By  on September 9, 1994

NEW YORK -- Mass market retailers are looking to their fragrance vendors to play Santa Claus this Christmas.

Many chain store executives hope promised spending by fragrance manufacturers will raise sales over last year's mediocre levels. Estimates are that more than $70 million will be spent to advertise and promote mass market fragrances this year, twice that allocated for 1993.

"It will be the first time in years that big money will be spent against fragrances," said Carol Allman, director of merchandising for Jack Eckerd Corp. of Clearwater, Fla.

Buyers said they are setting their goals for 10 percent increases, compared with increases of 6 to 8 percent last year.

Same-store sales, however, are expected to be held to 6 to 8 percent this year.

Retailers hope the Christmas spirit will lift fragrance sales out of the doldrums.

"There's no question there is a sluggishness out there," said Allen Nehman, senior vice president of merchandising for The Cosmetic Center Inc. in Savage, Md.

"There has been a lot of bad news, and the economy is impacted by attitudes," said Nehman.

Despite the parsimonious mood, Nehman is optimistic that purse strings will loosen as Christmas approaches.

Christmas falls on a Sunday, and he said he hopes the additional shopping day will push sales ahead of 1993's.

"There's something about Christmas that even if shoppers start late, they get in the mood -- you can't shirk giving to family and friends," Nehman said. "Christmas sales have come late the last few years, and we expect the same this year."

Mass market retailers' hopes of double-digit Christmas sales gains were dashed in 1993 by aggressive discounting at department stores, as well as stepped-up efforts by off-price retailers to sell prestige scents.

Sales gained 6 to 8 percent at most mass outlets.

After three years with few new fragrances, buyers have an arsenal of fresh mass scents this year.

Buyers singled out only one new contender as a sure bet, however.

"I think Coty's Longing will stand out this Christmas," said Penny Wade, category manager for Harco Drug in Tuscaloosa, Ala.According to buyers, Coty has consistently delivered winning fragrances; last year's Vanilla Fields dominated sales.

"Vanilla Fields was the success story of 1993," said Eugene Applebaum, chairman of Arbor Drug in Troy, Mich.

Buyers expect Longing to lead sales this year, along with Coty's Vanilla Musk, a spinoff of Vanilla Fields.

"We think it will augment sales of Vanilla Fields," said Naomi Germano, buyer for Harmon Discount Stores. "It appeals to a different customer."

Added Nehman, "The odds are with Coty."

Among the other scents vying for consumers' Christmas money are Revlon's Fire & Ice and Charlie Red, V by Vanderbilt from the L'Oréal cosmetics and fragrance division of Cosmair Inc., Del Laboratories' Naturally Vanilla, Timberline men's scent from Mem Co., Lady in Red's Beautiful Lady, Frederique from Hydrotech Laboratories and Navy White from Procter & Gamble.

After several years of disappointing fragrance launches, retailers are counting on Revlon to deliver with Fire & Ice.

A host of scents is being revitalized for the mass market, including Aviance, Cachet and Wind Song, now owned by Parfums de Coeur. Jean Philippe Fragrances Inc. has acquired the trademarks of Chaz and Intimate. The Parfums Parquet brands are now owned by Renaissance Cosmetics. Je Revien is marketed by Atlantis International.

A provocative TV commercial for Aviance is receiving rave reviews from retailers, who think the spot will lure customers into the stores.

The commercial features a woman who meets her husband at her office after work and opens her trench coat to reveal that she is dressed only in lingerie.

"The commercial is hot," said Allman.

Prestige fragrances supplied by secondary sources will again play a key role in Christmas mass market sales.

Buyers said there is a more plentiful supply this year of just about every department store scent, with the exception of some stockkeeping units from Esteé Lauder and Calvin Klein Cosmetics.

Recent store checks revealed healthy quantities of everything from Elizabeth Taylor's Passion to Christian Dior's Poison, from Ralph Lauren's Safari to Elizabeth Arden's Sunflowers.

Rite Aid Corp. of Harrisburg, Pa., only recently entered the secondary-sourced fragrance business, but is doubling its commitment to the category in several of its busiest stores.In addition, Kmart will once again advertise its prestige scents, based on its success last year, said a spokeswoman for the discount chain.

Industry experts estimate that prestige scents produce roughly 20 percent of Christmas fragrance volume for mass chains that have been selling the better-priced lines for a number of years.

There's a new wrinkle to luxury scents this year. The Opportunity Group of Ronkonkoma, N.Y., has signed distribution agreements with houses such as Givenchy for fragrances that are not in significant department store distribution, as well as for special sizes and sets of fragrance miniatures.

Retailers said Opportunity is producing special sizes of the prestige scents that can be offered at sharp prices and not directly compete with department store lines: a 0.33-oz. Liz Claiborne spray, for example -- not sold in department stores -- that can be sold for $9.99 to $11.99.

"The whole designer fragrance arena is changing, and we see this as something that helps our business," said one drugstore buyer.

"It is a form of paid sampling," said Dennis Schnur, president of The Opportunity Group. "People get to try the fragrance and then may buy a larger size and the lotions or shower gels in the department store."

Neil Katz, president of the cosmetics division of Liz Claiborne, said that for the last four years the company has been selling the small sprays to a variety of retail channels outside department stores, beginning with dress shops, to spread consumer awareness. In department stores, the sprays are given away as part of a value set.

"It's paid sampling," agreed Katz, who added that Claiborne has no exclusive contractual relationship with Opportunity Group. However, Katz said he knows Schnur, who apparently buys merchandise from Claiborne, as well as other sources in the market.

Despite the popularity of prestige scents, buyers warned that price points will still be an issue.

"We're still cautious because $10 is still pretty much the magic price point," said an owner of a franchised Drug Emporium store.

Alternative designer scents, or knockoffs, are also expected to generate volume this Christmas."We're doing well with Designer Quality Impressionists," said Rita Singh, a cosmetician at McKay Drugs in Manhattan. "People are even giving them as gifts."

A cosmetician at Revco's store in Hudson, Ohio, agreed.

"We really see movement on knockoffs around Christmas. I don't know if more people are wearing them themselves or buying them as gifts."

Retailers also expect more customers to shift from traditional fragrances to bath and aromatherapy products as gifts.

"The customer is willing to put together a basket of bath items as a gift," Allman said.

Nehman at The Cosmetic Center said his chain of 62 stores has been merchandising bath and body care products as gifts for the past two years.

"I think fragrance is sometimes viewed as a personal choice, where bath and body can be a safe gift choice," he said.

Executives at several chains said the bath gift collections are more appealing than those liner extensions from the major fragrance houses.

Despite the increased spending behind fragrances this year, buyers lamented that there was little creativity in promotions or gift sets.

"We're buying the same amount of gift sets this year," Wade said. "There wasn't anything unique, and I think manufacturers are being cautious. They are not willing to be creative."

Retailers said they wrapped up Christmas buying plans before June -- earlier than ever. Merchandise was delivered to their warehouses last month.

For the most part, however, retailers said they don't plan to push the season by putting merchandise on display earlier than they did last year.

Most store executives said their stores will be fully set up for Christmas by mid-November.

While other chains are holding back, McKay Drugs got the jump on Christmas with the opening of its new store on Third Avenue near 21st Street in mid-August. Special gift boxes, adorned with ribbon and called giftables, are merchandised near the fragrance counter. They contain Max Factor's Le Jardin and California fragrances for men and women.

McCrory Stores of York, Pa., is expecting a new emphasis on fragrances -- including more in-store displays and Christmas decorations -- to produce a far more robust business than during the sluggish 1993 holiday season, according to buyer Billie Carpenter."We have a very nice Christmas program in place," she said. Gift-with-purchase promotions, used successfully in the past two years, will again be promoted by drugstore and mass discount chains.

Harco, for example, will offer two different gifts by International Silver with different purchases.

Walgreens will offer a free 6-oz. body lotion with the purchase of a 3-oz. spray cologne of any of the five different scents offered by Fragrance Impressions Ltd. Walgreens will promote the gift-with-purchase in newspaper ads breaking in November.

Throughout the mass market, promotional tactics this Christmas will range from glossy gift guides to direct mail promotions.

"We'll also be using radio in the fourth quarter," noted Nehman. "With more and more stores selling the same product, you have to figure out what influences shoppers to go to one outlet over another -- that's the challenge."

The Cosmetic Center will also get a boost by adding new stores during the Christmas period. Five new units will be up and running, bringing the store count to 67 by the end of the year.

Mass market retailers are particularly concerned about department stores' plans for Christmas, especially after last year's value blitz by prestige retailers.

"We expect department stores to be aggressive again this year," said Nehman. Drug and discount store retailers agreed they expect department stores will continue to close the price gap this Christmas with reasonably priced gwp's and sets of miniature fragrances.

"You could get a great gift for under $25 at department stores last year," said Steve Lubin, divisional merchandise manager for Walgreens in Deerfield, Ill. "It is tough to compete against that."

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