Run a tight shop

30 August 2019



Traditionally, cruise lines have emphasised affordability in their retail policies. But habits are changing, with operators pivoting towards more upmarket offerings. Andrea Valentino talks to Miguel Maal, an expert in cruise retail, and Adrian Pittaway, head of retail at MSC, about the benefits of turning the act of shopping into a valued experience in its own right.


A handsome baroque theatre nuzzles for space with rows of Italian designer boutiques. Inside the shops – Max Mara, Bulgari – models show off the latest handbags. Artisanal wooden gondolas sit by as decoration, and guests dress up in carnival wigs and masks. It could, in all its gaudy excess, be Venice, even down to the setting. Like the real thing, her doppelgänger is surrounded by water, with seagulls flapping above the rafters.

And like the Venetians themselves, who once travelled and traded from Constantinople to Kaifeng, this new Venice has her gaze set firmly on the Orient. Since she set off in May, the Costa Venezia has aimed to lure rich Chinese passengers, intoxicating them with pleasure along the way. Costa is clearly taking the task seriously. The new ship boasts 8,000ft2 of boutique retail space and over a quarter of that again for beauty products.

Nor is Costa Venezia unique. Though cheap and cheerful offerings once dominated cruise retail, operators are increasingly worried about seducing wealthier customers. This is reflected by furious growth. Last year, for example, watches and jewellery alone accounted for 24% of all on-board retail sales. Following the Venezia, operators are now marbling traditional shopping with retail ‘experiences’ – from tea parties to whisky tastings. All this has the ability to transform retail at sea, if only operators and brands can work together.

Captive audience

A cruise is probably the only legal entertainment where customers pay to be trapped, surrounded by ways to spend money, for days at a time. Think of it like that, and the arrival of luxury retail almost feels late. After all, Miguel Maal explains, once the gangplanks fall away and a ship puts to sea, operators can entice ‘captives’ at their leisure, especially as cruise customers get wealthier.

“Jewellery and watches are the two main focuses,” says Maal, an expert in cruise retail and partner at Qvartz, a management consulting company. “In my experience, high-end travellers like to make brandbased as opposed to convenience purchases.”

To put it another way, the days of airport-style shopping, all rows of cheap spirits and bus shelter lighting, seem over. Instead, ships increasingly borrow their style from the grand European shopping arcades. As Adrian Pittaway, head of retail at MSC, puts it, the typical cruise environment is “formal, elegant, luxurious. It has that fantastic sense of place to the art of selling luxury.” Though the Venezia is perhaps the most extravagant example, other operators are not far behind. Travel with Carnival, for instance, and you can now buy chocolatecoloured diamonds, made famous by LeVian. At MSC, Pittaway is working with several classic brands, including Chopard and Tag Heuer.

Whatever the company, Maal and Pittaway agree that the growing Chinese market is poking many of these changes forward. For Chinese passengers, Pittaway says, “shopping is a leisure activity”. It helps, Maal adds, that duty-free makes splurging at sea far cheaper than it would in Beijing or Shanghai. At any rate, this enthusiasm is echoed by the statistics. Chinese tourists spend $261 billion a year on holiday, over $100 billion more than their American counterparts, and seven million Chinese are expected to embark on cruises by 2030.

Other explanations for the rise of luxury are more technical. Even the biggest cruise ships have limited room – that 8,000ft2 of retail space aboard the Venezia pales compared with Bond Street or Via Montenapoleone – meaning operators have to squash pricier products into smaller spaces.

“What you want to try and do is optimise your density, and optimise the amount of sales that you can generate in the footprint that you have,” Pittaway says. “It is a very good and well-designed category that is economically sustainable.”

24%
Overall sales attributed to watches and jewellery on the Costa Venezia.
MSC

$261 billion
Amount spent annually by Chinese tourists.
United Nations World Tourism Organization

In for a shop

Even with the rise of Amazon, landlocked shopping has not changed that much over the past 30 years. After all, you can still wander into a store, try on a pair of shoes or a new shirt, pay and leave. Not so with cruise ships. Because customers are locked on a floating tub with nowhere to go, operators are abandoning sombre, transactional shopping in favour of glitzier campaigns. “Retailers have found that they can target demographics specifically to each specific route,” Maal says. “They have their audience and can approach them over multiple days, and therefore be more effective.”

“In my experience, high-end travellers like to make brand-based as opposed to convenience purchases.”
Adrian Pittaway

These so-called ‘purchase journeys’ have mushroomed across the industry. At MSC, for instance, Pittaway and his team put on jewellery sales at grand gala dinners, complete with cocktails, and arrange for guests to try the best cognacs in private rooms. Other operators are doing similar work. Dream Cruises hosts Tiffany-themed tea parties, and Carnival encourages guests to pose for photos with precious jewels. At MSC, the captain himself sometimes puts on a retail hat, coming down from the bridge and welcoming passengers to a new shop.

Like luxury retail generally, many of these ‘experiences’ are catered towards Far Eastern passengers. The Venezia, for example, offers Chinese cuisine for guests who tire of polenta and salt cod. For his part, Maal recalls a project he worked on a few years back. Though Russian and Saudi magnates were happy with the regular services they received, the Chinese were not interested in just shopping. That led Maal and his colleagues to deck out whole areas for customers to relax in, with staff bringing jewellery and electronics for them to try.

None of this is simple, of course. But turning retail into an experience is far easier when operators work closely with brands, Pittaway says. “If we’re selling Salvatore Ferragamo leather, we need to make sure that the merchandising is a Salvatore Ferragamo experience. If we’re selling Chanel make-up and skincare, I want my guests to feel that they are specifically in a Chanel experience, rather than an MSC experience. We need the cooperation of the brand in areas like merchandising, training, expertise, local knowledge, local guidance and how you sell products differently in different markets.”

€11 billion
Investment committed by MSC Cruises towards luxury ships by 2027.
MSC

The benefits of experiential retail for cruise companies are obvious. They can nudge customers towards purchases, and make money even after the boutiques themselves have closed for the day. No wonder shopping now accounts for about 20% of the cruise market. Yet experiential retail is truly alluring, Pittaway suggests, for how it can charm passengers. “People want items based on the enjoyment of the activity that they’re engaged in, rather than necessarily having to do the laborious standard shop.” Maal agrees, hinting that a diamond picked up in Alaska can still conjure memories of pine trees and mountain air years later.

8,000ft2
Retail space on the Costa Venezia.
MSC

Good news for all the brands?

Not everyone is comfortable in this new world of luxury. Some brands have grumbled that the attention on extravagant high prices is dulling sales, particularly as port shops and the internet continue to dig into profits. Speaking last year, Pittaway admits pleasing everyone can be a challenge but says offering perks to customers helps. “When you buy a product from us, you might get benefits somewhere else in the cruise ship, maybe a free massage or a free meal in the restaurant. There really is a way of ‘premiumising’ the experience without necessarily chopping costs.”

Considering watches and jewellery now make up half the sales on some MSC routes, he probably has a point – just as well, because MSC has committed to spending €11 billion on luxury liners by 2027, invested across 13 new ships. Setting sail in November, the MSC Grandiosa will have 12 stores and two brand-new retail concepts. More broadly, you can get a sense of where MSC is going by examining the schedule of the Bellissima. The vessel embarked on her maiden voyage in March, but MSC plans to soon send her east. When she arrives in China next year, the Bellissima will be the biggest cruise ship in Asia.

As in other parts of the cruise industry, meanwhile, technology seems certain to prod future retail growth. For example, Carnival now lets passengers purchase watches or necklaces using wearable devices. These so-called ‘Ocean Medallions’ can also recommend products to guests, while the data they provide helps Carnival sharpen its retail operation. MSC is doing similar work, using ‘smart ship’ gadgetry to reach potential customers.

And if some are uneasy about the luxury craze, others are polishing their cufflinks and climbing aboard. Dufry and Heinemann are just two of the retailers to announce big investments in upmarket cruises. Different brands are getting involved too. Kat Florence, a London-based jeweller, has already signed a deal to service the Scarlet Lady, the flagship in the upcoming Virgin Voyages fleet. Florence has form when it comes to selling at sea: a cruise-goer recently snapped up one of her pieces for $250,000. Pittaway and his colleagues across the industry must be hoping other passengers are just as eager to open their wallets.

High-end brands are eager to access the captive audiences on cruises.
Part of the luxury shopping street on board the Costa Venezia.
Personalised shopping experiences, primarily targeting Chinese passengers, are growing in popularity.


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