BUYERS HOPE INVENTORY CUTS WILL BUILD SALES
Byline: Faye Brookman
NEW YORK — By tightening the screws on fragrance inventories, mass market retailers hope to avoid a repeat of last year’s dismal holiday.
If cutting back on fragrance purchasing turns out to be the right strategy, buyers said, sales could increase 7 to 8 percent above 1995 figures, which actually declined 2 percent.
“The fragrance category will have a better sell-through this Christmas,” said Mark Laracy, president of Parfums de Coeur, Darien, Conn. Most retailers bought 15 percent to 20 percent less for the holidays, he said, so there’s less inventory in the stores.
Gail Hubert, buyer for Drug Emporium, based in Powell, Ohio, is among those retailers making the extra effort to insure the fragrance category pays off this holiday season.
“We’ve scaled back,” said Hubert. “We’re hoping to be more productive.”
She added that basic stock fragrances will be scaled back even more in 1997.
By reducing their fragrance inventories, retailers are slashing costs and aiming for a sell-through in the 75 percent range. Last year’s sell-through reportedly was below 60 percent at some chains.
But retailers admit they have to achieve the right balance and avoid running low in the critical last few holiday shopping days, traditionally the most brisk sales period for mass market outlets.
Early indications suggest shoppers want to get a jump on the holidays, and many merchants said this is because people know there are five fewer shopping days this season. In addition, Chanukah arrives early, on Dec. 6.
“We have seen several early Christmas [point-of-sale] figures, and they are significantly ahead of movement at the same time last year,” said Laracy.
Bob Germano, president and chief operating officer of Nash Harmon Stores, Cedar Grove, N.J., had the same impression.
“We’re getting some decent hits already,” said Germano. Nevertheless, he added, “The week leading up to Christmas will be very important.”
Harmon units, he said, were set up for the holidays earlier than usual; new holiday scents were put out in September to set the mood.
At the Chain Drug Marketing Association meeting in September, several buyers said they had wanted to kick off the holidays early, but experienced shipping delays with key players such as Coty and Revlon.
“In all fairness,” added Drug Emporium’s Hubert, “we also got some orders in late.”
Wal-Mart Stores Inc. and Kmart Corp. both set up their holiday promotions early in September.
“Both Wal-Mart and Kmart are doing a much better job getting Christmas out early and merchandising it this year than last,” said Laracy. “This should have a significant impact on Christmas sell-through.”
Mary Prince, divisional vice president at Kmart, said she is optimistic about new scents such as Coty’s Celebrate and Revlon’s Cherish, and Kmart will give these lines a lot of support through the holidays.
While early consumer interest has been there, Harmon’s Germano said no products were emerging as star performers.
“All of the new launches — Revlon’s Cherish, Coty’s Celebrate and Raw Vanilla — are selling, but nothing is flying out of the stores yet,” he said.
A spokesman for Arbor Drugs in Troy, Mich., said the chain is “doing a great deal in the stores as far as displays to promote new launches.”
As a result, he added, “We’re seeing both gift and self-purchase sales.”
Cherish and Coty’s Exclamation Blush, Raw Vanilla and Celebrate could add as much as $70 million to the mass market fragrance business in 1996, according to sources — a much needed boost.
Hubert said that in addition to a bullish outlook for Cherish and Celebrate, she’s excited about movement on Charlie closeouts — outdated gift sets — she purchased from Revlon.
She put the sets out at $4.95, and they’re moving well.
“It proves that people want a bargain,” she said.
A handful of classics is gaining attention, including Dana Perfumes’ Chantilly, Tabu, Toujours Moi and Coty’s Emeraude.
Hubert and others also cited a sales spurt in prestige-market fragrances, a category that had become considerably quiet over the last two years.
“The retailers who aren’t doing well in prestige probably just don’t have the right items,” said Germano, noting Drakkar Noir and Sunflowers are doing particularly well at his store.
“Arden’s Sunflowers will probably be one of our best-selling sets,” he said.
Sunflowers has become a hot commodity in the mass market because it brings a department store product to drugstores at a price not much higher than those of Coty products, which sit at the expensive end of mass.
Drug Fair, for example, is featuring a 1.7-oz. Sunflowers at $17, at least $10 below the brand’s typical rate at department stores.
Beyond fragrances, buyers are optimistic about another key category — color cosmetics. “The color category is doing very well, especially metallics and shimmers,” said Jackie Millon, buyer for K&B in New Orleans.
Product innovations are driving the color business, added Hubert.
“All color cosmetics are great, especially nail color,” she said. “All of the glitters and shimmers are being purchased, and there are some wonderful promotions from Kiss and great colors from Orly.”
The Arbor spokesman noted makeup sales are sizzling. “All of the long-wearing items are selling. It started with Revlon, and L’oreal’s Colour Endure has come on strong, too.”
Bob VonderHaar, vice president of merchandising for Ulta3, concurred.
“There is just tremendous growth in nail color and products like ColorStay,” he said. “People are not only buying them for holiday looks, but just because they are excellent products.”
For the third year in a row, bath products are being pushed to the forefront as a holiday gift idea. Drug Fair is promoting Sarah Michaels’s Bath Ensembles at $9.99. Drug Emporium will key in on Tuscavi, a new line from Paradiso Ltd., Scottsdale, Ariz.
“It is just getting into the stores now,” said Hubert. “It has a cool package.”
Tuscavi comes in body lotions and foaming bath gels and is available in three sizes: a 4-oz. of either the lotion or gel for $2.99, 8-oz. versions at $4.49 and 12-oz. sizes at $6.49.
“It is definitely a gift item,” said Paradiso president Paul Croisdale. “We’re taking plastic candy canes and instead of putting candy in them, we’re putting in Bath Gems, which are bath beads in cute shapes.”
Retailers are becoming aggressive with their own gift ideas this year. Drug Emporium, for example, is offering a free gift bag with fragrance purchases and a free atomizer with a sale of $15 or more.
Harmon Stores, said Germano, will raffle off gift baskets donated by vendors just prior to Christmas.
While the host of new strategies is leading retailers to predict their holiday woes may be on the wane, Laracy at Parfums de Coeur voiced a warning.
“The only problem with Christmas is that some chains will have markdown programs,” he said. “Markdown programs hurt Christmas sell-through because every year more and more consumers are trained to wait to buy half-price after Christmas.”
Still, he added, “We believe many retailers are getting smarter and will discontinue Christmas markdowns in 1997.”