NEW YORK — The good news: the industry’s flood of new scents is luring customers to department store fragrance counters. The bad news: the gains are coming out of existing business, rendering the category virtually flat.
This story first appeared in the September 13, 2002 issue of WWD. Subscribe Today.
A number of top department stores are having a strong launch season, with nearly every new fragrance at least meeting expectations, but at the painful expense of the existing business. “It’s all about new, new, new,” said one leading store executive. However, even with a record number of major launches this fall, some retailers don’t expect the entire fall season to come out much above flat, including newness. That would mean the existing fragrance business could finish well below last year.
Early reports suggest that Chanel’s Chance has taken off like a rocket, so much so that Chanel is said to have escaped the curse of other established brands. Liz Claiborne’s Bora Bora and Glow by J.Lo have done solid business in some stores. Moreover, Ralph Lauren’s Polo Blue and T Girl by Tommy Hilfiger have shown early strength. Some retailers also expect a big showing from Calvin Klein’s Crave and Kenneth Cole.
Several launches that began their rollouts this spring — continuing now —?are also buoying business, including Vera Wang, Kate Spade and Marc Jacobs, said retailers.
Macy’s West, however, offers somewhat of an exception to the cannibalization effect. Elizabeth Morrello, senior vice president and general merchandise manager, said there has been a net gain — albeit not a “huge” one — for several houses, which have generated strong launches while maintaining existing business. She cited Chance and Chanel as a prime example but also ticked off Mania for Men and Giorgio Armani, and Intuition for Men and Estée Lauder. “We are very, very encouraged,” she said. “We have a feeling we will have a good fourth quarter.” Morrello noted that last fall the bulk of the store’s launches were nullified by the 9/11 attacks. This year, the vendors took pains to avoid the fallout from the anniversary. The San Francisco-based chain has already logged strong launches from Armani’s Mania for Men, Vera Wang and Lauder’s Intuition for Men. The launch of Calvin Klein’s Crave has just begun, but Morrello said indications are that it will do very well.
Jon Pollack, executive vice president and general merchandise manager for cosmetics, accessories and shoes at Belk’s, is carrying a number of this year’s launches. “On the ladies’ side, Bora Bora from Liz Claiborne Cosmetics has gotten off to a very strong start, and Chance from Chanel has been spectacular so far,” Pollack said. “Also, numbers for Tommy Hilfiger’s T Girl have been very good and our early reports on Glow by J.Lo are very good. Our early reports regarding younger consumers, in particular, have been very positive about Glow.” He’s also looking forward to Belk’s upcoming launch of Kate Spade’s fragrance. However, Pollack calls the women’s scent business overall “still a struggle.”
Business on the men’s side is currently trending stronger than women’s, Pollack noted, with mid-single-digit increases driven by newness. “Intuition for Men continues to be very strong, and Armani Mania for Men, which we have just launched, has been excellent — I think that’s going to be a star for us this fall,” Pollack said. “Bora Bora for Men has also been doing very good business —?that masterbrand is doing very well at both the men’s and women’s counters.”
New arrivals at Belk’s —?falling in the “too early to read” category —?include Ralph Lauren Polo Blue and the Kenneth Cole masterbrand, Pollack said. “Our early read on Ralph Lauren Polo Blue is great, but it’s very, very new for us —?it’s only been on-counter a week. Kenneth Cole isn’t yet in store for us, but will be very soon,” he said.
While new brands are creating a buzz at counter, Pollack noted that some of that buzz is coming at the expense of existing brands. “Some existing brands are taking some hits, but it’s hard to evaluate right now how much of one,” Pollack said.
Pollack believes that the strongest selling point for new scents is “a great juice and a strong concept.”
“The scents that are doing best for us have both great juices and great concepts —?Chance, Bora Bora, Mania,” he said. “A designer name doesn’t hurt but it isn’t the only part of the equation. The consumer wants a great juice first, and also a good story.”
To drive traffic to counters, Belk’s is stepping up its sampling campaigns this fall, as well as featuring more personal appearances. “We’re doing some innovative sampling campaigns, as opposed to just blotter cards,” Pollack said. “We’ve also got Kate Spade coming in to do a public appearance for her fragrance, and Oscar de la Renta is coming in for Intrusion.”
How will the fragrance races play out this fall? “I think that we’ll know pretty soon —?say, within the next 30 days — if we’ll get a bounce [in numbers] this fall. If we have a bounce this month I will be optimistic for holiday, but it is a very difficult business right now.”
Currently, three scents in Belk’s men’s top 10 are new entries, noted Pollack. “Season to date, since Aug. 1, Intuition for Men, Mania for Men and Bora Bora are ranking powerfully in my men’s numbers,” he said. The two women’s juices that Pollack believes will crack the top 10 this fall are Chance and Bora Bora.
Pollack sees the youthquake at fragrance counters as a “logical extension of demographics.”
“There’s been a demographic shift, and I think that we’re seeing a reflection of that in the industry,” he said.
“We love the extended selection of fragrances for men for this fall and holiday season, especially fragrances like Polo Ralph Lauren, Blue and Kenneth Cole that talk to men in their late teens,” said Dale Crichton, executive vice president of cosmetics for Nordstrom. “Some of the outstanding successes for the spring season have been Vera Wang, Marc Jacobs, Sexy Graffiti and Kate Spade. All of these brands have a little attitude and lifestyle message that appeals to a broad range of our customers.”
Looking forward to holiday, Crichton is looking to specialty fragrances to produce big business for the department. “For the holiday season we’re excited about some of our exclusive and limited distribution scents such as Façonnable Homme, Hervé Léger, Issey Miyake Night, Flower by Kenzo, Roberto Cavalli, Alessandro Dell’ Acqua and Valentino Gold,” Crichton noted.
Macy’s East in New York is having a good launch season, with the new fragrances living up to expectations. But that success has come at a high cost — “a significant erosion of the existing brands,” according to Micheline Jordaan, vice president and divisional merchandising manager of fragrances. As a result, “there’s no growth in the category. Things are flat,” she said, describing the erosion as a “disappointment.”
“The customer is responding to newness and fashion,” Jordaan said, adding that, “we’re pretty pleased with the performance of the new brands.”
Among the new launches that Jordaan rated as ranging from “very strong to successful,” were Chanel’s Chance, Giorgio Armani’s Mania for Men, Glow by J.Lo, Ralph Lauren’s Polo Blue and Liz Claiborne’s Bora Bora.
She is looking forward to the launch of Calvin Klein’s Crave, which “we think will be huge.” Jordaan also said she expects Christian Dior’s Addict to sell well. Elizabeth Arden’s Forever Elizabeth, the new Elizabeth Taylor fragrance, is also expected to do well.
“The problem is how to stabilize the erosion of the existing business,” Jordaan pointed out, adding that the second factor that the consumer is responding to is “value at point of sale.”
When asked if this will mean a proliferation of gift sets when the Christmas selling season gets under way, Jordaan said the trick will not be in increasing the width of assortment as much as the depth in having “the right gift sets.”
Vera Wang’s signature fragrance and Chanel’s Chance are the two frontrunners among a field of scents that have made Saks Fifth Avenue’s fragrance business “strong,” according to Deborah Walters, the retailer’s vice president and divisional merchandise manager of cosmetics and fragrances. The two are in “a little race” right now, she quipped.
After launching in February, Vera Wang ascended to the top spot among fragrances at Saks, setting sales records along the way. “Vera Wang has been a phenomenal success [and] it continues to be fantastic,” Walters said. “It’s by far our number-one launch in the history of Saks.”
But, even before its launch, Chanel’s Chance broke into the top five at Saks. “The pre-sell was fantastic,” Walters said. “We just have an incredibly strong Chanel business. That’s got the buzz currently.”
The retailer also has high expectations for Gucci Eau de Parfum, the house’s new women’s fragrance. Saks has a launch week planned for the scent later this month. “We’re very anxiously awaiting Gucci,” Walters said. “They will be one of the top contenders for fall.
“We’re also excited about Donna Karan’s Black Cashmere,” she said, adding that four Dior fragrances — Dior Essence, Miss Dior, Diorissimo and Diorella — available in Europe, but exclusive to Saks in the U.S., are seen as “a big opportunity.”
The fact that the same designers featured throughout the store also have a presence at the fragrance counter appeals to Walters. “Synergistically with what Saks is all about — powerful designer brands in the current mix of the business — we think Black Cashmere and Gucci will do well,” Walters said. And when it comes to deciding which fragrances are right, this synergy plays a big part. “It’s definitely taken into consideration — the designer brands that are strong in Saks Fifth Avenue.
Customers are also looking for points of difference, Walters noted. For this, she carries what she likes to call “boutique brands.” Walters is enthusiastic about Cabaret, a scent from Parfums Grès, and L’Or de Torrente, a fragrance from couturier Rose Torrente-Mett. Also, Saks is experiencing “a very nice performance” by Quel Amour from Annick Goutal. “That ranks in our top 10,” Walters noted.
Offerings from Hermès, Trish McEvoy, Sisley and Jo Malone are also performing well, according to Walters. “These are boutique brands but [they] also [represent] volume in our top 10,” she remarked.
One of last year’s scents, Dolce & Gabbana Light Blue, “is excellent this year,” Walters said.
Highlights on the Saks’ men’s side include YSL’s M7 and Marc Jacobs for men.
Given the strengths from the spring and bright expectations for fall launches, Walters faces the rest of the year with optimism. Adding caution to this feeling, however, are factors that can’t be ignored, such as the potential influence of the Sept. 11 anniversary on retail sales and the fact that Thanksgiving falls so late in November.
“I’m cautiously optimistic that we’ll continue to have a strong season in fragrance,” Walters said. “We have a really well-balanced portfolio right now” with classics, designer fragrances and “boutique” scents. “I’m counting on all these and all groups are performing.”
Alanna McGowan, fragrance buyer for Barneys New York, is seeing strong sales from her new additions, which include several new Frederic Malle fragrances and two new scents —?Ambre Extreme and Patchouli Patch — from L’Artisan Parfumeur. “Chanel’s Chance is also doing quite well for us, and it’s rebuilding the awareness of Chanel brand to the younger consumer,” she said. “That was a brilliant concept on Chanel’s part. We’re also looking forward to Annick Goutal’s Quel Amour and three new scents coming from Comme des Garçons, an amber, a vetiver and a citrus, that we think will do well. Our bestsellers these days seem to be very warm, comforting scents. And for us, the new scents are proving to be add-on business — they’re not taking away from what we already have.”
Shashi Batra, senior vice president of merchandising at Sephora USA, noted that Stila’s new fragrances, Creme Bouquet and Jade Blossom, are at the top of Sephora’s sales charts. “They are going to triple the original projections,” he said. “They are doing the best by a long shot and are creating a buzz in the stores.” The scents are being sold with single-note body lotions that allow consumers to intensify notes in the scents. “The fragrances are selling better than the lotions — it is a complete concept,” he said. “Stila really thought strategically about what they were doing.”
Chance is also at the top of Sephora’s sales lists. “We weren’t taking a chance when we decided to carry it, because it’s targeted at our type of consumer — a younger prestige customer,” he said. “The fragrance jumped into the top five right away.”
Other winners at Sephora include Kenneth Cole, Marc Jacobs and Michael Kors, with Glow by J.Lo close behind. “I am betting on Kenneth Cole to be in the top three or four,” Batra said. “Kenneth will do a huge amount of business. Marc Jacobs continues to be in the top five and Michael Kors in the top six or seven — it has seen double-digit same-store sales growth. Glow by J.Lo broke into the top 10 last week and I think it will bring in a new customer. There is a lot of interest.”
On the men’s side, Batra is bullish on Calvin Klein’s Crave, Armani Mania, YSL’s M7, Roberto Cavalli and Marc Jacobs. “In the men’s category, we are excited about Crave because it is a new product and targets a whole new market,” Batra said. “It will be synergistic with who the client is. They have gone beyond putting it in a package and saying ‘it’s young.’ Armani Mania has become number two for us in men’s fragrance. YSL M7 should be interesting to watch and we are putting a lot behind it. Roberto Cavalli is coming in October and targets a customer in their mid-30s or an aspiring one in their 20s. We are also carrying Marc Jacobs men’s fragrance; the women’s is in the top five, so we expect the men’s to do the same.”
Designer fragrances tend to trend well at Sephora, Batra said. “Our top 10 brands are designer brands, such as Bulgari,” he said. “So Kenneth Cole and Marc Jacobs are natural for us.”
Overall, Batra’s looking for a decent fall selling season. “Beyond the new launches, the classics are doing well. Issey Miyake has seen continued success, and we have been selling Hanae Mori since 1999 and have continued to see double-digit increases,” he said. “And Acqua di Gio is a classic that rolls on and on.
“Our existing brands are growing and new fragrances are coming in. With our existing brands, we will see some trading of sales. The outlook for this season for us is that the category will see a lift, but the question is: Will the new scents cannibalize the existing one? Business took longer to come back this year, but I think this year’s fourth quarter will surpass last year’s.”
At least one retailer has refused to subscribe to the “new-is-better” mantra. Laura Saio, merchandise manager for cosmetics and fragrances for Henri Bendel, said, “We are not planning to introduce anything [new in fragrances] this season….Classic fragrances, like Fracas, will drive the business. We will continue to sample in innovative ways — for one Laura Mercier event, we are mailing a deluxe mini bottle to our clients for them to bring back to be filled with Laura Mercier’s fragrance — and we are bringing in Sarah Horowitz in October to do a personal appearance for us. We also have Santa Maria Novella’s entire line of fragrances, and Calypso’s Mimosa and scents from Trish McEvoy and Laura Mercier are doing well. For us, it is about being unique and carrying hard-to-find fragrances.”
On the mass side, retailers remain cautious.
“Last year was a tough one for fragrance because of 9/11. We hope it is better this year. Of the new launches, Coty’s Club Med is off to a good start,” said Karen Durham, divisional merchandise manager for Duane Reade.
“Shoppers are looking for reasons to stay out of stores. It makes it harder to get impulse sales on fragrances,” said George Rosenbaum, chairman of Leo J. Shapiro and Associates.