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Fragrance’s Latest Antidotes

At a panel discussion hosted by The Fragrance Foundation, retail executives exchanged ideas about how to spark meaningful growth in the prestige market.

Fragrance sales inched up in 2010 after a double-digit decline the prior year, but a roaring comeback continues to elude the industry.

And while overall fragrance sales gained 1 percent last year, units sold declined by 10 million, said Pamela Vaile, president of Pamela Vaile Associates, citing data from The NPD Group. “The category continues to struggle,” said Vaile during a panel discussion she moderated on Wednesday called “Reset and Recharge,” hosted by The Fragrance Foundation. Vaile, together with four panelists, exchanged ideas for how to help usher in meaningful growth.

The topic of declining fragrance sales in the prestige market — despite a soaring number of launches each year — has vexed beauty executives for years.

“We have been talking about this for five years. It’s time for someone to have the guts to do something,” said Frederic Jacques, vice president of fine fragrances, North America, of Mane USA. “We’re basically converting it into a mass market, and now we have to deal with the consequences,” which he said were a lack of exclusivity and uniqueness. “It’s time to change the model.”

The retail executives on the panel — namely, Laurie Black, executive vice president, general merchandise manager of cosmetics for Nordstrom Inc., and Allison Slater, vice president of retail marketing for Sephora — said they both recently took a hard look at the fragrance category and consumers’ expectations.

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“She told us that the number one reason she buys a fragrance is to replenish,” said Black. Fellow panelist Don Loftus, president and chief executive officer of P&G Prestige Products in the U.S., said that finding marks an opportunity to “rebuild the classics.” At present, he noted, space and visuals tend to go to the new launch of the week.

Nordstrom’s survey also indicated that the second reason a shopper buys fragrance is that she received a free sample, liked it and came back to purchase a full-size bottle. The discovery prompted Nordstrom to restructure its selling process on the floor. Now, after a shopper smells a scented strip, she is handed a sample. “We don’t wait until the point of sale,” said Black.

Sephora has successfully put its spin on sampling with its Sephora Favorites program, which groups together generously sized samples from various brands. The Deluxe Fragrance Sampler For Her, billed as a $100 value, includes 10 scent samples and sells for $50. It also includes a coupon to receive a full-size version. “It’s been very successful,” said Slater. “This allows [customers] to get the fragrance they want” during the holiday gift-giving season. She added that, several years ago, Sephora noticed that customers were not buying as many full-size fragrances. With that insight in mind, it worked with vendors to create smaller roller ball scents that retail for around $15 to $20. “They allow clients to think about fragrance as an accessory,” said Slater.

As with most discussions on fragrance, talk turned to the role of celebrities. “Celebrity is important to build a brand. It does give an instant awareness and fan base,” said Vaile. Jacques agreed, adding, “There are some relevant and meaningful celebrity scents. It’s all a question of meaning and relevance to the market. Celebrity is not this issue if [the scent is] properly done.”

Driving that point home, trend forecaster Judy Galloway, managing partner of G-group Market Research, predicted during her presentation that the upcoming Lady Gaga launch will be an “earthquake.”