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Signs of Mass Fragrance Revival

NEW YORK -- If there was any doubt that mass retailers want to lure department store shoppers to their fragrance departments, Target put the question to rest the day before Mother's Day.<P>Using an old fashioned flower cart as a display, samples of...

NEW YORK — If there was any doubt that mass retailers want to lure department store shoppers to their fragrance departments, Target put the question to rest the day before Mother’s Day.

This story first appeared in the May 31, 2002 issue of WWD.  Subscribe Today.

Using an old fashioned flower cart as a display, samples of Target’s three new hot selling Sonia Kashuk floral fragrances were handed out to passersby that Saturday in front of Barney’s on Fifth Avenue from 1 p.m. to 3 p.m. The closest Target store is in Edgewater, N.J., some 20 miles away.

After years of sluggishness, a handful of mass retailers have been experiencing a spike in fragrance sales triggered primarily by an expansion of open-sell designer fragrance programs. Fragrance distributors including Elizabeth Arden and Quality King have been packaging these prestige brands in clamshell cartons [for theft prevention] which can be hung or stood on shelves. Sources said Wal-Mart, Target and CVS have all had success with the new approach. According to Information Resources Inc., annual sales of Calvin Klein fragrances have jumped 19.1 percent to $14.9 million and Liz Claiborne brands climbed 22.8 percent to $15.6 million at mass retailers. [IRI figures do not include sales at Wal-Mart.]

Still, the sporadic successes haven’t been enough to lift the total industry yet. Sales of women’s fragrances and gift sets at mass — including designer and traditional brands — slipped 3 percent to $570.7 million for the year ended April 21, according to IRI. The men’s segment did somewhat better with sales stable at $340 million for the period.

But the positive signs have been enough to spark enthusiasm for the market. For the first time in years there are several fragrance initiatives coming in and there are even some early encouraging results. The Kashuk fragrances, said one source, have become a top seller at Target. The line’s creator, makeup artist Sonia Kashuk would only confirm that the scents, launched in mid-April, “have exceeded expectations.”

Coty Beauty president John Galantic believes the market could end the year at a break-even point or maybe even “slightly up.” Coty Beauty, the traditional mass market fragrance leader had been standing nearly solo as an innovator over the last three years, as it focused on expanding existing franchises like Stetson and The Healing Garden and signing licensing deals to create brands such as Adidas Moves and Club Med.

Later this year, Coty will unveil The Healing Garden Waters Sheer Passion [see related story], and is increasing the ad budget by double digits. And the company is already gearing up for next year when it will reveal a “blockbuster” new license, according to Galantic.

Galantic thinks it is in 2003 when the mass market will really come to life. In the second half of this year, prestige manufacturers will unleash an unprecedented number of new fragrances in the hopes of lifting that market out of its doldrums. Galantic is sure many will make their way into mass by next year. “There is so much launch activity, especially on the prestige side, it stirs up more general interest in fragrance which is felt throughout distribution channels, including mass.”

The influx of designer scents, noted Galantic has “surprisingly not added meaningfully to the category in mass. But they have forced retailers to streamline assortments and knocked out some weaker, smaller mass sku’s.” Coty’s fragrance sales slipped 3.7 percent to $85.3 million, excluding Wal-Mart.

New Dana Perfumes Corp., which has worked to strengthen sales of its classics like Chantilly, Navy and Canoe, is bringing two internationally marketed scents to the U.S. next year. Secrets of Dana and Incognito are making their way onto retail shelves by spring 2003, noted Tony Wesley, senior vice president of New Dana. But sooner than that, in this year’s fourth quarter, New Dana is making its gift sets more interesting for holiday with novel ancillaries. For instance, Navy may be packaged with bath salts rather than a scented lotion, and California for Men may be matched with a scented sun protection item.

New Dana has also had surprising success with its Love’s Baby Soft scent. To capitalize on the brand’s growing fondness among tweens, New Dana is expanding the concept with licensing deals for watches, bags and cosmetics. The collection will be merchandised together in a new display set for next summer.

“Retailers are clear with us,” said Wesley. “We need some excitement.”

Along with Target, CVS and Wal-Mart are starting to carry exclusive fragrance brands this year. CVS has expanded its Essence of Beauty brand with a collection of promotional scents this spring called Perennials and plans to come back this fall with a holiday fragrance assortment, according to Cheryl Mahoney, vice president, merchandise manager at CVS. At Wal-Mart, Rimmel — marketed by Coty — is expanding into fragrance with three scents slated to make their debut this fall.

Not all retailers with private label cosmetics are ready to jump into the private label fragrance game, however. Karen Durham, divisional merchandise manager for Duane Reade, said the marketing muscle needed to launch a fragrance is prohibitive. And while she has a soft spot for mass fragrance, she isn’t sensing a major upturn in her business. “Mass fragrance has been tough for us,” she acknowledged. Designer sales at Duane Reade have propped up with some new higher priced items, but mass scents have been “flat to down,” Durham said, highlighted by sales of Coty’s Club Med and several New Dana scents, which moved well at Christmas.

Two other developing mass fragrance companies are optimistic about their respective business plans this year.

Smell This, now owned by Quality King, and headed up by founder Jim Berard, has been revamped. The collection of novelty scents has been pared down from some 20 to a core six or seven scents which will be continuously updated. For retailers items are now available in countertop displays or carded. A .5-oz. spray has a suggested price of $3.50. “Fun is really what it [the brand] is all about,” said Berard, referring to items like Beach Smells and Killer Coconut. He says Smell This introduces a fresh approach to fragrance. “We want Smell This to deliver fun — to deliver aroma entertainment.”

With that in mind, Smell This is expanding fragrance to novelty items like scented Teddy Bears that can be used as key chains or hung in cars. Berard declined to comment, but sources predict retail sales could rise to $3.5 million this year.

Meanwhile, Larry Couhey, president of Revelations Perfume and Cosmetics Inc., is expanding its Truth fragrance brand with a men’s version in July. The 1.7-oz. eau de toilette is priced at $15. The same size aftershave is $12. Perfumer John Doyle at Wessel spent nearly a year creating the scent, said Couhey. Truth for Men is a blend of wild bergamot, clary sage and lavender with juniper, coriander and warm woods. It is finished with amber and white musk.

The firm is also expanding its women’s scent into bath with a lotion and a gel, each priced $12 for a 6-oz. size. And the brand will be doing more print advertising this year. With the new products and growing distribution, Couhey expects sales to climb from $3 million retail to $5 million.

There is also a new fragrance brand expected to hit stores this fall, according to John Devine, president of BeautyWorks, which is helping with the launch. But he declined to provide details.”