Byline: Pete Born

NEW YORK — With a mediocre Christmas a fading but still painful memory, American department store retailers are struggling with ideas of how to change their class of trade for the better. “There is not enough excitement,” said one leading merchant, speaking primarily of the upscale fragrance business. “There is not enough innovation.” Although some department stores achieved sales plans and many specialty stores — notably Saks Fifth Avenue and Neiman Marcus — described their holiday business as above average, the overall gains were minimal. The fragrance category in the class and mass ends of the trade was the most troublesome, with makeup and skin care faring somewhat better.
“It’s a static marketplace in terms of dollars, and I’m sure it was actually down in terms of units,” said Robert Brady, president of Parfums Givenchy. A frequent lament from upper-tier retailers was the dearth of major fragrance launches last fall — but those on the buying end also warned of relying too much on newness. “We are into this syndrome that is even narrower than short term,” said one merchant, referring to the stores’ and vendors’ strategy of trying to make a mega-hit in the first season, without planning for the future. After vendors roll out the distribution of a new product, the retailer turns its attention to the next big launch, and support for a particular brand is eroded quickly. “We should start with a minimum of a two-year plan,” he said, “and I would expect that in the first six months there would be less support.
“Shooting your [arsenal] in the first six months only falsifies the numbers,” he said, warning that the constant desire to be number one or place in the top five is shortsighted. For Michelle Williams, divisional merchandising vice president of Federated Merchandising, the immediate future lies in finding effective ways to get fragrances into the hands of consumers who no longer shop the same way they once did. If more products could find their way into consumers’ homes, where women can try them out in a relaxed environment, more people might be inspired to stop in the cosmetics department, Williams noted. “The idea of being able to try a cosmetics product on her face at home the day before and knowing that the next day she’ll be in the mall — well, that may appeal to her,” Williams said. “The industry can’t rely on a particular traffic pattern being there now,” she added. “People shop in different ways.” While acknowledging that national magazine ads containing packettes will always have appeal, she pointed out that the use of databases for in-home sampling “is a whole area not being tapped as an opportunity.” She pointed out: “We have her address; we can send her a sample at home.” A more pressing need is to reduce the cost of advertising samples, like scented strips and Scent Seals, to encourage manufacturers to do more in-store sampling. “All the vendors say they would love to do more, but it’s very expensive,” she said. More appealing sampling also is needed, she said, noting that consumers like the newer vehicles that do not prematurely leak scent and can be resealed for later use. “Manufacturers have to begin seeing the benefit of being a Nineties good guy,” Williams said. “Consumers are prepared to respond to that show of sensitivity.” Rita Burke Mangan, the new senior vice president at Federated Merchandising, sees as a critical issue the scattered application of Electronic Data Interchange, the computerized inventory replenishment systems that department stores have started using in their cosmetics departments in the last two years. Mangan pointed out that no company is at the same place in the development curve, and she would like to see manufacturers and retailers get together and coordinate their efforts. The payoff would be enormous. “I would like to see the manufacturers and retailers accelerate their efforts,” she said, “and see the time and expense that would be saved be put toward better use. We have to all accelerate our efforts, using the technology to regulate the shipping of goods, and refocus our efforts on training and better customer service.” She noted that in some cases, manufacturers use the efficiencies of EDI to make economies by trimming sales staff, but she maintains that personnel should be redirected instead. Barbara Zinn Moore, senior vice president of cosmetics at Macy’s East, feels the industry must get together to tackle one of the most difficult and divisive issues in the business — the flow of prestige fragrances into alternative channels of distribution. Moore maintains that all factors should be examined and discussed in hopes of curing the problem. “We cannot continue to do business with people whose merchandise is being sold 50 percent off in alternate channels of distribution,” she said, noting that those brands that tightly control their distribution were also the firms gaining department store share. “That’s why Chanel, Estee Lauder and Calvin Klein continue to grow,” Moore said. “It’s definitely a factor.” She agreed with Mangan on the importance of EDI and the significance of its impact. “As we go onto EDI, the role of the account executive has to be redefined. Sell-through will become more of a focus.”
Joanne P. Hickey, merchandise manager at Mercantile Stores Co. Inc. in Fairfield, Ohio, said retailers have to find new ways to interest the consumer.
“We are so brand-identified,” she said. “What we have to do is get back to more special events. We’ve gotten into the belief that if we put the merchandise out on a table at a special price, [the consumer] will go for it.” She pointed to an EstAe Lauder event that involved picking the right shade of foundation for a customer as an example. Other executives noted that sharper consumer targeting is needed, instead of the broader approach now employed by most houses. “We have to do a better job as an industry in recognizing to whom our fragrances are meant to appeal,” said one retailer. “The [current] machine-gun approach is terrible.
“As retailers, we have to recognize that, too,” he continued. “We would be better served by developing long-term plans and being in business with a company whose customer appeals to [the store’s] focus.” On the other hand, Annette Green, president of the Fragrance Foundation, feels that in-store merchandising could use improvement. Individual personalities of fragrances need to be underscored. “That is why everybody went back to the classics last Christmas,” she said. Green suggested moving one step beyond the practice currently in use in some European perfumeries of grouping fragrances by olfactory types — florals, orientals and so on. The Fragrance Foundation president thought of taking a page from bookstores, like Barnes & Noble, and grouping scents under categories — for example “mystery” for orientals, or “adventure” for brands with positionings like Ralph Lauren’s Safari. Green noted, “We have to capture the imagination of the consumer and clarify it, and we could have mood wrapped around it.”

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