Brazilian flip flop and sandal brand Havaianas has underlined travel retail as a priority channel for expansion as it accelerates its growth in Asia Pacific. As reported, Havaianas made its debut at the TFWA Asia Pacific Exhibition last month.
Owned by São Paulo-based footwear company Alpargatas, Havaianas was launched in 1962 as a basic functional slipper but became popularised as a fashion item in the mid-1990s. Today, 240 million pairs of Havaianas are sold annually in more than 100 countries. In 2018, the company – which also owns Dupé, Osklen, Topper Argentina, Meggashop and Mizuno – generated net revenue of R$3.9 billion (US$980 million).
Up to 2018, Alpargatas’s owned operations were primarily focused in Brazil, US and Europe, Middle East & Africa (EMEA), while the rest of the world was run as an export market. Last year, the group restructured its businesses into five regions: Brazil, Latin America, North America, EMEA and Asia Pacific. To further bolster its push into the fast-growing Asia Pacific region, it created a regional subsidiary, Alpargatas Asia, in May 2018 and opened its first office in Asia Pacific.
Based in Hong Kong, the organisation is led by regional President Robert Esser, who has grown the team to 15 employees and spearheaded the rapid development of Havaianas in the past year.
Speaking to The Moodie Davitt Report, Esser said: “Travel retail is a key component because travel is a big part of the Havaianas identity. Prior to the establishment of our Asia Pacific office, the brand has been supported by an excellent group of independent distributors in the region for the past 20 years. But travel retail requires a great deal of structure and preparation, and upfront costs are relatively high. It needs to be part of an overall strategy, and being run by distributors remotely from our headquarters in Brazil was just not going to be possible. We really needed to establish a regional office and have the kind of strategic, long-term thinking and commitment necessary to invest in the channel.”
Travel retail has been earmarked as one of Havaianas’s three main strategic pillars for distribution and expansion, said Esser. The other two were beach holiday destinations and cities & urban areas. “Using Thailand as an example, this means we would want to be heavily present in the capital city of Bangkok, the beach areas of Phuket, Krabi, etc. as well as all the airports in between,” he explained.
Within travel retail, Havaianas currently has close to 20 airport and downtown duty free and duty paid doors in Thailand, Philippines, Indonesia, Malaysia, Macau, Taiwan, South Korea and Australia. These include mostly wall-bays, gondolas and shop-in-shops in locations such as Bangkok Suvarnabhumi Airport, Incheon International Airport, Taoyuan International Airport and Jakarta Soekarno-Hatta Airport. In May 2019, the brand opened a 45.5sq m shop at Bali Ngurah Rai International Airport – its first and only mono-brand store in travel retail.
Esser said these existing doors are performing above expectations given their limited retail space. Most of the gondolas are about 4sq m, but can sell up to 18–20 pairs of flip flops or sandals a day.
“Globally, we have about 650 styles of flip flops and sandals, and we carry about 40% of that in travel retail. Right now, we are offering purely flip flops and closed sandals which have a strap at the back. Given the limited nature of what we do now in terms of space and assortment, I think we’re doing better than expected. But we would like to dramatically expand our presence and our sales volumes.”
The company aims to do this by pursuing opportunities in a variety of retail formats, from multi-brand and pop-up to mono-brand stores.
“Our first objective is to establish multi-brand buy-and-sell relationships with the top duty free operators in their existing stores. The second objective is to open Havaianas mono-brand stores in key airport locations, such as Singapore Changi, Hong Kong International, Tokyo Narita, Shanghai Pudong International and Bangkok Suvarnabhumi. Our third objective would be filling in the gaps with airlines, cruise ships, train stations and other duty free and duty paid travel hubs.”
In the last 14 months, Alpargatas Asia has made significant strides in mono-brand store expansion in the domestic channel, primarily in Southeast Asia. For the next phase of growth, it is targeting North Asia – China, South Korea, Japan, Taiwan and Hong Kong – where it has a big presence in wholesale but no mono-brand stores at the moment. Seasonal pop-ups, however, make up a core part of the marketing programme in these markets.
“China is our big thing for this year,” he revealed. “We start trading there in June with Alpargatas China. We will be going direct, and it will be an e-commerce only proposition for the first year. After that we will look at building bricks-and-mortar stores in selected places, possibly a flagship in Hainan. We would love to get involved in travel retail in China.”
The company is building up the brand awareness of Havaianas with both traditional and digital marketing. “We have quite a heavy programme this year in digital marketing, consisting of Instagram, Facebook and Google AdWords, with WeChat, Weibo and VIP.com in China starting in June. We also do quite a lot of out-of-home (OOH) advertising in and around airports; right now we’re running a huge OOH campaign in all 14 airports in Thailand.”
The company is hoping to capitalise on the Asia Pacific travel boom and the rise of ‘bleisure’ travel. The latter is being driven by millennials, with 70% of business travellers aged 25–35 years old keen to extend their business trips for leisure purposes.
Esser said: “We’ve got great brand awareness and affinity among Asian consumers, especially the Chinese, South Koreans and Japanese. And I think we have very good opportunities in travel retail to follow these consumers, maybe even better than in domestic. These countries are very cold in winter, and there’s a window between November and January – or even February during the Lunar New Year – when they travel outbound to places such as Bali, Hawaii and Phuket, where they can buy Havaianas either at the point of departure or arrival.
“Asian consumers, especially females, like to bring flip flops with them when they travel – to wear in the hotel, the spa or the beach – and they are willing to spend a little more money on a nice pair. Havaianas is affordable luxury. We are inviting consumers to spend a little bit more for an authentic, high-quality and fashionable product that’s 100% made in Brazil.”
The average price of a pair of Havaianas is US$25, but can go up to more than US$100 for custom pair featuring Swarovski crystals. The customisation service is only offered in retail stores, where customers can choose from a range of strap styles, base colours and pin designs.
“With our mono-brand stores, we’ll be offering the full Havaianas line extension and customisation options in-store. We also sell apparel in Brazil and Europe, and we are looking to bring in apparel to Asia Pacific this year as well, in selected mono-brand stores only,” he revealed.
The full Havaianas offering includes flip flops, sandals, espadrilles, sunglasses (manufactured under license by Safilo Group) and accessories such as bags, pouches and beach towels. Product exclusives are also in the pipeline, Esser said.
“We are launching an exclusive collection at the end of this year as part of the Havaianas Local Soul campaign, which celebrates the most famous beach cities in the world. For Asia Pacific, we have chosen Bali, Phuket and Sydney. The designs will be exclusively available at these destinations, and we are looking to do some pop-up airport activations around the launch. Our Brazil-based innovation team has been travelling throughout Asia Pacific and together we are looking at two or three potential travel exclusive kit offerings right now. I think you can definitely look out for that in 2020.”
[Click on the YouTube link below for a sneak peek into the Havaianas factory]