Behind the Fragrance Slump
Several new reports from Mintel help put statistics behind the ongoing lethargy in the fragrance markets. Despite major celebrity after major celebrity announcing new scents (Taylor Swift and Justin Bieber this week alone), the category can’t seem to return to robust growth. Mintel’s most recent report points a finger at an aging population, who tend to buy less than younger shoppers in the mass market. The recession also is a major culprit to sagging sales, said Mintel.
The fact that scents are available at more doors also has diluted sales, the company suggested. The number of brands available at lower-cost outlets impacts sales. One trend not making a major impact, Mintel said, is the expansion of lower-priced private label fragrances. Sales of women’s fragrances in the food, drug and mass outlets are estimated to stand at $406 million in 2010, representing a 23 percent decline from 2005’s figures.
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Mintel measures the market in two sectors. The first is perfumes, colognes and body powders, a category that has declined to $295 million from $366 million. The other area is gift sets, which Mintel estimated has dropped to $111 million from $159 million in 2005.
The major fragrance houses have taken a hit with Coty Beauty losing $10 million in sales from 2009 to 2010.
Mintel claims older, baby boomer women are not as likely as younger counterparts to use fragrance and are less likely to try new products. Compounding this factor, while the population of women is expected to increase by 7.6 million in the U.S. within the next five years, the number of teens aged 12 to 17 — a key demographic — will only grow by 300,000.
Factors influencing women’s fragrance sales — such as price, celebrity endorsement or season — may be well known, but another study from Mintel reveals that the biggest influence may not be a fixed factor. Mood is now the most popular motivator of fragrance choice for women, as over half (54 percent) of female fragrance users decide what fragrance to use based on how they’re feeling. At second place, 31 percent of fragrance users say they decide which fragrance to apply based on their activity (work function vs. a personal outing).
Meanwhile, 26 percent of users decide based on the time of day and 25 percent decide based on what they’re wearing. Women over 45 are more likely to wear one fragrance, or a signature scent — so they’re less likely to base their choice on their clothing or mood. “Women in the 18 to 44 age range are more prone to change their fragrance based on a number of different factors, while over 45 are more brand loyal,” said Kat Fay, senior beauty analyst at Mintel. “This may be a result of these younger women juggling multiple activities and responsibilities with a busy work schedule. While they may deem a certain scent appropriate for the office, they might choose a more flirty scent for social functions.”
Motivations for fragrance purchase differ just as much as fragrance choice, but the clear favorite is in-store samples. Sixty-nine percent of fragrance users say they’re motivated to purchase a new fragrance based on samples they’ve tried in a store, while 26 percent cite a recommendation from a family member or friend as the impetus behind a new purchase. “Women have to experience a scent to make sure it’s appropriate, as there aren’t many objective criteria they can use to test smell,” added Fay. “Female consumers often say that a fragrance smells different on their skin than it does out of the bottle, so trying an in-store sample increases the likelihood that they’ll still be happy with their purchase once they get it home.”
This research can help retailers figure out a path back to profitability that perhaps engages younger fragrance shoppers, provides more samples at mass and makes fragrance shopping enlightening once again.
People, Places and Things
A few words with Alexandra Smith, Global Trends Analyst at Mintel about consumer trends for 2011.
WWDBeautyNews: What are long term effects on the economic crisis on consumers?
Smith: The effects of the global economic crisis have had long reaching implications and it is not just consumer behavior in the short term which was affected. Indeed, these consumer trends for 2011 are a legacy created by economics, but now gathering their own momentum and are set to influence the global consumer mind set for a long time to come. With a heightened sense of what economic collapse looks like thanks to the global recession, a renewed emphasis on prevention will drive consumers to think defensively. In the U.S., a third of consumers say they’re using debit rather than credit, and debit transactions are forecasted to rise nearly 60 percent between 2000 and 2010. Consumers want to know what they’re getting themselves into: No loopholes, no hidden costs and no pricey upgrades. So 2011 may see the need for brands to demonstrate how a product or service delivers long-term benefits or prevents problems down the road. Discounting is a new win battle against the internet. In the U.S., 35 percent said their choice of store is determined by special offers or discounts. In 2011, brands may need to get more creative to lure consumers into stores, offering more than just retail and be a venue, not just a shop. Service may extend into advice and demonstrations, while exclusivity and environment may also be key aspects to engage consumers with real life, not virtual, shopping experiences.
WWDBeautyNews: What new technologies will be important?
Smith: With smartphones becoming the dominant mobile force, QR codes and app technology will pique interest, provide portals into unique experiences and improve our quality of life. In the U.S., sales of smartphones grew 82 percent from 2008 to 2010. As consumers are empowered like never before, 2011 will see people take a deeper interest in where they are: From the city to a specific store. Geography and status can be redefined through retail, presenting savvy brands with an opportunity for increased location based services, promotions and solutions. To capitalize on consumer awareness of technology, brands will need to take QR codes beyond niche understanding, using it to explain and offer exclusive content. Rather than displacing our interaction with the physical, this technology has the potential to reinvigorate our relationships with brands, retailers and with each other.
What’s In Store
Gojo Reacquires Its Hand Sanitizer: At a time when consumers are hand sanitizer obsessed, Gojo has purchased its brand back from Johnson & Johnson.
Ho Ho Ho: Kohl’s and Walgreens are among the retailers going right from Halloween to Christmas. Holiday music filters through Kohl’s, while Walgreens has started putting out trim a tree in a season retailers are hoping will be the best in three years.