This Multi-Billionaire Has Set His Sights On Destroying The ‘Dinosaur’ Travel Retail Industry. A Major Investigation By TRunblocked.com
6 minutes read
Today is special. For two reasons. First, because today actually celebrates my 30 year involvement in global travel retail. It’s been one helluva ride and I look forward to continuing it for quite some time. I won’t be providing a long list of ‘thank you’s’ to the many friends and clients that have been my inspiration over the years – except to say you know who you are.
TRunblocked.com started 10 years ago. Initially a hobby blog, trying to tackle industry issues and ‘giving it straight’ to the industry, it has become a business where its distinctively different editorial approach has clearly resonated with the business community. 20,000 followers (and climbing) is testament to that – and this from only publishing 2 articles a week. We will continue to break new ground, providing better narrative with the selected stories we feature and continue to ask the questions you want the answers to.
The second major announcement is one where we uncover a story today that is an existential threat to our marketplace. It is our first full investigative feature and relates to an increasingly burgeoning industry that is directly impacting all categories of global travel retail. And that is fakes or dupes in the fashion and perfume and cosmetics sectors.
I met Mustafa P (I am leaving his surname out intentionally for his protection and my personal safety) at an embassy party recently. When we started talking, I realised I had to tread carefully, having disclosed what industry I was proud to work in. I chose to meet up with him again last week to find out more about his activities.
His picture is not shown at his request. We met at a fashionable restaurant overlooking the Marmara Sea which he said he owned. There was no one else in the restaurant except his two bodyguards. Here’s the recording of our brief conversation.
Peter Marshall (PM): Mustafa, welcome to TRunblocked.com. I want to start this conversation by asking you what you do as a business?
Mustafa P (MP): A pleasure to welcome you. My business is ‘genuine fakes’. I live in Turkey, but our footprint is global. We are in 37 countries. I have retail shops in many high streets across Europe, the Middle East and Asia as well as street vendors. We cover all well-known brands for bags, sunglasses and watches and business has never been better. We manufacture in Morocco, Turkey, Thailand and China. I must be honest and say that the Turkish quality is the best.
PM: Can you give me a number as to the value of the business currently?
MP: I would say in the region of 14 billion dollars and that is just for the business as it is structured at the moment.
PM: Do you have any serious competition?
MP: Not really, I have arranged business partnerships with most of my competitors. They are my ‘Captains’, and they call me ‘Pasha’.
PM: Ah, I think I know what you mean. Moving on, why do you think that this market is so big?
MP: It’s very easy to understand. People aspire to brands – they want to ‘own’ something that makes a statement for them. I don’t care what their reasons are. The fact is that my products are less than 15% of what customers will pay for the real thing and that is key to their purchase. I talked earlier about the quality of my products. You know I had a visit recently from a major brand’s ‘police inspectorate’. That person admitted that my copy was so good – the quality of the leather used, the weight of the bag, the identical clasp and zips used – that the only thing that was a little different was the stitching inside. I don’t care about anything about that and it’s quite obvious nor does my client base.
What’s interesting is that I know very wealthy individuals who have the real product and choose to leave it at home. They walk around with my fakes and are perfectly happy.
PM: Did the ‘police’ individual do anything?
MP: In truth, there were three of them, and the answer is nothing at all.
PM: I know in Spain the normal police are quite rigorous in shutting down and confiscating products – particularly on the beach paseos in the most popular resorts.
MP: Yes, that’s true, but we have a very sophisticated look-out system that offsets any ‘leakage’.
PM: Your English is exceptional – where did you learn it?
MP: On the street mostly, but I watch a lot of BBC World and have cultivated the accent.
PM: I want to go back to your bags. You seem to offer a two tier structure. For the shops you own – in many high streets as well as in the Grand Bazaar here in Istanbul – they do take on something of a ‘pile it high and sell it cheap’ image. But I also know that you have separate ‘studios’ close to your shops, where you have much higher-end product on sale and where prices approach 20% – 25% of the normal recommended retail price.
MP: Yes, that’s right. These studios are generally located in older buildings, a very short walk from our shops. Customers who are ‘in the know’ are escorted there by members of staff. But once inside, they are transported into a different world. The design is world class, a match to anything you might find from the major ‘houses’. We offer a big range of the best trending brands and the very latest designs, combined with luxury seating and unlimited amounts of Turkish kahve or çay as well as the best Turkish Delight to make sure that every customer has a very special experience.
PM: So what’s the typical spend?
MP: Around 1500 USD. Purchases are normally more than one.
PM: Do you care that you are cannibalising the major brands and potentially placing jobs at risk?
MP: Not at all. This is a business like any other. I supply the demand, that is all. And I am not stopping there.
PM: What do you mean?
MP: You say that you are in the travel retail business. Well, I am targeting this industry as well as products that are sold in the domestic market.
PM: I don’t quite understand.
MP: What I plan to do is to change the branding, the facias of some of my selected shops in the most popular tourist destinations here and at other global locations and, I think you say ‘big up’ the duty free element of my offer. Only I will be saying at least 30% less, guaranteed. If you look at the prices currently in duty free, this is not difficult to achieve and will not impact my margins at all. I see Duty Free or Travel Retail as a dinosaur business ready for extinction.
PM: Brave words. I should say that travel retail has shown itself to be a remarkably resilient business over the years. You seem very confident, so what else do you have in the pipeline?
MP: I know how much the fragrance and cosmetics market is worth. I am fascinated by beauty and have been researching the market. The margins are much higher than bags and watches and the global market is huge. My idea is simple.
PM: OK, what is it?
MP: I am just inspired by beauty. I have found out how to copy the essence of some of the most famous brands, without the need to access the formula. We will use some of our shops and create new spaces for a luxury experience. But we will not use the names of the brands themselves, only something approximating them. I see you are smiling. It’s no smiling matter, I am deadly serious. So I have considered new names like ShannL and Deeyour, but these are just work in progress. The key difference is that we will also be offering beautifully designed bottles to capture the imagination and help make the sale. And we will be beating the duty free prices in this sector by up to 40%. I see the main department stores, specialist high street retailers and duty free as very, very soft targets.
PM: Do you actually think that passing off in this way will work? Don’t you expect the major fragrance houses to react?
MP: What can they do? It might be cheeky naming, yes, but the formula is not theirs – how many similar-smelling perfumes are there out there? And the bottle shapes will be entirely different, I would say better, offering a modern, eastern character that will invite purchase. It’s all about the presentation, the smell but, above all, the price.
You need to understand that the scale of my enterprise is enormous – we have the outlets, the muscle and the people. And there’s the wholesale market opportunity, too. This is exciting and I have this unshakeable belief that we will create a global business very quickly. Money is no object to create awareness and build brand loyalty. We will use all available tools, especially social media, to create demand.
PM: I see. Is there anything else you would like to add, specifically for the travel retail community?
MP: Four words: just watch this space.
PM: I guess we may all need to.
MP: Can I get my driver to drop you home?
PM: I appreciate the offer, but no thanks, I have a taxi waiting outside.
Note from the Founder: Happy April Fool’s Day!
