MILAN — The Italian selective perfumery market is in a serious slump — but you’d never guess from talking with a handful of the more successful retailers.
Several owners of small chains shrugged off data reporting an 8.6 percent downturn in volume for first semester 2002. According to Abacus figures provided by Fenapro — Italy’s national federation of perfumeries — categories took a beating across the board with alcohol-based products hit the hardest at minus 10.7 percent.
"It is the worst market in 30 years," said one top industry executive.
As for the other categories, skin care dropped 5.6 percent in volume for the semester, hair products slid 5.9 percent and makeup fell 9.9 percent. In April alone, volume of alcohol-based products were down 23.3 percent year-on-year.
Despite the grim outlook, and while global players like Marionnaud, Limoni and Douglas continue to gain force through consolidation, some smaller chains have been shaking things up, too. And they have remained brazenly optimistic.
"That may be true for the others, but not me," said Augusto Mazzolari, who owns the Milan-based Mazzolari and Olimpia Beauté chains, when asked about plummeting selective perfumery sales figures. "To confront the [market downturn], I personally have not focused only on business. My success is attributed to love of the profession."
"Not us. Maybe for the others," echoed Silvio Levi, president of Calé, a global distributor of niche brands such as Creed and Floris. According to Levi, Calé’s growth rate is 20 to 30 percent a year. "Wholesale sales were four times higher at the close of last year than for the year prior," he said.
In fact, Levi opened the Calé Fragranze d’Autore perfumery in Milan this past September and Mazzolari has been expanding at full tilt this year. Mazzolari opened three Olimpia Beauté doors — in Lissone, Biella and Milan’s Via Ripamonti — in May, and four more were inaugurated in November. The perfumeries, which target a sophisticated consumer, are separate doors located within the "Superstore Esselunga" mini-mall complexes. Esselunga is one of Italy’s leading supermarket chains. The concept superstores consist of not only the grocery store but also a restaurant and an electronics store."Where are there always a lot of people? In supermarkets," said Mazzolari, who also took over the three-door Liali chain in March. He estimates that each Olimpia perfumery, owned and managed with his brother Luigi, will ring in about $1.1 billion each per year.
Mazzolari is sticking to traditional Italian perfumery service: There will be four salespeople in Olimpia stores offering the personal touch upon which he bases much of his success. For example, some of his saleswomen — a few of which are in their 60s — have worked at his Milan locations for more than 20 years.
"In my opinion, the principal problem [with the Italian perfumery industry] is the total lack of personalization," he said.
Executives from Fenapro might agree. A recent edition of its Imagine trade magazine was devoted entirely to service, and one study found that in Italy, overwhelming percentages of customers ranked relationship with the staff as their number-one reason for store loyalty: more than 60 percent for national chains; nearly 80 percent for local chains, and almost 90 percent for independent stores.
Mauro Garino, manager of a 13-door chain in Milan owned by M&G Spa, was also unfazed by the depressed perfumery market. He, too, banks on personalized service and his tiny Via Amedei location — a dingy perfumery on a graffiti-covered Milan side street with little pedestrian traffic — had a steady stream of oddball customers on a Friday afternoon. That’s despite its minimal, outdated merchandising and windows featuring lone products placed haphazardly on filmy glass shelving. But sales were flying as dedicated saleswomen solved customer problems and offered behind-the-counter product suggestions. And judging from the deli-style "take-a-number" system, crowds must get unruly.
However, M&G has integrated its 13 doors under a new common branding and logo: Lively perfumeries. The company blanketed Milan with a print, radio and tram billboard campaign, but Garino refused to comment on strategy, costs or reasons behind the move. "We would like to have a more satisfactory result," he said flatly. With the new branding and store renovations, Garino expects "30 percent growth in sales at the end of 2003 compared to the end of 2002."Paolo Calvi, buyer for the department store chain Coin, said in early November that a series of initiatives, such as increased promotions and the clearing out of old merchandise, have caused a 21 percent leap in the chain’s fragrance sales since August. "It is a favorable period for us," he said. "Manufacturers have been investing more in in-store promotions and support."
Others, like the Ethos perfumery consortium, are focusing on marketing and retaining acquired customers to combat the crisis. Its Ethos Card, a consumer loyalty program, hit the ground in April and May of 2002 and now boasts 40,000-plus members.
Another reason for the collapsing sales, writes Fenapro president Pepe Giuseppe in Imagine, is the lack of "innovative proposals, both in terms of new products and in terms of new distribution policies."
An October report put out by Unipro, Italy’s National Association of Cosmetic Industries, claims the perfumery market has been "saturated" for some time. The study, released by its Centro Studi e Cultura d’Impresa, reported that the Italian cosmetics market was experiencing a net slowdown in its growth rate — forecast at plus 5.2 percent for the third quarter and plus 6 percent for the fourth. International markets bolstered the weak domestic market, according to Unipro, with exports expected to be up 15.1 percent year-on-year.
Specifically, Unipro’s research concluded that the "unstable" perfumery market is suffering from its difficulty to develop growth initiatives and "distribution-related tensions."
As for the market leaders, Marionnaud has been steadily beefing up the structure and employees at its Assago-based Marionnaud Italia Spa branch since its March 2001 founding. In its first 18 months, the chain snapped up 121 perfumeries here. Its most recent acquisition was in July, when it took over Colombo Spa and Le Profumerie di Sarzana, which operates 15 Idea Bellezza perfumeries in Liguria, lower Lombardy and Tuscany.
According to a Marionnaud Italia statement, the company’s goal is to be market leader in Italy within a three-year span. Currently, Limoni is number one, followed by Marionnaud with 132 doors, and Douglas is in third place with 82 perfumeries.
Others, such as Limoni and the Rome-based chain Koiné, are banking on the concept of an American-style superstore. Limoni opened a LimoniBest mega "experience store" in Milan in November 2001 and recently inaugurated another in Bologna. Here, customers may wander among makeup islands and shelves of perfume and are encouraged to touch, explore and try out products — without real sales pressure.Koiné management did not comment on sales figures. Executives from Marionnaud Italia and Limoni would not comment or return phone calls.
And Parkod Europe, a company that tracks prestige beauty sales data, is taking nonpersonalized service to another level: a computerized in-store information system, accessible to customers, that provides detailed product information by swiping a bar code. The firm’s sales force is sweeping through Italy with the product, called Parkod Image, and MSI Informatique (the information arm of Parkod). Sales executive Lucien Seca reported that the system is currently installed in 35 perfumeries in Milan, Turin, Florence, Naples, Rome and Parma. But while some perfumery owners — like Mazzolari — swear by personal service, others take cues from the location and clientele.
A saleswoman at the five-door Kami perfumeries, which are located in Turin and are a slower growth among the first to install the Parkod Image system, said customers in Turin are more reserved and don’t appreciate a pushy sales staff. "Computers have been present in our perfumeries for 10 years," explained Kami owner Maria Angela Neirotti. "Through these systems, the customer can receive product information and that facilitates the purchase. Today, given these stores’ larger sizes, the customer feels the need to roam freely."
The Limoni, Koiné or Parkod Image experience contrasts the personalized service found in perfumeries such as Mazzolari’s tiny shop on Milan’s Corso Matteotti, or Levi’s new "salon-style" perfumery.
"Too many customers would be damaging," Levi explained. "People sit, chat with the salespeople. The difference is the service. I don’t want everyone who walks by to come in."
To be sure, Levi had just one customer during the prime shopping hour, which he spent pointing out specialty products like an Edwin Jagger freestanding razor or Creed’s Cuir de Russie.
"The loyal consumer is the prince in this sector," he said. "What is important is the value of a single purchase. People who wear these perfumes don’t want others to know what they are wearing. They will instead say: ‘Go there, find one for yourself.’ When you choose a perfume here, it is like choosing an outfit. Look around. Maybe come back later. You will never see people at the door spraying perfume samples here. Forget it."
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