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Securing the Impulse of Prestige Fragrance

NEW YORK -- To expand a prestige fragrance business that is largely dependent on seasonal surges, mass market retailers are out to remove the glass barrier between shoppers and scents.<BR><BR>Prestige items have been a boon since their advent in the...

NEW YORK — To expand a prestige fragrance business that is largely dependent on seasonal surges, mass market retailers are out to remove the glass barrier between shoppers and scents.

Prestige items have been a boon since their advent in the mass market a few years ago. But early on, it became apparent that much of the movement of pricier scents wasn’t due to sales; instead, scan data helped reveal, many of the bottles were being pilfered.

The result was the securing of more expensive fragrances under lock and key, a situation that has all but eliminated impulse buying. For the last two seasons, the vast majority of prestige sales were done during the Christmas period, retailers noted.

Now some of these retailers are looking for safer ways to bring the fragrances back out from under glass in the hope that greater accessibility will create a year-round market.

“We need a fixture or a way to inspire sales of prestige scents throughout the year, rather than just at the holidays,” said Naomi Germano, a buyer for Harmon Discount Stores of Cedar Grove, N.J.

Target Stores, based in Minneapolis, is experimenting with putting small groups of prestige fragrances in countertop displays. PayLess Stores, based in Wilsonville, Ore., promotes a “fragrance of the month” with a tester and a few boxes on the counter.

Genovese Drug Stores of Melville, N.Y., also has unlocked some higher-end fragrances — including its own fragrance of the week — to encourage sales.

“With roughly 40 percent of purchases in the chain drug business being impulse, putting fragrances under glass drastically cuts the sales potential,” said Gretchen Cuzydlo, senior vice president of marketing for the Miami-based French Fragrances Inc., a distributor of scents such as Salvador Dali.

Still, while buyers agreed that moving fragrances out in the open can drive sales, some feared that the risk of shrinkage was too high.

“We have to keep fragrances under glass because of theft,” maintained Steele Balkunas, buyer for Ike’s in Memphis.

Retailers like Ike’s are searching for ways to keep scents out of reach while taking steps to encourage more customers to buy them.

Revco D.S., based in Twinsburg, Ohio, has a special fixture featuring columns where testers can be placed. If shoppers take an interest in a fragrance, they can hit a buzzer to summon a sales clerk to the counter.

Rite Aid Stores, based in Camp Hill, Pa., has installed a similar system involving a bell.

Still, some retailers think these techniques don’t do enough to remove obstacles to sales. They want ways to put the products out without fear of theft, and they are turning to vendors to install antitheft devices at the manufacturing or distribution level.

“Cosmetics and fragrances sell better when they are out from under glass. Manufacturers want to get their products out into the hands of shoppers,” said Dave Shoemaker, director of business development at the Thorofare, N.J.-based Checkpoint Systems, a firm that markets security systems. “That’s creating interest in electronic surveillance and the tagging of products to prevent theft.”

French Fragrances is one manufacturer that is already working to halt pilferage, according to Cuzydlo. For the last six months, the company has been putting devices on all its shipments.

Although her company’s retail accounts use different security hardware, Cuzydlo said each shipment receives the tag appropriate for the individual retailer’s system.

“We have packaging instructions [listed] by account in our computer system,” she said.

Although she said it costs less than 10 cents to tag each item, Cuzydlo said manufacturers won’t be able to shoulder the entire cost of affixing the antitheft devices.

“There is a fear to come out from under glass,” she said. “The only way to do it is for manufacturers to share some of the cost with retailers. Source-tagging is a step in the right direction.”

Others are sure to follow Cuzydlo’s lead. Some leading retailers, including Wal-Mart Stores, are now insisting that vendors install some sort of security protection.

Meanwhile, some chains, including Revco, Happy Harry’s of Newark, Del., and Harco Drug of Tuscaloosa, Ala., have purchased their own security devices and are applying them at store level.

Revco, for example, tags products priced over $5 that are sold in what have been identified as high-pilferage locations.

Harco uses three different security systems, according to James Harrison 3rd, president of sales. Instead of tagging every item in a department, the chain randomly affixes a security device. Every fifth item in cosmetics, for example, is tagged.

Beyond guarding against customer theft, retailers said they also need the security devices to halt internal theft. According to research from Coty Inc., as much as 52 percent of stolen fragrances are snapped up by store employees.

Efforts will also be aided by a decision reached by the National Association of Chain Drug Stores to condone one form of electronic article surveillance. NACDS is currently studying the options.

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Buyers were vocal about the problems of returned and repackaged merchandise during the recent Chain Drug Marketing Associates meeting in Orlando, Fla.

The continuing lackluster mass market sales picture, coupled with the gripes over returns, is nudging a barter system into the beauty picture, according to Mark Goldsmith, president of Inventory Management Systems in New York.

Goldsmith, a former executive with Shiseido and Revlon’s Almay division, absorbs merchandise from retailers and manufacturers that either isn’t selling or has been repackaged.

“One company decided to repackage its entire makeup line. The plan was to mark down the existing packaging to half-price and then have whatever was left after six months be returned to the manufacturer’s warehouse,” said Goldsmith. “We suggested the merchandise be bartered and we were able to clean out their warehouses.”

IMS then found other retail outlets, such as the network of closeout retailers across the U.S., who wanted to sell the merchandise.

In return for the products, IMS worked with the vendor to develop a spot radio campaign to be run in 30 top markets.

In other cases, the company has taken on merchandise that hasn’t sold and products that have been discontinued.

“With returns such an issue,” Goldsmith said, “it is good for manufacturers to know there are ways to handle excess inventory in which everybody wins.”