New Delhi: André Joseph Hoffmann, executive director and vice-chairman of global luxury spa and natural skincare brand L’Occitane en Provence, is bullish about the Indian market. Hoffmann, who is also L’Occitane (Far East) Ltd’s managing director for Asia-Pacific, was in India recently to look at stores and potential new shopping centres, besides meeting executives from some of the leading e-commerce firms in the course of a four-day visit. “The opportunity here is in digital," he says. L’Occitane currently has 10 stores in India and also sells its products through three multi-brand Shoppers Stop outlets. Globally, the company operates 3,264 stores in 90 countries.
Excited as Hoffmann is about his India plans, he believes the country will not make it to L’Occitane’s top 10 markets anytime soon. In an interview, he outlines his expectations from the Indian market, expansion plans and how it’s not just women who prefer whiter skin. Edited excerpts:
How big is your business globally and where does India stand?
We operate 90 spas around the world, mostly in five-star luxury hotels. In India, we have six spas—some big independent spas in Mumbai and Delhi, and some in hotels. We work with luxury hotels around the world to supply L’Occitane products. We have about 10 stores in India in cities like Mumbai, Delhi, Chennai, Bengaluru, Chandigarh, Pune and Kolkata.
We will finish this year (2016-17) in excess of €1.2 billion. Globally, our L’Occitane branded stores contribute 75% to our revenue, e-commerce through L’Occitane.com contributes 11-12% and the rest comes from travel retail.
The plan for India is to dramatically expand footprint and increase business by multiples of 100%. The opportunity is that big. We have to put in place the structure we need to go ahead but looking at the size of the market today, we are very bullish on the opportunity.
What are your current India revenues?
Very low. But there is a need to be patient with India. It is a very challenging market. Certainly, a market with 1.4 billion people cannot be ignored but there are a lot of barriers for imported brands to do business here. There are very high duties and taxes, very complicated tax structure between the states and bureaucracy in India.
We believe that India can be a solid 3-4% of global revenue in a few years but it is extremely expensive to create a retail footprint here. Over the next three years, we can easily envision another five stores but we need the right location and commercial terms for that.
The opportunity here is in digital. A lot of people can’t buy our products because there is no store nearby. Digital will give multiple touchpoints and accessibility to hundreds of millions of potential consumers.
How big is your e-commerce business globally?
E-commerce is about 11-12% of our global business. In India, it is less than 5% of our business but the potential to multiply that is high. We have been laying the foundation by meeting a lot of digital partners and preparing an outlay. We have our own online marketplace (L’Occitane.com) and we will also be working with third-party sellers like Nykaa, Myntra among others. There is a tremendous opportunity with the explosion of online sales in India. However, we don’t want to be in the discounts game on digital.
Is it tough to sell luxury online?
It is a question of trust. Once the consumer has experimented and bought something from a certain website and he/she is satisfied, the barrier disappears. The need is to create the same experience online as you do offline. We can make sure that the products are delivered on time and the consumers have a frictionless experience in case of returns. All these things give seamless experience. That is why a lot of luxury brands are pursuing this omni-channel strategy online. Also, it is easier when it’s your own website. You can control the journey of the customer.
How has the Indian consumer evolved over the years?
All women want to be beautiful whether it is for their own self-respect, pride or to keep their man happy. If a woman feels that a skincare product will help her avoid having wrinkles or sunspots, she will use the product. It is the brand’s responsibility to make the product accessible and affordable.
India has traditional mass beauty brands and they are extremely big. As imported brands, we have to educate the consumer that instead of spending Rs500 for a jar of anti-aging cream, she should consider spending Rs5,000 for a global brand. In fact, our best-selling skincare product in India is Divine anti-ageing cream which is priced at Rs8,000 for 50 grams, while its premium variant Divine Harmony is priced at Rs12,000. Of course, there is a very small percentage of the population that is going to spend this much money. But there is an incredible amount of wealth in this country. It’s a question of consumers changing their habits and buying these types of products.
Which are your best markets?
Our largest market in the world is Japan, which contributes 18-19% to our global revenue. It is followed by US (11-12%) and China (close to 11%). We expect China to overtake US in one-two years owing to its strong growth. Skincare is 70% of the beauty industry in China.
If you look at the penetration of premium skincare in India, it is insignificant. Indian market is driven by colour cosmetics and fragrance. Skincare is still a work in progress. It is the smallest of the three legs of the stool but it is also the one that will have the biggest opportunity to grow because of the concern about the impact of pollution on the skin.
How has your men’s grooming range performed in India and globally?
Exceptionally well. India has one of the highest penetrations in Asia when it comes to men’s products, which include shaving creams, shaving oils, moisturizers and shampoos. Not just Asian women, even men like to have lighter skin because of which our whitening range tends to do well here.
Primarily, the men’s range of products do well in Europe and North America. In fact, many of our products are perceived as unisex and are equally good for men and women like our shea butter hand cream.
What are your personal favourite L’Occitane products?
I personally use the Divine Harmony serum. It was clearly intended to be the ultimate anti-ageing product for women because women’s needs are different. But I love it because the texture penetrates the skin and leaves a really nice glow. I also use the hand cream especially in winters if I go to the mountains or for skiing. The lips can get chapped very easily in the snow. I use the shea butter lip balm. I love the almond shower oil. It’s one of our best formulae. I have never ever met a woman or a man who tried it and didn’t appreciate it.