NEW YORK — Revlon's momentary honeymoon with department stores is over.
Six months ago, Revlon saw the department store fragrance business as a strapping white knight, capable of hoisting its mass market brand back into the world of glass counters, marble floors and high glamour.
Now, disenchanted with the business, the company has postponed plans to reenter department stores until 2007, citing a need to focus on mass market brands.
Revlon had planned to plough its way back into the category this summer after more than a decade's absence, armed with an advertising and promotional war chest of as much as an estimated $25 million. But when it comes to the fragrance market, even the best laid plans are vulnerable to change.
As Revlon learned all too painfully, things have changed in the market while it's been gone.
The industry — once predicated on longevity — has evolved into a rapidly changing cycle of one-hit wonders. A decade ago, a successful fragrance typically had a seven-year lifespan in department stores with sales rising in the first three years and tapering off in the next four. Today, a "hit" sticks for little more than a year before sales are crimped by new competing entries and the original is relegated to the mass market. It's become a game of market share, and the game has stunted overall sales growth.
In fact, industry experts warn that the rising tide of fragrances is eroding profitability. In 1997 — the year scents like Acqua di Gió for Men by Giorgio Armani and Gucci Envy made their debut — department stores cleared room for 40 new scents, which fueled sales of 78 million units that year, noted Jack Wiswall, the outgoing president of the Designer Fragrance Division of L'Oréal USA, a business that includes Giorgio Armani and Ralph Lauren fragrances. Wiswall added that last year, despite taking in 150 fragrances, department stores sold 58 million units.
The size of the fragrance business has remained stagnant at $2.9 billion, almost level with 1997 sales of $2.8 billion, according to The NPD Group.
Industry consultant Allan Mottus noted that a decade ago, women's fragrance sales accounted for 38 percent of department store beauty sales. They have dropped off to 28 percent. "It's become a PacMan game, where each launch gobbles up the brand's existing fragrance sales," said Mottus.
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