Byline: Faye Brookman

WATCHUNG, N.J. — The battle for the fragrance business on bustling Route 22 here isn’t between Macy’s and Bloomingdale’s or Caldor and Kmart.
Instead, shoppers have a choice between Annie Sez and Marshalls — two off-price apparel retailers that each offer prestige fragrances at discounted prices.
In an effort to build profits per square foot and to help offset mediocre clothing sales, many budget and off-price apparel retailers are adding fragrances and cosmetics to their merchandise mix.
These stores are creating yet another new channel of competition for department stores and mass marketers. According to industry estimates, off-price apparel retailers now account for as much as 4 percent of total U.S. fragrance sales, which would mean a $200 million share of the $5 billion market, at retail.
The allure of stocking fragrances is that in a three-square-foot parcel of space, retailers can produce profit margins exceeding 30 percent, according to industry experts. This figure is significantly higher than the margins of 20 percent and under that off-pricers typically snare on apparel.
Stocking scents also gives the apparel retailers another way to make the cash register flash.
“These stores are a perfect home for designer fragrances because there is an obvious synergy between clothing and fragrance,” said Dennis Schnur, president of The Opportunity Group, Ronkonkoma, N.Y., a firm that has been at the forefront of instituting fragrance programs in apparel outlets.
“There are people who are loyal to brands, and that can be carried forth to build incremental sales,” he said, noting that it makes sense for the retailers to focus on teaming designer apparel names with the corresponding fragrances.
The list of women’s clothing chains selling fragrances, cosmetics and bath items continues to expand.
Currently, beauty products are found in stores such as Annie Sez and Mandee, operated by Big M Inc. of Totowa, N.J.; Marshalls, operated by Melville Corporation of Rye, N.Y.; T.J. Maxx, operated by TJX Companies Inc. of Framingham, Mass.; Filene’s Basement of Wellesley, Mass.; Charming Shoppes Inc. of Bensalem, Pa., and New York’s Century 21.
Many of the off-pricers are not going out of their way to merchandise the newly added fragrances and cosmetics, in keeping with the no-frills approach to retailing that has made them successful.
A recent visit to Marshalls here, for instance, found a haphazard assortment of fragrances such as Yves Saint Laurent’s Opium, Bill Blass and Giorgio’s Red. The fragrances are kept under glass and shoppers must ring a bell for service.
The store also featured a display of bath products from The Botanical Workshop, along with a smattering of treatment items, such as Elizabeth Arden’s oil-removing soap.
Across the highway, Annie Sez had a more meticulous presentation of its scents, which included Elizabeth Arden’s Sunflowers and Liz Claiborne. The fragrance area was directly in front of the cash registers, and prices were touted as being 20 to 35 percent below manufacturer’s suggested retail.
According to the store, the mix includes only the best-selling stockkeeping units.
“Fragrance isn’t a destination in our store; we offer it as a service,” said Mary Beth Foley, accessory and gift buyer for Annie Sez. The chain operates 36 stores, with working women in the 25-to-45 age range as its primary consumer target, she said.
Foley said fragrances are procured both on a direct basis and through secondary sources. She would not elaborate on what brands were directly sold to the chain.
Annie Sez’s customers prefer to find upscale fragrances, Foley noted. In fact, the inventory of Chantilly, a fragrance sold in the mass market, is currently being marked down and moved out of the stores.
Annie Sez’s sister retailer, Mandee, sells some alternative designer scents, and it does appear that many apparel retailers, especially those aiming at shoppers on a budget, prefer to sell alternatives rather than the diverted names.
For instance, Tristar Corp. of San Antonio sells its knockoffs to retailers such as Charming Shoppes and Fashion Bug, both owned by Charming Shoppes Inc., based in Bensalem, Mass.
“Apparel [stores] keep growing in fragrance. It is one of the strongest parts of the business,” said Donald Wilchek, director of marketing for Tristar.
Wilchek said the firm’s EC Uni, a Calvin Klein CK One mimic, is currently being picked up by apparel retailers.
Besides fragrances, several apparel retailers are also putting in small racks of color cosmetics. ClothesTime stores, for example, sell the Jordana Cosmetics line of brightly colored eyeshadows and lip colors.
But just putting the products into the stores doesn’t insure success, according to Leonard Ichton, president of Cosmetic Network in Lawrence, Mass. Ichton helped get Filene’s Basement into the beauty business in the early Nineties.
Filene’s had tried several times to add a beauty selection, without success, until Ichton helped formulate a mix that worked, he said. Filene’s assortment now includes skin care from Elizabeth Arden and LancOme.
“What off-pricers don’t understand,” said Ichton, “is that cosmetics can’t be treated like a commodity. You can’t buy 4,000 lipsticks and expect them to sell.”
He said many apparel retailers go into the business merely because their competition has, and they don’t have a strategy.
But that could change, he said, as the industry is gradually becoming more sophisticated when it comes to beauty retailing. That will make off-price apparel merchants an even more formidable competitor to department stores, discounters and drugstore chains.
“Whether the percentage is growing because consumer buying habits are changing, or because people are finding it more acceptable to buy fragrances while buying clothing, the business is growing,” said one vendor who supplies products to that class of retail. “What they have to learn is how to merchandise, and they’ll set a new standard in fragrance selling.”

Rather than unleash a barrage of new products, several firms at last week’s Exclusively HBA shows in Chicago were touting new packaging designs or new displays.
Pavion Inc., Nyack, N.Y., was exhibiting three new floorstand spinners. The fixtures, according to Fred Kamis, the company’s Eastern region manager, help retailers expand their assortment, even when they think they don’t have enough space to put more products onto the wall.
“This is especially good for adding to the ethnic assortment,” he said.
Another budget line, Artmatic of Brooklyn, N.Y., was showing the repackaging for its entire line.
“It is a more contemporary look,” said Stuart Reiner, group vice president.
The Ontario, Calif.-based Blossomville Cosmetics has also not only changed its name on its packages, from King Vega to Blossomville, but has totally revamped the packaging.
“The new packaging features softer colors, and we’re getting a good response,” said Fred Land, vice president of sales for the company, which sells cosmetics makeup kits.