared to airports, where you only have minutes to convert. At Haitang you could have hours. Customers stay in local hotels and they have time to discover the brand. We also give them a coupon so that they can come back for a facial service. You can imagine that this is almost like a local, market-type of customer service.
PM: So the ability to adapt to different formats of Travel Retail is key.
TZ: There’s no uniform kind of Travel Retail experience. You have to adapt to consumer shopping behaviour. And then just go back to dwell time. At Hainan it’s half a day on average. That’s why it cannot be the same experience as airports.
PM: Absolutely. But, given the size of L’Oréal, you’re surprisingly and sufficiently agile a business to be able to adapt, which is excellent. One size clearly doesn’t fit all – no cookie cutter approach can be applied.
OK, now one of the things where you lead the field is in digitalisation. It’s been a hot topic for many years now, but honestly there’s not been that much that captivates the mind. It’s not progressing the way that it should. This business still seems largely focused and swimming only in the waters of price promotion. It’s a generalisation, I know, but it’s still essentially true.
There still appear to be many blocked roads between brand and retailer partnerships – genuine partnerships, not one way traffic, retailer-led. I know you may well argue differently. So, what’s special about L’Oréal’s digital activations in this region that truly stand out for you and have made a significant difference?
TZ: I think we are pretty proud that we are pioneering quite a few initiatives, again benefitting from our huge experiences. As you know, L’Oréal is a beauty leader worldwide, but also particularly in China in the domestic market, so there’s tons of experience that we can benefit from there.
So we work on two big, key initiatives. The first, you know, it’s the consumer data, and that’s where everything starts to understand your consumer – know who they are.
We then work with a partner such as Alipay. They operate throughout the region, and you know we work with them for activations like Golden Week and Lunar New Year.
Now if I give you the latest year-to-date results through all these regions, all these traveller activations with Alipay, one will be able to reach millions of Chinese travelling, especially around Lunar New Year.
So, we make sure that the brand and the digital experience are exactly the same. Whether on Tmall, at CDFG or DFS – they all look exactly the same, so the consumer is never confused.
PM: Just before you leave, do you have something planned in your back pocket that you would like to share – that will truly capture the eyeballs of both consumers and the world of beauty tech?
TZ: Of course, the group is going really big on beauty tech. You know we have lots in the pipeline. We look at beauty tech in the same way as we look at our pipeline of brands and products. And there are many in the pipeline – notably on skin diagnosis and hair care. Watch this space is all I can say now.
PM: L’Oréal Luxe is now the clear global leader in beauty in the Travel Retail channel. What can we now expect to see in the Asia Pacific region from the company that will help cement your pole position?
TZ: Ok, so first you need to ask: what will take you further away from the competition? That’s a better question actually.
PM: OK, let’s go with that.
TZ: So the definition of leadership. Well, we have a few definitions. You know that if you are in the local market, you would put market share leadership, right? And for TR we were at this stage and you know we are still going through with this race.
Then there is squeezing out the daigou from the business.
So I would say the market share – if that’s the criteria. Yet it’s not really what we are looking at. If our brands, our products lead us there then, yes, we’ll probably, naturally be there.
But, you know, the business has to be sustainable, and we can question whether this is a sustainable business. Of course we will do everything to protect our brand.
The real leadership at this point is to stay really firm on mission. And our mission in TR is first and foremost a brand shop window – a real window to recruit consumers. We have to stay true to our mission, so for me that’s what real leadership means in this context.
We are never tempted by short cuts – that’s too easy – and you will pay for it. That’s not a leadership mindset.
So today I am proud that we are staying ahead of the game, We’re in that perspective. We’re a real leader.
PM: Let’s move on. Last year, L’Oréal made its biggest acquisition ever, which was the Aesop brand. It’s in the upstairs area of this remarkable exhibition ‘stand’ of yours here at TFWA Singapore. Just to digress for a moment, this space is completely different – it’s actually more approaching an art form than it is a shop window for your brands. The whole space has delivered an incredible ambience, it’s green and it’s sustainable, too, as a complete area. It’s genuinely impressive and stands out from what else you may see here.
PM: Back to Aesop. What are your plans?
TZ: Yes, our plans are developing to introduce this brand to Travel Retail.
PM: And the timing?
TZ: We’re working on our first appearance this year, but we’re taking our time. You’ll find this brand is amazing. It’s impressive. But you’ll also notice it is not unlike a traditional big brands’ kind of look. And that’s exactly what we like. Our consumers say that you notice something amazing, yet it’s so different – I don’t know if you even notice there’s a logo there!
This brand will bring a lot to our portfolio. So we have got a very big plan – the first boutique that we are launching – and hopefully by the end of the year. I cannot reveal the details of the exact date of this yet, but all will soon be revealed.
Many retailers have offered us locations, but we are not in a rush. We have a lot to learn from this brand because Aesop’s approach to retail and their branding is so post-pandemic on trend. And so for this one we need to take the time it takes to really learn from this. And when we deliver, it has to be true to its soul and the body of the brand – physical and spirit. It has to be Aesop and even more Aesop than Aesop that you will see elsewhere.
And here we are again, going back to the mission we have. It is the shop window – and it simply has to be true to the brand. It has to be a very holistic experience.
And then it’s the staff. They are so well trained, with deep knowledge. Yes, there is a huge learning curve for us. That’s why we have to be very careful, going right into airports and doing transactional business. This is not at all what we want.
You will also see that there is not a standardised Aesop shop anywhere you may look. This is what is really extraordinary. So we will ensure that our designs will all be different – tailor-made to the different locations. No standard approach. Everything around this brand will be very, very unique. It’s a great brand.
PM: I remember, L’Oréal bought Body Shop, then offloaded it. Aesop is marginally similar to Body Shop, but it is also very different, certainly in terms of price point.
TZ: That’s why we have to learn, to stay true to this brand.
PM: The last question links to this next one: as a group, L’Oréal has also recently taken some bold moves investing as a shareholder in local and Korean brands – from skincare to perfume. Even – and I really must be getting old – to tattoo machines. What are the plans to integrate these brands?
TZ: You know, this is also down to the real culture of this group. We are a century old as a business – a big dinosaur in a way. Big and yet with a lot of legacy at the same time. But the fact is that we are still the number one beauty leader in the world. This is because there is always this entrepreneurial spirit that we have. It’s in our DNA. So, let’s try new things. Sometimes we succeed, sometimes we don’t. There are always plenty of projects in the pipeline, so we feel we can always stay ahead of the game.
We do have a few Chinese and Korean brands, yes, and ones that are also up and coming, In L’Oréal this is a thing that is repeated generation after generation.
Looking at the young market here, we are the first to see what’s happening. And this is precisely the approach of our M & A acquisition policy. There are opportunities that we learn from. Just look at Kiehl’s, for example. From a pharmacy brand we made it global.
So the idea is always the same: to work and learn and stay ahead of the game.
PM: And the tattoo machines?
TZ: Well, the machines are part of it – high tech. And then just look at Lancome. Here there is real inclusivity. We have created the Lancome lipstick applicator for people with Parkinson’s disease.
As a group we see we have a responsibility to care for all consumer groups, to create beauty for all, everyone in society.
PM: We are coming to the end of this conversation now, Tao. Let me ask you this: if you wanted to make one change in the global Travel Retail industry, what would it be?
TZ: I am going to return to our purpose. It is travel. It is for travellers and it is for a brand window – to discover new experiences, make new discoveries. Essentially, for people to fall in love with travel again.
PM: This is the last time you are going to address the Travel Retail community. Are there three different messages you want to pass on?
TZ: Well, we just mentioned one – purpose.
PM: Three more?
TZ: OK. First, and it’s the same reason I’m attracted to this travel retail industry. It is the incredible, incredible family of very talented and diverse people. And it stays like this – family. And this has to be at the base of Travel Retail. People have to stick together.
The second point would be to say that there are always cycles in Travel Retail. There’s not always double digit growth. We’ve been through a pretty big storm and there may still be dark clouds somewhere. But then it will be clear sky again, there will be a rainbow. We always need to believe that there will be a rainbow after the storm and that we have to remain confident in that belief. And we should always believe and be confident in this industry.
PM: And the third one?
TZ: Beyond resilience, we must also be down to earth. Have people who are down-to-earth, Make things happen, address issues, transform, reinvent. We create our own rainbows, our destiny.
