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Starboard Cruise Services looking to sell memories, not just merchandise [The Miami Herald :: ](Miami Herald (FL) Via Acquire Media NewsEdge) March 31--When a cruise passenger buys a vacation memento on a ship -- whether a Carnival-branded T-shirt, Guess bag or luxury watch -- chances are good their shopping experience was dreamed up in an office building in Doral. At its headquarters not far from some of the world's largest cruise operators, Starboard Cruise Services boasts a team of merchandising experts who create company-specific and ship-themed goods and work with both established and emerging brands to come up with exclusive items to sell on ships. As vessels are becoming destinations in their own right, Starboard is seeking to make the onboard shopping experience more enticing with a greater focus on special shopping events, one-of-a-kind products, well-known luxury brands and enhanced customer service. "It's all about dreams, it's all about giving people moments of joy, it's about creating memories for people," said Starboard president and CEO Beth Neumann, who was hired in December. "What's so fun about it -- and really why I'm here -- is because you can bring retail to life in different ways on a cruise ship." The company was founded in 1958 as Florida Export Tobacco, selling duty-free items at Miami International Airport. The business changed name and ownership over the years. In January 2000, it was purchased for about $300 million by French luxury conglomerate LVMH Moët Hennessy Louis Vuitton. Starboard, which today operates only in the cruise sector, does not release its own financial information but said the revenue trend has been favorable over the years, and profitability has paralleled the revenue growth. The publicly traded parent company reported profit from recurring operations of more than $8.3 billion in 2013. The "selective retailing" segment of LVMH that includes Starboard Cruise Services as well as beauty powerhouse Sephora and duty-free airport retailer DFS, saw revenues increase 13 percent to about $12.25 billion; profit from recurring operations increased 6 percent to $1.2 billion. Sister company Onboard Media, which also reports to Neumann, manages recommended shopping programs, which offers a guide to recommended (and guaranteed) retailers in port. That company also provides custom in-room media for Carnival Cruise Lines and Princess Cruises. Starboard operates a total of 700 stores on 93 ships that sail worldwide. It partners with eight cruise lines, including major players Carnival Cruise Lines, Royal Caribbean International, Norwegian Cruise Line, Holland America Line and Costa Cruises. While the company says each line -- and sometimes each ship -- has a different personality and strategy, some trends are common across the industry. Drew Reich, Starboard's senior vice president of merchandising, planning and marketing, said the company has been able to bring in more high-end brands as ships have grown and placed more emphasis on retail. "The cruise industry is making their new ships more of a destination, and we're expanding the retail footprint," he said. "We've been able to bring some really exciting new concepts on board. Standalone [boutiques for] Bulgari, Michael Kors -- those things did not exist on a cruise ship four years ago." He said the draw for brands is that shoppers on ships -- unlike in a mall or a port stop -- have plenty of time to browse, mull and eventually buy. "We have on average seven days to have a relaxed, comfortable shopping experience where we can educate the guests, inform the guests about the brand, about the value, not high-pressure sell them," Reich said. "My whole speech is we get on average 2,500 of our closest friends for seven days, locked up with nowhere to go, and it's up to us to figure out a way to sell them on a brand." Susan Bonner, vice president of onboard revenue at Miami-based Royal Caribbean International, said the addition of megaships such as the 5,400-passenger Oasis and Allure of the Seas, as well as the cruise line's expansion into Asia, has created new retail opportunities. Oasis and Allure both feature standalone Coach stores, for example. And Mariner of the Seas, which sails in Asia, introduced the first IWC Schaffhausen boutique, which sells luxury watches, at sea. "Brands are the biggest growth market we have," Bonner said. "That's where Starboard plays a critical role for us." About 60 percent of sales are from branded items and 40 percent from cruise-specific merchandise, Starboard said. While the company works with brands that owned by LVMH, such as TAG Heuer and Bulgari, Starboard also forges relationships with outside brands including Coach, Guess, Michael Kors and others. "It's really about what's right for the guest and what's right for the cruise line," said Neumann, who previously was vice president for the global fashion and home group with Avon. Starboard also seeks out up-and-coming brands with an attainable price point to feature on ships. One success story has been Invicta watches, which are frequently released in a limited batch and engraved with the name of the ship on the back. Watches at all price points have become the company's biggest business in terms of revenue, Neumann said. Francine Nejame, a divisional merchandise manager at Starboard who handles fashion jewelry and handbags, said the company also arranges for specific styles and colors from brands such as Guess and Kipling that are available only onboard. Shipboard customers often make their purchase based on price, Neumann said; because many of the categories sold on board are duty-free, they are cheaper than they would be on land. Starboard often will tack on discounts to make sure products are priced competitively. To give guests a sense of confidence, Starboard offers a two-year commitment to quality for fine watches and jewelry and a 30-day guarantee that it will match the price if a customer finds the same product for less. Starboard is also increasing the number of trunk shows it organizes on ships, which brings on unique products for a limited time. Darlene Smith, divisional merchandise manager who handles fine jewelry, said the company will do about 2,500 trunk shows this year, compared to 1,200 last year. The company also has created its own affordable brands such as jewelry line Tara Vanessa and Bella Perlina, which sells Pandora-like charm bracelets. Cruise lines define the relationship with Starboard, which comes up with ideas for items that are specific to cruise lines and even individual ships. Communication is key. William Butler, vice president of retail services for Doral-based Carnival Cruise Lines, said his team has weekly meetings with Starboard to go over concepts. "We're really reliant on Starboard as the merchant team to define those next trends and really go after it," he said. But Carnival is highly involved, especially when it comes to bringing up new retail opportunities based on innovation at the cruise line. For example, Butler said, a new partnership with Dr. Seuss and a new concert series both provide new avenues for sales on board. "We're approving Carnival Live T-shirts today," he said last week. Starboard's reputation as an expert in cruise retail led Norwegian Cruise Line to choose the company for its newest ships, starting with the Norwegian Epic in 2010. Starboard also handles retail on Norwegian's Breakaway and Getaway, which launched in 2013 and earlier this year respectively. "We rely on them to know what makes sense, what kind of products to sell on board," said Ross Henderson, vice president of onboard revenue operations for the Doral-based cruise line. He said it's important for players in the industry to be aware of what competitors are doing as well. "We all tend to look at each other and see what's working and what isn't working," he said. "If it's working on another vessel, typically they'll bring it to us." With the cruise industry growing at a slower pace than in years past, Neumann said the focus is on increasing passenger spend on existing ships and evolving the offerings on board to drive more people to retail. The global growth of the cruise industry provides new opportunities, she said, as well as challenges in staffing, sales tactics, products and store layout. "I think retail might be more important to cruise line strategies as they reposition around the world," she said. "More and more retail has evolved and transformed; over the years, it's become more and more a part of the strategy...to help support that cruise line brand and really articulate what that cruise line stands for." ___ (c)2014 The Miami Herald Visit The Miami Herald at www.miamiherald.com Distributed by MCT Information Services |