Retail Exchange podcast host Ben Bland caught up with Calum Mackay, director of international sales for Neal's Yard, at this year's World Retail Congress to chat beauty, the importance of physical retail and in-store treatments, and ambitions for the future.
BB. What particular challenges are there at the moment for health and beauty retailers, and what are you doing to address those?
CM. So common amongst many retailers is the growth of online, that is the single biggest disruptor factor. We're selling relatively small products, they're not something you need to necessarily always try on yourself and it's something that people are very happy to order online. Making sure you have a compelling online offer is really important, be that through your own branded website where you completely control the environment, or through third party retailers that will offer their customer base superior service such as same day delivery.
BB. When you look at building the customer base you already have, where are the expansion opportunities both in terms of within UK retail but also internationally for Neal's Yard?
CM. With UK retail, we're an established brand in the UK market; we've been around for 37 years so it's very much about capturing the younger consumer. Our core consumer is a lady 45-60 who's been shopping with the brand 15/20 years. We need to capture the 30 year olds that are starting to think about health and beauty and caring for their skin and investing in that.
BB. How do you capture that group?
CM. Firstly, going to where they buy, so looking at new points of distribution – online is a big factor for that, but secondly, also with the product assortment that you're selling as well. We focus on anti-aging benefits, radiance, and that angle which they care about. Then, if we look internationally, we are an established retail player in Japan so that's been really helpful and important for building our business in the rest of Asia, because Japan is still a big influencer in that part of the world.
BB. Talk us through your approach to breaking into Japan.
CM. Japan started through a small part of our business which is aromatherapy education. We worked with the Japan Aromatherapy Association to launch courses and through that we started selling essential oils through the wholesale market – this is in the 1980s – and then that broadened into skin care, which is our core category of sales. We've now got over 30 branded shops in Japan but that has been built up through time. Japan is a very tough market; if you get it right you can be very successful and enjoy the fruits of that labour.
BB. You mentioned the aromatherapy courses that helped you get into that market initially. That sort of experience, how much of a role does that play in your UK stores, if any?
CM. We're also the largest operator of high street therapy rooms, so that's where somebody could come in for a treatment, it could be homeopathy, it could be simply a beauty massage or osteopathy if they've got a sore back. That's really important – it's offering something that you cannot get necessarily online. Aromatherapy education is also something that we offer through our Covent Garden Education Centre as well; really important, something different, something that you cannot always get online.
BB. One of the themes that has emerged is the importance of continuing to offer something that is different, new, surprising to your customers. How do you refresh that offering?
CM. We always want to surprise and delight, and the reality is, if someone's visiting your store two or three times a year, it's going to be difficult to have something completely different all the time, but we have a very broad range of categories, so we try to leverage that. For example, we offer tinctures or a tea blending service, so that's one angle that we could focus on for a particular season; that's great when the weather's turning colder and people are getting colds and flus. In the summer we will try to do activities with suncare, with refreshing cooling sprays and cold tea drinks and health blends.
BB What was your path to your current role?
CM. I've been in beauty since the outset. I joined the L'Oreal Group back in 2006, I was actually living in Japan at the time and joined, initially, their Tokyo office before going to work in the UK operational marketing team in anti-aging skin care, which as a 22 year old you're thinking, what is a pillow effect on your skin when you wake up. I was in Japan post-university on an exchange programme and I had an offer to join L'Oreal in London, but because I was in Japan, I was able to undertake some of the initial training in Tokyo, which was another great insight, because beauty in Japan is very different to Europe.
BB. What's the best bit about your job?
CM. I love the people that I work with, getting to travel isn't as exciting as people think, you know, it's often late nights, early mornings, lots of socialising, which can be exciting but also, you have to be on your best behaviour. Getting to understand different cultures, I really enjoy that.
BB. At 35 you are director of international sales for a very well established brand. What ambitions do you have left?
CM. That's a really good question and something I do think about and I think I maybe fall into the millennial category by perhaps one year or something and you hear about millennials, the thought of doing one career for their entire life such as, you know, my parents certainly did, is actually not appealing and in the future, you know, not immediately, but in a few years' time, I would want to do something quite different, I think. Take the skills that you learn and deploy them either in a completely different industry – hospitality, for example, or I'm very much in beauty, fashion is a big sector as well.
BB. Increasingly retail seems to be looking to hospitality for lessons in how to give people a sort of, an experience that makes them feel more like a guest than just a customer. Do you look to the hospitality sector much?
CM. We haven't studied it a lot, it's a really good question. We always welcome people in with a cup of herbal tea into our stores, which you could take as a nod to hospitality, and I think that is an area that we need to look to further.
To listen to the full interview, visit www.theretailexchange.co.uk