SK-II on serving not selling, and brands as a force for good
On the eve of the unveiling of the Haitang Bay collaboration with China Duty Free Group and the launch of the ‘VS’ Series from SK-II STUDIO, The Moodie Davitt Report Chairman Martin Moodie talked with Global SK-II Chief Executive Officer Sandeep Seth; SK-II Travel Retail Vice President Liz Caton; and SK-II Global Senior Brand Directors YoeGin Chang and Delphine Buttin about the partnership and the remarkable brand concepts, initiatives and purpose that underpin it.
THE MOODIE DAVITT REPORT
Sandeep, this first ‘Social Retail’ pop-up store is a landmark in lots of ways. It’s a medley of social media, social purpose, experiential retail, gamification and the whole O2O marketing gamut. Sum up please how big a step this is for SK-II.
Hainan is an exciting place at this point with everything that is happening and with the kind of traffic we’re seeing. We were sitting back and thinking, how do we as SK-II create something memorable in that environment? You talked about a lot of different technologies and experiences. But actually, our objective here was how do we create something extremely relevant to our consumers who are going to be visiting Hainan, especially during this May Golden Week holiday period when we expect traffic to be at its peak?
“Beauty brands are supposed to drive hope, drive confidence, drive positivity. How do we focus on that as a priority going forward?”
Global SK-II Chief Executive Officer Sandeep Seth
How do we as a brand create those amazing moments of experience as shoppers come in? SK-II has been on this journey of creating such experiences in a retail environment for three to four years, in fact. We’ve done a multitude of pop-ups, starting with Tokyo and then we’ve done one in Shanghai and similar pop-ups in Singapore at the CES and at the CIIE.
For Hainan, we needed to take this retail experience to a whole new level for a couple of reasons. First and foremost is that with the pandemic a lot has changed over the last 12 or so months. How retail presents itself is a whole new opportunity now. The borders have blurred between online and offline more than ever.
And skincare is a very tactile category. So you can’t say that I can fully be online and there is no need for an offline presence because it’s never going to work like that. But it’s also not a case of ‘I experience offline and I buy online’. It’s all merged. Sometimes you experience offline and maybe you order online; sometimes you research online and go back to offline to buy.
So with all of that in mind and the importance of what’s happening in Hainan and our strong partnership with China Duty Free Group (CDFG), we decided to create this first of its kind SK-II pop-up experience where we bring in technology as an enabler to shopping. We aim to leverage our campaign and #CHANGEDESTINY purpose as an immersive experience and then create the future of contactless counselling all at the same time.
So all of these things are coming together for us. Think of this as a flagship store that we are creating for that limited period. A lot of the elements of this flagship store will find their way into other retail environments, including other pop-ups.
As you know very well Martin, Hainan is the brightest spot in travel retail right now and we know that people will be travelling for Golden Week to have their holidays and do their shopping. It’s also clear that they have time and they have high expectations of the experience that the brands will be bringing them.
“In travel retail, shoppers are still looking to get the best advice they can. However, there is obviously concern about social distancing and so on. So a contactless experience is something that we are experimenting with in the Hainan environment.”
SK-II Travel Retail Vice President liz Caton
I see the travel retail channel as not just sales and shopping but also a channel where innovation is needed. You have to elevate the experience that you’re bringing to shoppers and that was also part of the intent when we chose Hainan, because people are there to shop but also to have a great experience.
And then you have the scale and reach of Hainan. The innovation that you bring reaches a great deal of your target audience. You can then get their reaction and take that forward as a brand as well.
Let me add a few more specifics as to what is happening in Hainan. There are two aspects to it. One is identifying what our shoppers need most from brands like SK-II. We had a lot of discussion on this, and short-term sales gain was not a primary objective.
“Because the shopper habit is to stay on the mobile phone when they’re in-store, we’re using that habit to create a unique experience.”
SK-II Global Senior Brand Director YoeGin Chang
We looked into the shopper’s life and into what brands can do to be a force for good. And that is why we’re launching our ‘VS’ Series at this time. Hainan is our premiere spot to launch this project globally.
The second aspect is that in terms of putting our shoppers at the centre, we were observing how shoppers are behaving, especially in Hainan and especially in a high-traffic season like May. There is always a lot of lining up and a lot of spending time on their mobiles and we wanted to create a whole new experience merging their mobile screens together with the physical space around.
With those two backgrounds in mind, what happens in our ‘Social Retail’ concept is that we’ve brought together a gamified skincare shopping experience anchored with a WeChat Mini program – and that’s where the social shopping starts.
We are featuring a couple of elements, for example the hyper-realistic world of the ‘VS’ Series with content from SK-II STUDIO that combines real athletes as well as animations. We’re also using AR technology to create a larger than life experience. As I mentioned, because the shopper habit is to stay on the mobile phone when they’re in-store, we’re using that habit to create a unique experience in that space.
Finally, on skincare – where, as Sandeep mentioned, it is very tactile in nature and there is a need to see, touch and feel many things – the pandemic has created an interesting challenge to go contactless. So we’ve combined those points, and we are bringing forward our latest innovation which is contactless counselling. We have showcased this in CIIE in China earlier but the Hainan event is our first full showing in China.
It’s extraordinarily ambitious, as you have included just about every element in there of the modern O2O marketing and communication playbook. What fascinates me is that not only you are bringing together the physical and digital worlds but you’re doing it with a deep sense of purpose.
Yes. SK-II’s purpose of #CHANGEDESTINY is now very well ingrained in our entire activity system and as a part of each and every employee within SK-II.
So when we are planning from an upstream innovation to a commercialisation, we always keep this purpose of #CHANGEDESTINY at the centre. We have now branched into three pillars of #CHANGEDESTINY: firstly, #CHANGEDESTINY of skin, which is something that we’ve been doing with our Facial Treatment Essence – PITERA™ Essence – for over 40 years now. Secondly, #CHANGEDESTINY of life, which is the whole campaign that we started with the film ‘Marriage Market’ and a series of other films like ‘Expiry Date’ and ‘Meet Me Halfway’.
The third pillar is changing the destiny of the planet where sustainability takes centre stage in everything we are doing. SK-II and P&G have always been very conscious about the environment. Our packaging and our plants are already sustainable in many ways, for example. But there are still areas and opportunities for us to be even better for the environment and a lot is happening.
So with this pop-up, we’re going to keep all three of those in mind as we continue to drive each aspect of #CHANGEDESTINY.
Consumers now have a much-elevated expectation towards brands and businesses. Just to push you though Sandeep, how do you foresee that evolution of balancing good and growth in businesses of the future?
These two elements are very interlinked. You cannot separate being the force for growth and being the force for good. I don’t think purpose is a separate element of the brand plan; it is at the heart of everything we do.
A lot of brands are doing a lot of great stuff out there, which also gives us encouragement to be part of that positive movement towards society. As a brand, if you don’t make the purpose integral to everything you do and consistently drive that, it will end up seeming very inauthentic and very driven by commercial gains.
Now I know as a brand that I need to deliver my quarters, without which none of us would be here. But having said that, sometimes you have to look beyond just that quarter. Our purpose enables us through everything we do to create a human connection between the brand and its target audience. That may not have a short-term ROI per se but in the long-term it really builds a strong bond.
“Everything needs to be designed with the consumer in mind. Make her shopping experience easy and delightful, that’s what we want to do. So you don’t want to put in technology that creates friction.”
Global SK-II Chief Executive Officer Sandeep Seth
In Hainan during May, we didn’t have to do something big to get our sales – with so many people coming, the numbers will always flow in. But we wanted to go beyond just the numbers and create memorable experiences for our consumers because that’s what they will remember, talk about and share. So it goes beyond the ROI of that physical event during that finite period, which you can deliver with let’s say a fraction of what we are doing.
What this does is create a human bond that lasts longer in terms of building positive connection and equity. And that’s what we’ve always been trying to do. SK-II’s growth has been driven by the human connection that we have built over the years with everything that we do in our communication.
And that’s why very often we let go of short-term opportunities. As the pandemic hit, a lot of promotional activities were happening in the market and SK-II was probably the least involved in many of them because we said that consumers at this point don’t need another promotion – they need empathy. And how do we be that beauty brand? Beauty brands are supposed to drive hope, drive confidence, drive positivity. How do we focus on that as a priority going forward?
Hainan’s role has been elevated by the pandemic – the rest of the world has been in darkness and Hainan has been lighting up the channel. But it’s clearly here to stay as a core centre of travel retail. How do you see the role of your partner here, China Duty Free Group, and its Hainan operations in terms of global travel retail, China travel retail and also your aspirations with the Chinese consumer back on the Mainland?
CDFG are a long-standing and major partner of SK-II. We’ve done business with them for many years prior to COVID and even last May  we put together a partnership event in the Haitang Bay store. So we’ve got a history of doing good work together and growing the joint business. We’re expecting this to be the next building block on that journey.
We know they have big plans for Hainan too. We’re talking with CDFG about what comes next for them and we’re working out how we can play a big part in their future in Hainan too.
But I agree with you. Everything that we read points towards the same direction – Hainan is here to stay as a part of the growth of the travel retail channel, so it definitely will be part of our business plans going forward. You’re also right to say that the Chinese consumer is so important to SK-II. We have some fabulous products that are very well appreciated by them and we intend for it to stay that way. So of course there will be a focus from SK-II on how we continue to delight them as well.
“We are on a journey of transforming all of our beauty counsellors to behaving, thinking, acting and interacting with our shoppers more as a beauty influencer.”
SK-II Global Senior Brand Director YoeGin Chang
Let’s move on to the specifics of this Hainan activation and campaign. The beauty and skincare categories have generally been very tactile, all about the senses – smell, touch, sight, human smiles, human engagement, face to face engagement. Here you’ve got something very deliberately different going on. You’re recognising both the realities and the constraints of the pandemic and its impact on how consumers behave. I’m interested to know how you sought to achieve a balance in terms of reassuring your consumers on the one hand and on the other also delighting them, educating them and engaging with them.
When we look at the changes in the landscape, the first thing that is notable is how the line between online and offline is blurring. So the digital experience and the need for it has been growing. While online has accelerated, there is also that specific tactile experience that we need to bring forward, as the skincare category is based on those senses that you have just mentioned.
Our mantra at the centre of our retail experience is to serve, not sell. And we want to ensure that we provide an entertaining time that she spends with us when she’s in our stores, whether it’s a pop-up or our other retail. And one of the things that we’re bringing to life to meet her needs is the Mini Magic Scan, the contactless skin-counselling innovation from SK-II.
We understand that she wants to know about her skin. This is something that she cannot get from online searches. At the end of the day, skincare is very personal and SK-II has a lot of proprietary knowledge and data-based analysis that can help her to identify those needs and that can be done when she comes to our store.
So we’re continuing our journey on the skin counselling road. We’re also really pushing the boundaries of livestreaming. This social commerce in our Chinese markets has opened a whole new platform of two-way dialogue in real time between brands and consumers. You’ll be hearing more from us on this and the innovations coming through.
And the last piece is YUMI – she is our AI-based brand ambassador who can really serve our shoppers and consumers 24 hours because she doesn’t sleep! She lives in the Cloud and that’s just one of our innovations that we’re bringing forward and we’ll be soon seeing it across markets.
In terms of the human experience, we’re also evolving this with our beauty counsellors because no one wants to be pushed or to be sold at – that’s why a lot of consumers have moved on to beauty influencers as a source of information.
And so we are on a journey of transforming all of our beauty counsellors to behaving, thinking, acting and interacting with our shoppers more as a beauty influencer. That has also been taking place during this pandemic. Some of this we’ll see in Hainan; others will be impacting our domestic China market and beyond. But this is our retail experience journey that we are on.
That concept of beauty counsellors and beauty influencers is absolutely fascinating. All this is happening so fast, and there are so many elements in the mix. I can’t even begin to imagine how complex it must have been in putting together such a programme, both with outside agencies and inhouse resources involved. But try to sum it up for me.
It’s a very interesting question. It’s always an interesting challenge but a great opportunity when shoppers are moving faster than you. I think the pandemic has clearly shown that habits and practices are accelerating at a speed never seen before.
By really grounding ourselves among the many changes, we asked what were the few critical ones that we should choose to really act upon. That was really the starting point.
The solution was driven by the fact that SK-II is very much grounded on a single purpose and a very simple mantra on #CHANGEDESTINY of skin, life and planet, and that becomes our North Star. And by putting the consumer at the center of the mantra, it’s not about what we want to do as a brand so much, but really going back to asking is it really needed for her right now among so many other things that are happening? That really helps us to make our priority choices and drive urgency on the brand aspect.
I’d like to build on this. Martin, you’re right, this is a massively big challenge and I’m so glad to have this team here that’s taken it on. Of course, it needs a whole village beyond just a few people to make things like this happen. And you’re right, it’s very, very multidisciplinary… from our marketing to IT to just about every particular function is involved in this, and we’re leading it.
What makes it even more challenging is most of the people who are designing cannot travel to where the design is going to get executed. So we are mirroring two teams, one in China and one here [in Singapore]. We are prototyping in a third location and trying to see how this whole thing will come together and come to life. Even when we started, we knew it was a big task. But we didn’t realise that actually none of us would be able to travel there to even see how the construction was going.
So how do you operate in this world? It has been a massive, massive learning. At SK-II, we’ve consistently over the years been very open to failures as long as we can pivot really fast. And we also engage our retail partners upfront very much. When you have an ambitious goal, you’ve got to be ready to fall many times before you hit your ideal end point. Of course, we want the perfect experience for our shoppers in the end, but things never go as planned, especially with so much technology and so many things involved.
Everything needs to be designed with the consumer in mind. Make her shopping experience easy and delightful, that’s what we want to do. So you don’t want to put in technology that creates friction. You don’t want to just put things there because they are shiny objects. How do you enable and empower that shopping experience that becomes a memorable moment for her?
Let’s move on to the ‘VS’ Series. How proud are you of this as an initiative and what it stands for?
The anthology series is very dear and close to our heart. I mean, this is something YoeGin and Delphine and the team have been working on for more than two years. This was the next chapter of our #CHANGEDESTINY campaign, but it was also bringing in a very important moment of the Olympic Games Tokyo 2020 that we were working towards over the last year.
Now things did not pan out the way we wanted [due to the pandemic]. I remember my last international trip out of Singapore was to New York in March of 2020 to launch our Olympics campaign and we did the Times Square takeover there. And here we are now, a year and a half later, launching it. We’ve pivoted the campaign quite a bit. But to us it’s more than a campaign. We think that this is the moment where the world needs more hope and more positivity.
This anthology series touches on very specific topics that are at the heart of #CHANGEDESTINY – the societal pressures that women face day in and day out. And these pressures have really become even more so through the pandemic.
Everyone has suffered through this period in different ways. But I think the burden of a lot of things has fallen on women way more than on men. And this is also starting to impact a lot of their career and life choices as they have to juggle between work, family, taking care of kids, the home schooling – just name it, it’s there.
What we are trying to do through the ‘VS’ Series is to show how some of these women have taken their destiny in their own hands and overcome such pressures. And so each of these films is talking on a very specific pressure which is very relevant to our target audience.
We created these six films based on the real-life experiences of those athletes. And you can see and understand the authenticity behind it. Because each film is really based on the pressures that they have faced and have overcome.
“We asked, how do we bring to life each of those stories in the most authentic way that will resonate the most with women out there?”
SK-II Global Senior Brand Director Delphine Buttin
While those stories are based on the athletes’ real lives, they actually reflect pressures women face today. The next question was, how in this animation were we going to represent those pressures? And we used this concept of the kaiju and the strange beast as these inner demons that our athletes will have to conquer to overcome and change their own destiny.
It’s a mix of live action and animation but it’s also six different genres of film… which we didn’t dictate, actually. This was all created very organically with the athletes and with the directors and the animation studios.
We asked, how do we bring to life each of those stories in the most authentic way that will resonate the most with women out there? So we are very proud of the release.
SK-II was already well advanced in terms of digital technology pre-COVID, but how pivotal has the pandemic been in accelerating changes in technology and consumer behavior? And how much do you expect that behavior to continue to evolve?
In travel retail, shoppers are still looking to get the best advice they can. However, there is obviously concern about social distancing and so on. So a contactless experience is something that we are experimenting with in the Hainan environment. As we move away from the pandemic, if the technology is good enough to provide that skincare counselling expertise, then I expect it will stay. So we’ll stay flexible to see what it is that the shopper wants as we come out of the pandemic experience.
How we bring to life our brand purpose #CHANGEDESTINY on skin, life and planet is something we will continue to evolve.
In terms of the skin part of the in-store experience, this is a pivot that we have made through the pandemic. We’ve introduced skincare counselling through our pop-ups in Tokyo, Shanghai, Singapore and the US as well as the CES and CIIE shows in the US and China. We were actually involving a lot of contactable counselling, if you will, because we didn’t know that the world would need contactless skin counselling at the time.
As you know, SK-II is unique in the sense that our hero Facial Treatment Essence has a formula that’s been unchanged for the last 40 years, which gives us a unique set of data and understanding of human skin beyond just the short-term impact of certain products. And so we have been trying to make things more convenient for the consumer while ensuring all the back-end, all the mega data that we have, all the analytic tools and the accuracy stays intact.
And all of that lies behind our analytic tools. But contact is one thing, contactless was a whole new chapter that we had to get into. We had to really up our game in facial recognition, for example, and the diagnostic tools that allow a bit more distance. Our team was able to turn that around in a very limited time with a high focus on this specific project in Hainan and that is why it’s going live first there.
When it comes to the #CHANGEDESTINY of life, you’ve seen the ‘VS’ Series from our SK-II STUDIO. We see the need to really tap into her life and her concerns – what are the discussions that are going on in her mind, well beyond skin and beauty?
So SK-II STUDIO will be a long-living platform. We’re bringing interesting experiences around this as well. We launched SK-II City, a virtual city inspired by the streets of Tokyo, which would have been one of the top 2021 tourist destinations with the Olympic Games. This was a pivoted plan for us to bring the ‘VS’ Series to life in a very immersive way.
Shoppers in Hainan get to experience ‘VS’ Series physically, but those who cannot go to Hainan will be able to experience it virtually through SK-II City as well. So we’re creating a unique online brand experience for shoppers.
For the last pillar #CHANGEDESTINY of the planet, we are creating a two-way programme for shoppers to contribute to causes that make our planet a better place. We are partnering with external communities who are driving positive change. Our shoppers can contribute with every PITERA™ drop and every SK-II bottle that they buy, and the brand will grow the contributions at the same time.
So across the three pillars, we have gone through a lot of pivots in the last year. It’s all helped us to move things faster in the right direction, so we’re very excited about this journey.
Let’s close by summing up how you are embracing retail innovation to connect with a new younger generation of consumers.
Shopping should be fun and empowering. Yet we know that skin and beauty shopping can sometimes be extremely pressuring. In department stores when you have beauty consultants looking at your skin, you may feel judged and pressured by what they say. You may be pressured to buy more than you wanted to buy.
In travel retail, sometimes the shortage of time means there is pressure in terms of how fast I can buy and together with the push that the brands do with promotions, more pressure is created.
As a brand we want to remove that pressure and allow her to make the choice at her own pace even within that limited time. We want to create a very empowering, easy and entertaining shopping environment with everything that we do in the retail space.
So a lot of work that we’ve been doing over recent years is to start transforming the retail shopping environment into a much more positive experience for our consumers. I think we’ve just touched the tip of the iceberg on this, there’s a lot of work to be done. And each of these pop-ups give us an opportunity to try and pilot new things which we can eventually bring into the full physical retail environment.
But it’s going to be mandatory for all brands to create a positive shopping environment versus a pressuring one. The more pressure it creates, more shoppers are going to go and look for alternate ways of buying. So that’s going to be a big focus in terms of what we are doing and very much in line with the brand’s philosophy of how we enable the best skincare experience through whatever we do.