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A Playbook for Reviving the Mass-Market Fragrance Business

A total overhaul of the thinking in mass market fragrances is needed, according to one marketer.

The National Association of Chain Drug Stores’ Total Store Expo kicks off next week in San Diego. More than 60 brands representing cosmetics and fragrances are slated to exhibit to the 275-plus mass-market retail companies signed up. Total Store Expo, held from Aug. 19 to 22 at the San Diego Convention Center, attracts retailers and brands responsible for all aspects of mass-market retailing, but has a strong presence in beauty.

Among the issues on retailers’ minds will be how to reinvigorate the mass fragrance business, especially at a juncture where other beauty categories are clocking healthy gains.

Surveying IRI data, the mass-market fragrance business hasn’t cracked into the black in a decade. However, the prestige scent scene is reawakening, posting 1 percent gains for the second quarter of the year, according to NPD.  In the last two years, up-and-coming niche entries added more than $250 million to the prestige fragrance business. Mass retailers want to reclaim their share of a business they once dominated.

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A laundry list of issues stymies sales at mass including the dearth of mass launches, the decline of celebrity scents, a lack of testers, heavy holiday promotions and the fact many fragrances are locked under glass. “The days of mega-million-dollar launches are gone,” said John Burgfechtel, executive vice president of corporate strategy at Sheralven Enterprises Ltd.

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For its part, Sheralven is rethinking the mass fragrance playbook, transitioning from a distributor to a resource with a menu of options for retailers looking to re-engineer the category. “The way to restore luster is to begin thinking differently and breaking out of the normal paradigm. Retailers must start to carry what customers ‘want’ and not what manufacturers want the retailers to carry,” Burgfechtel said.

A Playbook for Reviving the Mass-Market
John Burgfechtel

Sheralven adopted a multipronged approach to the business, encompassing e-commerce, licenses and private label, wholesale and warehousing/logistics. The company ships only what is needed, versus endless rows of scents that don’t turn and often get dusty on mass shelves.

Managing retailers’ fragrance inventory is essential to  boosting online fragrance sales for chain stores. Many retailers have edited in-store assortments to key movers, while offering a wider  selection of fragrances online. Shoppers looking for a particular fragrance can be referred to the website if the item is not available at the store level. Sheralven holds the inventory for the retailer and drop ships on their behalf when the item is ordered by the customer. In addition, Sheralven has stock of many hard-to-find favorites such as Creed and Prada.

“With this model, there are no turn issues or inventory concerns for the retailer. Sheralven carries more than 5,000 stockkeeping units in the top 250 plus brands so the retailer doesn’t have to,” he said. The company has a 200,000-square-foot warehouse stocked with the fragrances to provide quick turnaround.

Private label and branded licensing programs offer another path to build fragrances. Sheralven’s licensed fragrances include Nicole Miller, Laundry by Shelli Segal and B.U.M. Equipment, as well as three more in the pipeline. These exclusive opportunities can help drive customers to the retailer while offering healthy profits.

“The industry has become ‘juice in a bottle,’ the category needs to get back to the emotional side,” Burgfechtel said.

Sheralven’s strategy is to help build avenues to “create your own, individual” scents as well as offer new delivery methods. “This is all part of providing business solutions rather than the same old,” he concluded.