By  on June 30, 2006

NEW YORK — Along its road to recovery, the fragrance business is bracing for more speed bumps this fall, including the closure of 80 Federated Department Store doors this year.

But despite a succession of yellow caution signs — including lost store sales, rapid-fire launches and a flood warning for celebrity scents — The NPD Group has declared the fragrance business is turning a corner.

Total prestige fragrance sales increased a respectable 3 percent to $2.94 billion in 2005 — just shy of reaching $3 billion for the first time. Women's fragrance sales inched up 2 percent to $1.97 billion, while men's sales surged 5 percent, nearly hitting the $1 billion mark, according to NPD.

The consumer tracking firm forecasts that the industry can power additional growth by shifting gears to deal with the road ahead. Its suggestions include:

  • Connect: Create a rich history behind each scent and tell that story to the consumer, perhaps at the counter or through the Internet.

  • Relate: Appeal to consumers' individuality by customizing sizes or delivery forms, such as portable scents.

  • Excite: Put a new spin on purchasing occasions by billing scents as a great date fragrance, an empowering fragrance for a first interview or a lucky scent for meeting the parents.

  • Adapt: Tap into emerging forms of media — including satellite radio, text message alerts and podcast trailers — to get heard.
NPD stated that such "out-of-the-box thinking" is needed to succeed within a new set of realities. Modest sales gains far from mask the business' underlying ailments. By WWD's count a staggering 100 new fragrances are slated to hit the market between July and October. The sheer number of fragrances may succeed in driving sales volume, but unit sales are dragging far behind, according to industry executives. The consumer is finding it difficult to sort through the clutter, and the manic pace of new launches has single-handedly shortened fragrance life cycles, in the view of NPD, which noted that, on average, it takes nearly two women's launches to generate what just one fragrance achieved 10 years ago.

The Federated store closures will only exacerbate these problems.

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