AUREL’S SMALL STRATEGY
Byline: Melissa Drier
WIESBADEN, Germany — Is there a future for small German perfumeries? Reiner Metz, director of the Aurel Group, a cooperative of independently owned perfumeries that has its headquarters here, thinks so — but only if the stores make the most of being small.
Metz thinks the independent perfumeries have to upgrade personal service, highlight their individual identities to set them apart in a lookalike market and orient their product assortments to a very specific clientele.
The Aurel Group, the marketing name of Aldro Handelsgesellschaft & Co., is made up of 105 partners operating a total of 300 doors, with about 120 under the Aurel name. Generally 150 to 200 square meters, the perfumeries together generate about $214.5 million (390 million marks) in annual sales. The most successful of them, Metz noted, have annual sales of approximately $1.9 million (3.5 million marks) each.
Both floor space and sales volume put these small perfumeries in a different league from major competitors like the 400-door Douglas chain, which favors much larger setups. Trends seem to favor large players like Douglas. According to the German Perfumery Association, about 300 to 350 perfumeries have closed in the last few years, most of them small-scale operations, and in the future there will be fewer — but larger — retail outlets.
Moreover, the business environment has never been more difficult for small perfumeries. Discounting has seriously cut into margins, and a weak economy has shaken consumer confidence and tightened purse strings.
Trying to be big, however, is no sure recipe for success, as Aldro experienced first-hand with the 1995 collapse of the company’s Aurel franchise stores.
Those branch doors owned directly by Aldro went bust in 1995. Twelve were sold to Douglas, 18 more were sold to Aurel group cooperative members and 10 were closed. According to Metz, the mistake made at the time was trying to grow too quickly.
“The branch store concept was conceived of 10 years ago, in boom time. We went national immediately, and the logistics were too complicated and costly,” he said. “In certain cases, we overestimated the possibilities, and our calculations didn’t include the advent of discounting and growing consumer resistance.”
Many new openings were flops, he said, and rents on some stores were too high. The bankruptcy proceedings in June 1995 provided a way out of the expensive, long-term leases.
One year later, following a full reorganization, Metz is back in business and confident that small perfumeries — including Aurel — can survive. Buoyed by Aldro’s profits — “the highest since the company was founded” in 1968 — he is optimistic about the future.
New strategies have been adopted. To strengthen name recognition, many Aurel perfumeries, such as the Munich-based Aurel-Siegfried Kammerl, now combine the Aurel name with the owner’s. Similarly, Aurel puts out brochures six to eight times a year that feature the owner’s name on the bottom.
On the service front, Metz is particularly enthusiastic about new cosmetic treatment cabines in Aurel branches from firms such as Lancome, Biotherm, Sisley, Kanebo and Shiseido.
There are already more than 170 such cabines in operation, and they provide added income, he said. Aurel also organizes makeup lessons for customers. Both “spa” services are typically available up to 8 p.m. every day except Sunday.
Metz urges each individual perfumery owner to determine which cosmetics ranges best suit his or her store’s clientele.
“A major brand like Lauder, for example, can be superfluous in one place and extremely important in another,” he noted.
He also advocates branching out into “boutique articles” such as makeup bags and shaving accessories. “The goal is to have an attractive store, and boutique articles could well generate 8 to 12 percent of turnover in the future,” he added.