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Fragrance is Down, but Hope Remains

Industry experts gathered for a panel discussion at the French Institute Alliance Française for the Fragrance Foundation's Fragrance Forum 2015.

“Fragrances have been growing at about four points less than the rest of the market, and there’s something we need to crack there.”

This admission, made by Alexandre Choueiri, president of international designer collections at L’Oréal Luxe USA, was echoed by fellow industry experts on Thursday night at the Fragrance Foundation’s Fragrance Forum 2015, held at the French Institute Alliance Française. This year’s panel included Daniel Annese, global president of Aramis and designer fragrances at the Estée Lauder Cos.; Linda G. Levy, the omni group vice president of fragrance at Macy’s, and Jerry Vittoria, North American president of fine fragrance at Firmenich. Editor in chief of Allure Linda Wells moderated.

Despite slow category growth, the panelists remained optimistic that sales in the fragrance industry will recover, and offered insight on how to get there. Wells kicked off the discussion by asking where the primary opportunities in the fragrance industry are. Annese emphasized the importance of the ultra-prestige category, which includes artisanal brands like Creed and Le Labo and luxury scents from high-end designers like Tom Ford and Chanel. He said the ultra-prestige category is poised for growth in both North America and emerging markets — especially in Asia. “A lot of these customers are brand-new to the prestige category and the first thing they buy is fragrance,” Annese said.

Choueiri was quick to agree about the importance of ultra-prestige, noting that consumers want customization, and they can find it in the top range of the market. “People don’t want one-size-fits-all anymore, and it’s not going away. Customers want something more special, and we’re going to have to listen to them,” he said.

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While Le Labo offers a bespoke experience via customizable labels, Levy noted that Tom Ford’s extensive fragrance line is a prime example of customization without personalization. “It’s a good experience for the customer. The [sales associates] take you through the juice and you understand,” Levy said. “All of my clients are trying to bring some sort of storytelling in.”

Annese agreed that strategic storytelling is key for fragrance launches, citing the success of Lauder’s Tory Burch fragrance as a prime example. Lauder’s fragrances typically penetrate online somewhere between 5 and 7 percent, but Annese said Tory Burch Eau de Parfum did six times that, and remains the fragrance with the highest online sales volume in the company’s portfolio. Why? An online video campaign featuring Burch speaking directly to her customers proved a good sales pitch. “The way she speaks to her customer about her clothing and her collection — she did the same thing for her fragrance,” Annese said.

Annese also emphasized the importance of storytelling in capturing the Millennial audience, an obvious key growth focus, and used Lauder’s Modern Muse campaign with Kendall Jenner as an example. Since the Modern Muse launch, Annese said Jenner’s social following has more than doubled. “When we look for people to represent our products and our fragrances, we want to make sure they have that social content, and we watch how quickly it’s growing,” he said.

I meet people all the time who say ‘I wear the Kendall Jenner fragrance,’” Levy chimed in.

The retailer agreed that storytelling and customization are key marketing factors imperative to increasing fragrance sales, especially when it comes to marketing to whom she said is the hottest customer base right now in the U.S. market — Latinos. “[The Latino] is the customer that you need to attract [and] that I need to sell if we will ever have success in the business,” Levy said. “If you look at the compilation of people buying fragrance in Macy’s and in the U.S., it’s all about the Latino customer.”

Vittoria agreed, and said that marketing strategies will need to evolve to cater to the Latino customers, who are eager to shop for scent. “We understand that [they] use fragrance in a very different way than [Americans]. Fragrance is a tool of self-expression. They want to stand out. We need to focus on them and give them what they really want,” Vittoria said.

Another way to gain traction with Latino customers is to introduce more intense variations of traditional fragrances, which Levy said is a trend she’s seen with her clients at Macy’s. One example is Ralph Lauren’s Polo Red Intense, which launched this year.

“Without the Latino customer, we cannot succeed in the U.S.A.,” Levy said.