Interview
Jean-Christophe Babin on streamlining and Bulgari’s fragrance focus
Introduction: Bulgari CEO Jean-Christophe Babin outlines a strategic path forward for the Roman luxury house, focusing on streamlining and redefining its market presence. Babin emphasises Bulgari’s commitment to becoming “the world’s most desirable luxury brand” by carefully selecting retail partners and locations that align with its high standards, cutting its footprint from 24,000 to 6,000 locations to better control and elevate customer experiences.
Central to Bulgari’s growth strategy is a renewed focus on its fragrance business, where Babin aims to elevate its prestige to match the watch & jewellery divisions. He also discusses the brand’s fragrance heroes, such as Allegra and Le Gemme, which are making significant headway in global markets, bolstered by a targeted approach to premium retail environments and partnerships.
As the luxury landscape evolves, Babin notes the importance of adapting to regional dynamics, particularly in China, and balancing growth across Bulgari’s diverse portfolio. This multi-category approach, Babin believes, reinforces Bulgari’s resilience and supports its luxury mission in an unpredictable global market.
A continuing streamlining journey
In 2022, Babin spoke to The Moodie Davitt Report about his grand ambition to become “the world’s most desirable luxury brand”. Since then, the Roman luxury house has been on a streamlining journey, cutting down its retail footprint to focus on locations where it can win big. It has also significantly invested in its fragrance business, particularly in travel retail where the category has been booming over recent years.
Babin says: “The ambition of the brand is to get the fragrance business as close to our watches & fine jewellery business in terms of prestige and exclusivity. This is why we need to streamline our network, to work only with the best retailerswho provide the best support and who really believe in Bulgari fragrances. That’s why we reduced our retail footprint from 24,000 to 6,000.
“When you have too many doors, some with distributors, it’s not always easy to control,” he adds. “Now, with a more streamlined network, we have more control at each point-of-sale.”
According to Babin, the streamlining process was driven by the growth of Bulgari fragrances and the company’s strategic mission to premiumise its fragrance business.
Bulgari CEO Jean-Christophe Babin: ”As a business, we don’t just rely on jewellery, but also on watches, fragrances and even hotels – making us a strong company”
He explains: “We try to balance the sell-in and sell-out which you can’t do with 24,000 doors. We selected those doors based on their belief in Bulgari fragrances, and their willingness and capability to provide us with a qualitative space.
“We don’t necessarily need a huge space, but it has to be qualitative in line with the level of quality of our jewellery and watch business, so that there is no difference between the fragrance business and the rest of the brand.”
Commenting on what the short-term and mid-term impact of that streamlining process has been on the Bulgari business in travel retail, Babin says: “The 80/20 rule applies to Bulgari as it does with all businesses. By applying that rule, you eliminate 75% of your stores and temporarily lose a portion your business. But it’s only a temporary loss because in most cases the store will close in a city where we already have other stores.
“That reduction, conversely, has been very marginal in travel retail, where we’ve always enjoyed very good quality in terms of retail environment,” he adds. “This is because airport operators have always put a lot of emphasis on fragrances, which have a strong gifting appeal.
“In travel retail, we have a very proactive approach thanks to excellent reciprocal partnerships with operators. In the domestic markets however, we have not hesitated to cut our network a lot, especially in places where there is no qualitative space for our fragrance category.”
Babin describes Bulgari as a ‘mini group’ with a diverse offer covering fine jewellery, watches, fragrances and also hotels. Pictured is the Bulgari Hotel in Paris.
Championing fragrance heroes
This has led to the acceleration of Bulgari’s fragrance heroes, starting with Allegra which pre-launched in global travel retail with China Duty Free Group four years ago. “It feels like yesterday,” Babin says. “Today, not only is Allegra overperforming in terms of our overall growth it’s also outperforming the fragrance market.
“Soon it will be one-third of our total fragrance business,” he adds. “Both Allegra and Le Gemme are going global. For instance, we see Allegra fragrances, such as Baciami and Fiori di Amore, are becoming bestsellers everywhere. These two scents stand out because they are both about love and have great gifting appeal. For Le Gemme, Tygar is the bestseller, not only in the Middle East, but also in China, Germany and in the USA. Why? Because Tygar is very versatile in terms of global appeal, while other scents in the Le Gemme line cater more for the tastes of the Middle East market.”
According to Babin, the three pillars of Bulgari’s fragrance strategy are relaunching the icons of the past, re-staging core lines and the continued development of its high-end fragrance portfolio.
“We are investing a lot in our fragrance innovations but are also restaging core lines of the past such as Bulgari Omnia to new levels of quality and sustainability. We are also relaunching icons of the past and adapting formulations to new regulations and enhancing these icons in terms of packaging, sustainability and the quality of the juice.
“These three points will lead to a fragrance business that reflects the same storytelling and value perception as our jewellery business,” he adds.
Bulgari has streamlined its store network from 24,000 to 6,000 over recent years, although the streamlining has not impacted its travel retail network as much as in domestic channels thanks to the growing power of its fragrance business. Pictured is the Bulgari boutique at T-Galleria by DFS Macau Shoppes at Four Seasons.
The empty middle and the changing luxury landscape in China
As CEO of Bulgari, which boasts a powerful multi-category luxury portfolio from fragrances, watches, jewellery, fashion and even hotels, Babin has rare insight into how the luxury landscape has changed in recent years.
Babin says: “We are covering five different businesses at Bulgari and so we are operating like a ‘mini group’. The luxury world post-COVID has changed significantly. We are seeing consumer uncertainty not only in China but also in Europe due to several destabilising political and economic factors.
“While there is indeed a cost-of-living crisis, these changes don’t necessarily impact the super-luxury consumer. High-net-worth individuals and above are buying luxury more than ever. These customers are focusing on the most reputable brands because they want the certainty of buying something beautiful, with a value that grows over time.
“For instance, jewellery is not only measured by the quality of gems, but the beauty of the craftsmanship and the brand itself, which is a seal of forever quality. So, this upscaling of the luxury category is very beneficial to us not just in our jewellery business but also in our fragrances and even our hotel business.
“What is really suffering is the in between, the premium luxury. During crisis times, the premium category is something purchased by the upper-middle class only on special occasions. Before COVID, this was a more frequent indulgence, but post-COVID the pressures of inflation and higher interest rates means this becomes more infrequent. This has led to what we call ‘an empty middle’. This segment, particularly in China, is suffering where the country’s middle and upper-middle class is under economical pressures.”
Allegra and Le Gemme were the stars of the Bulgari gifting animation at Samaritaine Paris in December 2023
The Chinese consumer – historically among the highest-spending travel retail consumers pre-pandemic – is a key demographic for Bulgari’s fine watches & jewellery business. However, luxury spend in China had decelerated over the last year or so in what Babin describes as an “economic crisis”.
Speaking on how Bulgari is navigating this challenging luxury landscape in China, Babin says: “Like all luxury houses, we obviously benefitted from China, which has been the engine of growth worldwide from the global financial crisis until COVID. In China, there was a new generation of luxury consumers who were travelling a lot, who were driving the luxury category in China.
“For a period there was such a thing as ‘easy sales’ because our Chinese clients would come into the boutique with a specific item already in mind and with purchase intent. COVID was the first step that changed this and the second step is the current economic crisis. While this initially impacted our sales, it also enabled us to rebalance our focus.
“Thankfully, we were conscious that we had to grow a lot in the other countries to keep a balance, which was not easy to find, because when a country is growing double digits, it becomes more difficult for mature markets to deliver the same growth.
“At the end of the day, this crisis has made us a stronger company,” he recounts. “As a business, we don’t just rely on jewellery, but also on watches, fragrances and even hotels – making us a strong company. If we were just reliant on one region or one category then we would be very exposed.”
This well-balanced approach to regional growth and portfolio has also reinforced Bulgari’s watch business, which is facing another crisis on the other side of the globe. “Everyone is talking about the slowdown of the watchmaking industry in Switzerland but for us there is no slowdown. This is because we invested in the right products, such as Octo and Serpenti, at the right time. These products are very distinct in the market, setting us apart.
Bulgari and China Duty Free Group opened an elegant fragrance flagship store at the cdf Sanya International Duty Free Shopping Complex Global Beauty Plaza in March 2023
“Swiss watchmaking was very reliant on the China market,” Babin adds. “There are many watchmakers in Switzerland who have slowed down their orders of components, putting third party suppliers under immense pressure.”
Has this had a negative impact on Bulgari’s own watches & fine jewellery business? Babin confidently says: “This has not impacted us because we were much less dependent on China for our watch business and in fact, we even grew in China. We knew that 2023 was an anomalous year, and after the 2023 post-COVID boom, we knew that 2024 would be a stagnation year. We had planned for modest growth this year and the market has proved us right.”
Going back to Babin’s mission of turning Bulgari into the world’s most desirable brand, Babin ponders on the role that travel retail plays on that elevation drive. “The journey continues, and travel retail is crucial to our mission.
“The challenge we are faced with now is that with travel retail you have a paradox. You must create an experience, with little room and little time.
“What we’re trying to do is have more well-trained staff to reinforce the speed of service, because travellers are often time stressed. So, the quicker we can service them, the better. This is eased in the airport by the fact that clients often already have some idea of what they want to buy. They browse our websites and downtown boutiques but buy in duty free for the tax benefit.
“They have already made up their mind by the time they get in a taxi for the airport. Luxury clients know exactly what they want, so the airport will always have that convenience dimension that can’t be replaced,” Babin adds.
Early this year, Bulgari partnered with Gebr. Heinemann and Unifree Duty Free to showcase the Allegra fragrance collection with an AI experience at Istanbul Airport
Travel retail remains an especially important channel as Bulgari continues to focus on driving growth for its fragrance business. Babin says: “Travel retail operators have always understood that fragrance is a dual category because you buy it for yourself and for gifting. Travel retail has always understood the potential of fragrances, which in my opinion has been a bit forgotten by its domestic counterparts.
“We always fight for more and better, but what we’re trying to reinforce and elevate is our service levels and the overall luxury retail experience.
“By doing this we can de-stress the client through our efficiency, by identifying their needs and providing them with the right products. Because at the end of the day, that’s the most luxurious service we can really provide.”
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The Moodie Davitt eZine
Issue 340 | 4 November 2024
The Moodie Davitt eZine is published 14 times per year by The Moodie Davitt Report (MA Travel Retail). © All material is copyright and cannot be reproduced without the permission of the Publisher. To find out more visit www.moodiedavittreport.com and to subscribe, please e-mail kristyn@moodiedavittreport.com