NEW YORK — To satisfy the mass market’s hunger for avenues to revive the sluggish fragrance market, The Northern Group is on the prowl for scents with strong heritages.

This story first appeared in the November 14, 2003 issue of WWD. Subscribe Today.

The Hicksville, N.Y.-based fragrance firm has already demonstrated the ability to buy and build up franchises. In 1998, Northern bought the Pierre Cardin and Santa Fe fragrance licenses from Tsumura — both well-known names in need of nurturing. Sales of Pierre Cardin Pour Monsieur have tripled in the last three years alone. A women’s fragrance under the Pierre Cardin logo is set to launch next spring.

Last year, Northern added to its portfolio with the purchase of the brand and trademark rights for Lutèce and Raffinée from New Dana Perfumes Corporation. These scents offer Northern entrance into the burgeoning universe of value stores.

Northern, founded in 1986 by brothers Robert and Mark Crames (who has since left the firm), is eyeing fragrance acquisitions as the company shifts from a distributor of mass and designer fragrances to a manufacturer and marketer.

The new positioning has helped Northern grow from sales of $22 million in 1998 to about $105 million this year. “We decided to look for long-term stability and get out of diversion and into distribution. We want to build our own brands,” said Robert Crames, president and chief executive officer. Crames believes there are many classic brands with loyal consumers who want to find them at midtier or mass stores.

For retailers, there has been a move to avoid legal hassles associated with diversion while eliminating the costs of middlemen. Drug Emporium, for example, had to endure the pinch of lawsuits a few years ago when it sold gray market fragrances. Now, retailers want to build programs with legitimate distributors so they can guarantee to shoppers they’ll have a day-in, day-out stock of prestige scents. That’s a far cry from the early 1980s when retailers scooped up any scent they could get. Now merchants want to partner with suppliers who offer programs such as clamshell merchandisers to prevent pilferage.

According to Crames, Northern achieved completely authorized distribution in 1995. “We convinced manufacturers there was a real need at mass and second-tier distribution for premium scents,” said Crames. “Retailers were hungry for real solutions.”

Crames acknowledged that retailers are disappointed with fragrance sales and that “most chains are figuring out what is wrong.” The use of clamshells, which allow mass marketers to bring pricy scents out from lock and key, has been one solution embraced by chains including Target, Kmart, Costco and CVS.

Northern has been a leader in offering clamshell programs. “You have to have it, although it adds a big expense, and you have to have different programs for different retailers.” He explained that each chain wants different products, different clamshells and different security devices.

Retailers are also turning to Northern to help create fragrance departments that can be profitable on a year-round basis. Northern has a well-planned promotional calendar for retailers. When chains only beef up at holidays, consumers tend to forget that the stores are truly in the fragrance business.

Northern is investing in programs to build fragrance sales in a self-service environment via sampling events such as those that have been done at Wal-Mart, as well as scratch-and-sniff labels where patrons can get a sample without opening the package.

Beyond programs for value and mass retailers, Northern covers the upscale end of the market with its unique ingredient story built upon synthesized human pheromones marketed in its Realm scent. The Realm brand was recently expanded with a fragrance called Pherose by Realm, which is slated for 700 department stores this month. In 2004, there will be a spa line introduced called Inner Realm Spa.

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