Flanker Scents Spark Squabble

NEW YORK — Love them or hate them, flankers have become a fact of life in the fragrance business — to the tune of about $200 million in retail sales.

The fragrance industry’s well-documented ups and downs over the past several years are no secret, but a strategy that began building steam several years ago — launching flankers, or scents that are related to existing juices and that share some element of the name — has become so endemic the practice has begun to spark controversy. In fact, this year it reached new heights, as manufacturers and retailers try to ignite the fragrance category out of the doldrums, where it has stagnated for three years.

The list of manufacturers choosing to employ the strategy spans a good chunk of the prestige fragrance category. The Escada, Jean Paul Gaultier and Issey Miyake brands were among the first to catch on to the trend roughly 10 years ago, and they’re certainly not alone: They’ve been joined by a long list of heavy hitters, including Clinique, Estée Lauder, Lancôme, Elizabeth Arden, Liz Claiborne Cosmetics, YSL Beauté’s stable of brands and Nina Ricci, to name just a few.

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But popular as it may be, the million-dollar question is this: What is it doing to the long-term health of the still-struggling fragrance industry? Fragrance guru Ann Gottlieb, president of Ann Gottlieb Associates, an international fragrance consulting firm, flatly said, “I don’t think flankers are a good thing for the industry.”

But it all depends on whom you ask. Fragrance suppliers, who are being squeezed financially by having to keep devising new submissions, hate them; perfumers decry the lack of creativity inherent in the practice. But retailers and manufacturers, who see the appeal of built-in consumer trust — and consequently greater and easier sales —?love them.

“The consumer trusts the original brand, so she’s more open to buying these scents,” said Thia Breen, executive vice president of cosmetics for the Federated Merchandising Division. “And as a retailer, I love them. It takes all of the hard work that we have done with manufacturers and extends the life cycles of many scents.” Among the many that have done well for Breen: Ralph Lauren’s Romance Silver, Clinique’s Happy Heart, Estée Lauder’s Pleasures Intense and Elizabeth Arden’s Red Door Revealed.

“We call the summer our second Christmas because we get a lot of activity in our stores [from summer fragrances],”added Rod McFadden, vice president of merchandising for Sephora. “The client has shown us that she wants something new with more and more frequency. Flanker products and summer versions keep her interested.” McFadden expects strong performers this summer to include Escada’s Island Kiss as well as summer scents from Issey Miyake and Tommy Girl. “In the past we have always participated in summer fragrances; this year we are going to try and make a bigger presentation and highlight them more in our stores than we have in the past.”

But are these scents producing incremental business, or just shifting dollars around? Opinions vary, but some manufacturers concede that while they may not be producing significant plus-dollars, they pay off in other ways, such as increased consumer awareness.

“Flankers are generating business, so with this strategy we are bringing in a new customer,” said Gilles Dougoud, general manager of Parfums Givenchy, whose flankers have included 2002’s Amarige d’Amour and the upcoming Givenchy Pour Homme Blue Label. “It may siphon off business from other scents, but we are keeping the customer who always wants new products — everything new is hot, even more so in the U.S. than in Europe in the fragrance world.”

Breen said that in many cases, flankers can offer plus business. “Flankers, for us, aren’t eroding basic business — it’s not a trade-off,” she said. “In fact, we’re finding that flankers take advantage of what is already a known brand. For both retailers and manufacturers, it’s a great way to leverage the power of the brand.”

However, a major department store retailer who declined to be named said that “in general, flankers don’t produce incremental business; in our doors, for the most part, they are siphoning off business from other scents. However, it’s a lot easier all around to bring in a flanker than to start up a whole new line. From a vendor’s perspective, it helps the brand maintain position and ranking, and consumers do like something new. Also, it can help a manufacturer freshen up a brand.”

And that’s an important point, noted Timra Carlson, president of NPD Beauty, a division of The NPD Group, a marketing information company, whose company has estimated the size of the flanker market at more than $200 million in retail sales. “Launching flankers for classic brands that have peaked in their product life cycle or for brands that are beginning to decline in their sales is an ideal way to help extend the life cycle of the brand,” she said. “The strategy requires less advertising and relies heavily on current brand equity. The success of this approach depends on the ability to determine the right point of sales decline, and launching such a spin-off at this precise time.”

“It’s our job as marketers to ensure that the consumer understands that we’re talking about a variant on an existing line,” said James Ragsdale, vice president of classic brands for YSL Beauté. “If we’ve done our job well, we end up recruiting new consumers into the line franchise, as they are attracted by the newness, try the variant fragrance and are then convinced to try the classic line, when perhaps they wouldn’t have done so, had there been no special animation on the line. And, if we’ve done our job well, existing consumers are convinced that they have made the right choice in buying our line, a line which not only offers a classic, proven juice but remains completely up-to-date and in line with current trends as a result of its seasonal animations.”

“They work incredibly well for us and we find them very impactful,” said Terese McDonald, vice president of retail sales, development and training for Beauté Prestige International of the Issey Miyake and Jean Paul Gaultier summer fragrances. “They really give us a chance to put forth a different interpretation of the fragrance as well as highlight the spirit of the designer. It [also] gives the customer the opportunity to buy into the dream of each of the particular designers.”

Within the flanker category, BPI only launches summer fragrances, McDonald explained. “[Consumers] like newness but they also like the security of the fragrance that they wear,” she added. “I think it allows them to step up or step out a little but without straying too far from what they are most comfortable with.”

Despite the obvious draw, others decry the declining creativity that results when a company chooses to spin off a flanker scent rather than devise a new brand.

Gottlieb helped develop such notable scents as Calvin Klein’s Obsession and Dior’s J’adore. “Part of what has been lost over the last few years is that commitment to special brands,” she said. “They [flankers] detract from the meaning of the masterbrand itself. I also don’t think that they have any of the magic that the industry really is craving — they are a short-term solution.”

Gottlieb noted that these fragrances allow the industry to “defer real creativity and fill their pipeline with fragrances that don’t do a lot for the business” as well as “confuse the consumer because many of them are so close in concept to their parent brand that it’s hard to tell if they are really different.”

Givenchy’s Dougoud conceded, “Success also depends on how well the company plans and executes the brand mix. For example, if you use a very different advertising concept in which the customer doesn’t recognize the original brand, then you can confuse consumers.” For the brand’s upcoming Givenchy Pour Homme Blue Label, for instance, the brand is updating its advertising with a new portrait, but is still true to the original, he said.

Dougoud raises an important point, said retailers: Flankers need to be supported with advertising and promotional gambits of their own — they can’t just be shoved on a shelf and be expected to perform. “They need to be advertised and marketed,” Federated’s Breen said. “You can’t just put a new scent on the counter; all the marketing ingredients need to be in place.” Said another retailer: “You can’t just put it out and say ‘They will come.’ It doesn’t work that way.”

And despite the kudos of retailers and suppliers, most flankers have few fans on the oil house side. The onus is on these companies to develop submissions for flankers, which can be very expensive — particularly if the submission isn’t chosen as the juice for the new launch.

“This trend is driven by retailers demanding that manufacturers anniversary sales in their doors,” said one fragrance supplier executive. “It’s a lower-cost option in the absence of an ability to create new brands. It can be a way to breathe new life into the category, but it also commodifies the category. These fragrances have become a lot of noise in the industry, and for the most part they don’t help to rehabilitate the industry. In fact, they cheapen the industry. I’m not against initiatives that add texture to a brand, but I don’t think that most flankers —?particularly the summer scents — do that. But realistically, it’s the cost of doing business with some of these companies.”

That’s evident from the plethora of scents now on the market and on the list of those coming soon. Gottlieb added that the number of flanker scents launched is increasing, and will probably continue to do so “because if everybody is doing it, there’s a competitive edge to doing it.” She pointed out that a big recipient of flankers are travel retail outlets to make them “attractive to people who are passing through on a regular basis. In many cases they are colorful and a way of resuscitating a brand that might be tired and sort of dull.”

Which leads to a salient point: No matter how good a flanker is, if the primary brand isn’t meeting its numbers, it’s unlikely that a spin-off will save it, noted the department store retailer. “This strategy works best with a healthy brand,” said the retailer. “If that’s the case, a good flanker can do 50 percent or more of the primary juice’s business. But you have to get the consumer to the counter first. If they’re not there buying the first scent, what’s going to pull them in for the flanker?”

Still, some flankers have actually ended up surpassing sales of those from which they were conceived, noted Dougoud. “Some flankers do better than original fragrances, which we expect with [our upcoming] Givenchy Pour Homme Blue Label,” he said. “And also on the plus side, a new flanker produces an opportunity to refine the total image of the brand franchise.”

And others argue that the cost of launching the original scent — generally estimated at $20 million or more — justifies trying to milk all possible business out of a brand proposition. “Companies invest so much up front into launching collections; I think it’s really necessary that they extend the life of them,” said Sephora’s McFadden. “The challenge is that collections have launched to a large fanfare and they begin to go down, well the flanker is a sort of second life — I think they will continue.”

NPD’s Carlson added, “Offering limited edition flankers on off times, such as summer seasonal flankers, is a concept any brand can follow to build brand loyalty — as long as it is implemented properly. Introducing lighter summer versions strategically helps bring consumers back to the counter for their signature scent in a lighter version. The ideal approach would be to offer the seasonal version on counter for a limited time and then reintroduce it a year later to help bring the consumer back for more and build on consumer loyalty.”

And according to Carlson, some top-selling flankers that helped boost the brand’s ranking when combined with parent brand sales in 2003 included Clinique’s Happy Heart, Chanel’s Coco Mademoiselle, Ralph Lauren Romance Silver and Tommy Hilfiger’s three flanker scents [see chart].

As for a solution to the issue, Gottlieb noted that she “would love to see much more creativity done in stand-alone brands. That’s such a great loss for the business.”