Nov 25, 2019: Elisabeth King reports on this week’s business news

Australia predicted to be among top four international markets for Kylie Cosmetics; Australian Christmas spending to reach $52.7 billion; and MCM inks fragrance deal with Inter Parfums.

Australia predicted to be among top four international markets for Kylie Cosmetics
Launched only four years ago, Kylie Cosmetics sells the lion's share of its products in the US through direct-to-consumer online sales and Ulta Beauty, the largest specialist beauty chain in the US. But over half of Kylie Jenner's 141 million Instagram followers are outside the US. Coty has acquired a 51 per cent controlling stake in Kylie Cosmetics to globalise the brand as soon as possible and target younger consumers aged 18 to 34.

Every acquisition has a leap of faith component but the future looks good, according to an Advertising Value Equivalency (AVE) report on Kylie Jenner's online activity by Meltwater Media Intelligence. Four markets outside the US have a monetary value on media coverage in excess of US$500 million, says the social media and news monitoring platform. The UK at US$2.1 billion, Germany at US$995 million, Australia at US$600 million and Canada at US$521 million. There's a long drop to the next placegetters, led by China (US$62.2 million), France (US$50 million), Spain (US$36 million) and Brazil (US$30 million).

Australian Christmas spending to reach $52.7 billion
Aussies forked out $51.4 billion over the 2018 Christmas trading period. The annual festive season sales prediction from Roy Morgan Research and the Australian Retailers Association (ARA) estimates growth of 2.6 per cent to $52.7 billion this year – slightly below the 2.8 per cent increase of last year. Both forecasters believe that all six major categories – food, household goods, hospitality, apparel and fashion, department stores and other retailing will experience an uptick.

Food always heads the list over the Christmas and New Year period, with revenues predicted to rise to $21.67 billion this year – up 3.2 per cent. Household goods are expected to increase marginally by 0.6 per cent to $8.8 billion, as hospitality businesses are estimated to grow by 2.3 per cent to $7.45 billion.

In some much needed good news for the apparel and fashion industry, sales are on track to jump by 3 per cent to $4.17 billion. Department stores should edge up 0.5 per cent to $2.97 billion. The three major states also lead in growth rates as well as total dollars to be spent. NSW seasonal revenues are expected to rise by 2 per cent to $16.78 billion, followed by Victoria at $13.84 billion (+3%) and Queensland $10.62 billion (+3.6%).

The small drop in growth from a year ago is in line with other industry reports such as the ANZ - Roy Morgan Consumer Confidence Index, says Michele Levine, CEO, Roy Morgan. The National Retail Association's expectations for the festive season are slightly less bullish at $50.1 billion. But the NRA foresees a 22.5 per cent jump in online retail sales this year to $3.4 billion – $54,437 per minute over the six week period.

MCM inks fragrance deal with Inter Parfums
MCM, the Germany-based luxury fashion brand, first achieved global fame in the 1980s. From 1984 to 2017, the label released 14 fragrances, including MCM Rouge for women and the recent unisex trio – Incense, Orris and White Tea. In 2005, the worldwide rights to MCM were acquired by Sung-Joo Kim, the daughter of the late Kim Soo-keon, the billionaire founder of the Daesung Group, one of South Korea's major chemical corporations.

Over the past 14 years, Sung-Joo Kim has revived the MCM label and re-positioned it as a leading lifestyle brand with 500 stores across 40 countries, including 60 in China. Price tags for the brand's bags are in line with Celine and MCM is on track to reach global revenues of US$2 billion by the end of this year. Approximately 70 per cent of sales are in Asia, mainly South Korea, Japan and China, and the remaining 30 per cent in Europe, the Middle East and the Americas.

With many fragrance brands taking aim at the Asian market, MCM has signed a 10 year exclusive fragrance deal with Inter Parfums. As in the past there will be men's and women's fragrances and the first launch is scheduled for the first quarter of 2021. Distribution channels will include MCM's worldwide store network, department stores and prestige beauty retailers and the three-pronged marketing focus will target Asia, the Americas and Europe. Fragrance is a powerful tool to build connections to the brands, says Sung-Joo Kim.

Snippets from the Wires

  • Australian travel retail sales are booming. Aesop has opened its first standalone travel retail store in Melbourne International Airport. Heinemann Asia/Pacific regards Australia as a major focus after securing the duty-free airport concessions in Sydney and the Gold Coast in 2014 and 2018, respectively. The retailer will significantly expand its 430 square metre departures and 300 square metre arrivals outlet in the Gold Coast. The large upsurge in Chinese passengers in both airports has intensified Heinemann's spotlight on cosmetics, liquor and local brands.
  • Sephora has opened its first pop-up in Western Australia The activation is located in the David Jones store in the upmarket Claremont Quarter Shopping Centre in Perth and will run until January.
  • The Australian Retailers Association (ARA) has announced a partnership with Alibaba. The Chinese online giant now sells more than 2000 Australian brands through its marketplaces in China. According to Russell Zimmerman, Executive Director of the ARA, the Alibaba Group is the leading industry partner providing retailers looking for growth with new sales channels to reach their customers. Tens of thousands of Australian retailers now accept Alipay, China's leading payment method.