TIFFANY TO DISCONTINUE WHOLESALE FRAGRANCE DISTRIBUTION
Byline: Pete Born
NEW YORK — The fragrance division of Tiffany & Co. has decided to pull out of its department and specialty store distribution, effectively cutting off nearly 2,000 doors around the world. The company will only merchandise its fragrances in the more than 100 Tiffany stores around the world.
In a statement issued Thursday, Tiffany said it will discontinue external distribution after next Jan. 31. Nancy E. Kanterman, vice president and general manager of the fragrance division, said that since Tiffany has amassed its chain of stores, the company feels it can better maximize the business on its own selling floors, with better merchandising and visual presentation.
It will also allow Tiffany to make its fragrance offerings a bit more upscale. Kanterman pointed to a special item that will be introduced in October, a crystal perfume bottle with a sterling silver cap that will retail for $350.
“We can manage new ways to do the business,” Kanterman said. “We hope to come out with prestigious new offerings. We are committed to the fragrance business.”
This is the final step in a three-phase distribution rollback that was first signalled last September when Tiffany announced plans to stop wholesaling jewelry, gifts, table and flatware to 265 department and jewelry stores in the U.S. Then the chain pulled the plug on European distribution, and now it has done the same for fragrance.
But the amount of sales at stake amounts to less than 1 percent of Tiffany’s total volume, or less than $15 million at wholesale. Tiffany’s total fragrance volume hovers at nearly 2 percent of total revenue, or about $29 million at wholesale.
Tiffany works through a series of distributors. The U.S. distribution of about 700 department stores is handled by Fragrances Exclusive, a division of Chanel. The other 1,300 department and specialty stores are mostly in the Middle and Far East, with 100 doors in Japan alone.
Although Tiffany has set a Jan. 31 cutoff, Kanterman said the company will deal with its commitments with various distributors. One is Kose in Japan.
Also, she said Tiffany will continue to work with Chanel in terms of manufacturing and product development.
Tiffany has three main fragrance brands, consisting of the women’s signature scent, Tiffany, a 1987 entry; Tiffany for Men, which was launched in 1989, and the 1995 introduction, Trueste. Tiffany Sport was added in 1998 and Sheer Tiffany a year later.
Kanterman acknowledged that improving profitability was one motive for making the move. But another, perhaps larger issue, is how to spur growth to the fullest. “It’s less about sales per square foot and more about how to best serve the customer,” she said, noting that it will allow Tiffany to do “more business in the upscale high-end.”
Kanterman said she expects to recapture some of the jettisoned volume in the near term, but she would be happy keeping pace with the Tiffany growth rate. For instance, in the first quarter total Tiffany sales increased 28 percent.