Cruise Re­tail Hospi­tal­ity De­liv­ers on Brand Re­la­tion­ships

Star­board Cruise Ser­vices, a divi­sion of LVMH, is shift­ing to­ward mega ships where over­all re­tail spa­ces av­er­age 8,000 to 10,000 square feet.

WWD Digital Daily - - The Reviews - BY VICKI M. YOUNG

At least one on­board cruise re­tail op­er­a­tor seems to have fig­ured out the value-cre­ation propo­si­tion — ex­pe­ri­ence and dis­cov­ery — that on-land, brick-and­mor­tar stores haven’t yet been able to do in the new age of shift­ing con­sumer shop­ping pref­er­ences, and it doesn’t have much to do with tech­nol­ogy.

Beth Neu­mann, president and chief ex­ec­u­tive of­fi­cer of Star­board Cruise Ser­vices, is quick to ac­knowl­edge that she has the ad­van­tage be­cause her on­board re­tail teams can build re­la­tion­ships “in ways we can never do on land, where the fo­cus is trans­ac­tional and of­ten times no more than two hours long.”

Star­board, which is cel­e­brat­ing its 60th an­niver­sary this year, was ac­quired by LVMH Moët Hen­nessy Louis Vuit­ton in 2000. Neu­mann, who joined the firm in 2013, de­scribed cruise re­tail as a seg­ment that is “un­der the radar, even within LVMH.”

Neu­mann ini­tially wasn’t so sure about the sec­tor when the job opened up. “I thought about what’s the value cre­ation and where are we with cruise re­tail. Many peo­ple in the re­tail in­dus­try have never been on a cruise ship. When I was asked to look at this, I hadn’t sailed in 25 years and didn’t know what the op­por­tu­nity [could be] in re­tail,” she said. Then came a stay on a mega ship while Neu­mann was think­ing about the op­por­tu­nity, along with the sto­ries about “re­la­tion­ship sell­ing.”

That led to a con­clu­sion about ex­pe­ri­en­tial re­tail that has un­der­scored ex­e­cu­tion strate­gies across 10 cruise lines with dif­fer­ent re­tail points of view, more than 700 on­board re­tail shops and more than 2,500 em­ploy­ees op­er­at­ing on more than 90 cruise ships: “Re­tail in­her­ently is all about the ex­pe­ri­ence; the joy­ful ex­pe­ri­ence of be­ing on va­ca­tion in­volv­ing a time to learn and dis­cover, and then bring­ing some­thing home [as a mem­ory] of this joy­ful va­ca­tion.”

The re­tail sell­ing per­spec­tives range from high-end lux­ury ex­pe­ri­ences at Sil­versea Cruises and Crys­tal Cruises to mod­ern lux­ury and celebrity-fo­cused shops at Royal Caribbean and Hol­land Amer­ica, to name a few. On Wed­nes­day, Star­board will show­case its next big re­tail ex­pe­ri­ence on board the Car­ni­val Hori­zon, the new mega ship from Car­ni­val Cruises that is docked at the Man­hat­tan Cruise Ter­mi­nal.

Ac­cord­ing to Neu­mann, Star­board is launch­ing five mega ships within the next year. The on­board re­tail square footage ranges from be­tween 8,000 and 10,000 square feet, with the bou­tiques av­er­ag­ing about 400 square feet. Some brands the re­tail op­er­a­tor works with in­clude Bul­gari, Cartier, Tif­fany & Co., Dior, Vic­to­ria’s Se­cret, Cit­i­zen Watches and Le Vian. She be­lieves the mega ships are the next big trend in the cruise in­dus­try, as well as on­board re­tail.

Ac­cord­ing to Statista, the U.S. is one of the largest cruise mar­kets in the world, with rev­enues ex­pected to reach al­most $31.5 bil­lion by 2020. The pro­jec­tion of rev­enues in the cruise in­dus­try world­wide is $35.5 bil­lion, with the North Amer­i­can mar­ket ac­count­ing for more than half of the to­tal num­ber of guests glob­ally. Cruise Lines In­ter­na­tional As­so­ci­a­tion, the largest cruise in­dus­try trade as­so­ci­a­tion, last month pro­jected 28 mil­lion pas­sen­gers on cruise ships for 2018, on a global ba­sis. The CLIA said there were just 17.8 mil­lion pas­sen­gers in 2009. It also said de­mand for cruis­ing has in­creased 20.5 per­cent in the last five years.

The Star­board team works with the brands to train its re­tail as­so­ci­ates, who are em­ploy­ees of the com­pany. Star­board works with the brands to de­sign the re­tail space, as well as de­ter­mine ap­pro­pri­ate pric­ing for pas­sen­gers. Neu­mann said while her teams work with many brands to pro­vide unique mer­chan­dise for the cruise ships, there’s al­ways the chance some items might be avail­able at the port shops and pric­ing needs to be com­pa­ra­ble. “What’s im­por­tant is that we are duty-free, and be­cause we are tax-free, that means a sav­ings of at least ten per­cent ver­sus [the cost] on land,” she noted.

While LVMH doesn’t separate out the bot­tom line of each of its busi­nesses, Star­board’s prof­its are based on earn­ings after de­duct­ing the whole­sale costs for the mer­chan­dise in its stores and other over­head ex­penses, such as rent to the cruise lines for the re­tail spa­ces and staffing costs.

For Neu­mann, the se­cret sauce is ex­e­cu­tion. “Our big fo­cus is on making sure the stores are highly ex­pe­ri­en­tial. We set them up around the idea of a life­style ex­pe­ri­ence. A liquor store on board is set up like a bar. You can buy a va­ri­ety of dif­fer­ent items, not just bot­tles. We have them dis­cover new brands, there are spe­cial tast­ing nights and events that ex­plain why bour­bon is called bour­bon. We set up shops as places where you want to hang out,” she said.

That’s where the ceo said her team has the ad­van­tage over on-land shops, not­ing that it’s far eas­ier to cu­rate the ex­pe­ri­ence and de­velop a re­la­tion­ship with the pas­sen­gers over a voy­age that could last from two weeks to a month.

Each cat­e­gory has a dif­fer­ent fo­cus. In the beauty cat­e­gory, there is a beauty bar, where the big at­trac­tion is fa­cials. There are also games — be­cause cruise ships are about en­ter­tain­ment, play­ing and hav­ing fun — such as Truth or Dare, as well as an iPad app that lets pas­sen­gers find their fa­vorite fra­grance. For Dior, a fa­vorite event on the celebrity ships is the Mas­ter Class, where a mas­ter beauty ex­pert does makeovers for guests, as well as talks about day looks and night looks.

In jew­elry on the Car­ni­val Hori­zon there’s a “Make Your Own” jew­elry party — along with drinks and Cham­pagne — us­ing Swarovski charms, but on a lux­ury ship that ex­pe­ri­ence more likely would in­volve time spent us­ing the tools of a Swiss watch­maker. A highly ex­pe­ri­en­tial event might in­clude an ac­tual jew­elry de­signer on the ship help­ing pas­sen­gers de­sign a piece just for them that com­mem­o­rates the trip, Neu­mann said.

Fash­ion plays a smaller, but grow­ing role, mostly due to stor­age con­straints, and there have been fash­ion shows on board, with the de­signer pre­sent to talk about the line. What does work are cap­sule col­lec­tions on the ac­ces­sories front, such as fine jew­elry, small leather goods and Swiss time­pieces. Some spe­cial items in­clude Tag Heuer prod­ucts that are spe­cially num­bered for the ship, or that fea­ture the ship’s logo.

Neu­mann said the shops and ex­pe­ri­ences are re­freshed ev­ery 18 months be­cause that’s when they start to see re­peat guests on the ships.

The top three take­aways Neu­mann has learned about on­board re­tail could eas­ily be a page from Re­tail 101 for on-land re­tail: ex­pe­ri­ence, hu­man in­ter­ac­tion and unique prod­ucts.

“Peo­ple are buy­ing the ex­pe­ri­ence, they’re not just buy­ing things. Re­tail needs to be a des­ti­na­tion that peo­ple choose to go to, not only for things to buy, but for the in­cred­i­ble ex­pe­ri­ence whether to learn or dis­cover. It’s high-touch hospi­tal­ity.

“An­other thing that’s clear from cruise hospi­tal­ity is that peo­ple do want that hu­man in­ter­ac­tion with each other. It’s about build­ing a strong re­la­tion­ship in a gen­uine way that makes them feel spe­cial and no tech­nol­ogy could ever change that.

“And pas­sen­gers, par­tic­u­larly on the lux­ury cruises, want some­thing unique. It’s about dif­fer­ent cus­tomiza­tions for each per­son. Hospi­tal­ity is about peo­ple feel­ing that they are in­di­vid­u­ally served,” Neu­mann explained.

Inside a Vic­to­ria’s Se­cret shop on board

a cruise ship.

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