Industry experts faced the challenge of looking into the future at The Fragrance Foundation’s 2010 Fragrance Trends Forecast. Held on March 23 at New York’s Time-Life Building and sponsored by Bath & Body Works, the event provided an interactive dialogue and overview of new trends in the fragrance industry, ranging from circumventing the recession’s impact with “customer-centric” differentiation, to the delights of creating sensual signatures, embracing nature, the changing dynamics of mass and class, and building and maintaining brand loyalty.
Rochelle Bloom, president of The Fragrance Foundation, welcomed attendees with a brief statement acknowledging the purpose of the event, noting, “The intent of the program today is to create a lively discussion and move this industry out of its business-as-usual malaise.”
Bloom introduced Ann Gottlieb, president of Ann Gottlieb Associates, moderator of the panel, who in her illustrious career has developed such top-selling fragrances as Obsession, Eternity, Lola and Daisy for Marc Jacobs, as well as J’Adore. Gottlieb introduced the diverse roster of panelists, including Camille MacDonald, president, brand development & merchandising, Bath & Body Works; Cosimo Policastro, executive vice president fine fragrances North America, Givaudan Fragrances Corp.; Judy Galloway, managing partner, G-Group Market Research; and Joe Magnacca, senior vice president and chief merchandising officer, Duane Reade.
MacDonald, commenting on key factors that may have impacted the implosion in the fragrance industry, said, “Ground Zero started 10 years ago, with using newness to solve all our issues, and this led to customer boredom, and a commoditized version of newness. I call this issue Ground Zero, because it was at the start of this predicament.”
MacDonald further noted that if there were fewer launches there would be more differentiation and P&Ls would get healthier.
She also said it is more about the consumer’s perception today, and less about a brand’s positioning, adding, “The world is now more customer-centric, enabling the customer to be the maestro. This is abetted by diverse distribution channels, which enable the new customer to buy high and low, resulting in traditional mass and class losing market share.”
Left to right, Cosimo Policastro, Ann Gottlieb, Rochelle Bloom, Judy Galloway,Camille MacDonaldand Joe Magnacca
“Operate in a two-way marketing dynamic, where the objective is to create emotion, not impose it; then take it from there,” she said. “It’s about what the customer wants and our job is to enable this two-way marketing,” noted MacDonald. “Consider diversifying, and know that it matters what the fragrance smells like, how the notes make the customer feel, and why she loves it.”
MacDonald added that it is important to focus on uniqueness.
“If someone’s done it, don’t do it again,” she said.
Also emphasized was the importance of storytelling, activities and experiences.
“Bring blogs into the stores, learn from European ateliers, leverage the web, create fragrance profiles, or offer a club, where customers can sample fragrances. Direct, non bricks and mortar initiatives like mobile phones, and other ways women can sample the advantages of a different lens, all contribute to changing your model,” said MacDonald.
Classics and Customer Loyalty
Policastro, of Givaudan, said, “ Classics have sustained consumers’ interest over time, and I believe the product is key to all of this. Research regarding classics has divulged four basic criteria, the first being the notion of Relevance, that is, how relevant is the fragrance to the customer?”
The next criteria, is the notion of Disruption, which is what is referred to as signature, and the characteristics that distinguish the fragrance. The third criteria is Ownability, which reflects the ability of the fragrance to deliver on its promise of high quality, whether in a personal care fragrance or household, and the fourth criteria centers on whether a fragrance is disruptive in the marketplace.
“That is key,” commented Policastro, adding, “This is not self-serving to the essential oil houses, but you can clearly find differentiation in your products utilizing quality ingredients, in what we call prestige products.”
On the question of loyalty and fickleness in the Millennial market, Galloway offered a perspective on changing tastes and the diverse demographic landscape. Consumers among the 15-22 and 23-38 demographic, referred to as the Millennials, by Galloway, reveal that fragrance selection and purchase are determined by a variety of factors.
“Research shows that this group of Millennial consumers loves fragrance. My hypothesis is that they may have been given these fragrances.”
When it came to the most important criteria for selection, most young women stated that how a fragrance smells and how it makes them feel is the most important result in the research.
Galloway noted, “This demographic is interested in fragrance, but they are not loyal. They’re fickle.”
She added that Baby Boomers, on the other hand, are 80 million strong, and have $2 trillion in spending power. These are customers that clearly impact the industry.
“When we’re thinking about newness, don’t forget we need to keep these consumers loyal,” she added.
Joe Magnacca, Duane Reade, offered a retailer’s insight into promoting customer loyalty.
“If I know a customer is a loyal fan of a particular product, I can create availability. Our loyalty program enables better penetration of the beauty market,” explained Magnacca.
He emphasized that Duane Reade’s loyalty programs take consumers and retailers and put them on the same plane, noting that the Duane Reade Look Boutiques are enabling increased dialogue with consumers about beauty, as well as offering a cross-section of products, including such brands as Demeter and Bulgari, and such values as skin analysis.
“Loyalty works so well because it helps people understand we’re not only a drugstore, so we can, from a beauty perspective, take this new, relevant information to the consumer.”
He added that with the store’s Flex Rewards Program, when the consumer has points to redeem, she goes to beauty first.
MacDonald noted that while Bath & Body Works does not have a points program, it does have specific campaigns encouraging customer loyalty. She cited its P.S. I Love You campaign, based on an eponymous fragrance product launch, which invited people to share their own love stories on line, ultimately encouraging loyalty to the brand, and emphasizing the power of being heard and responded to.
“Everything we have in the store is basically rated, and we are intimately connected with customers to determine what is working and not working,” said MacDonald.
Changing the Current Model
According to Policastro, “Change is inevitable, and as any viable company knows, you need to change with the times. Overall, Givaudan has a wealth of marketing knowledge and creative perfumery and we position our resources as value added. Our consumer and market insights now include greater depth of knowledge and we invite our clients in to work with our tools to get the best possible product. Suppliers can’t forget their primary core competency is to create new fragrances. We must remember that this is key. We also need to develop the tools to engage consumers whose needs are changing,” he added.
“In the future, for working arrangements, we see an increase in exclusive development projects and exclusive client arrangements. If there is ample opportunity for mutual growth for ourselves and our clients, then we will investigate the possibility of these relationships,” acknowledged Policastro.
MacDonald noted changes in the blurring of prestige and mass.
“The customer is buying high and low and there is a new definition of prestige at Bath & Body Works. We encourage multiple purchases from our customers with an offering of value that raises our volume sale. We’ve got a philosophy of value at Bath & Body Works and offer multiple unit values, not buy one get one free. Ultimately, nothing will work if the product isn’t good. A customer won’t buy it just because it’s cheap. We’ve found that out. This is part of the value of what we call our Master brand,” she added.
In discussing the value of research, MacDonald said there is no substitute for getting in front of the customer.
“We spend time with the customer, watch the products she uses in her bathroom, and observe her anonymously in the store. We also do quantifiable testing as well. All of this needs to be analyzed and quantified, which is an art, not a science, so we can determine where the customer is today,” she concluded.
Research is clearly seen as a valuable way to track and interpret the changing market.
“We validate the research by uncovering opportunities on a worldwide basis for category growth,” said Policastro. “This feeds creativity and category innovation. We are trying to uncover the reason why 12 million women have moved away from the category,” said Policastro, citing an NPD source. “I think we have focused largely on Western markets for innovation, but I’ve got to tell you there is clearly inspiration for innovation in many other areas,” he noted.
Whether promoting customer loyalty through incentive programs or product touch points, utilizing research, creating emotional relevance, tapping into social media or differentiating products with unique value propositions, and fine ingredients, the fragrance market remains, as clearly demonstrated by the panel, a dynamic category whose nature is deeply nuanced, increasingly collaborative and unquestionably personal.
Additional information about The Fragrance Foundation and the Fragrance Trends Forecast Report 2010, which details the olfactive influences in the category, from sensual signatures and nuanced florals, to natural and sustainable fragrances, new forms and formats, like solids and rollerballs, and the impact of blogging and new fragrance retail environments, may be found at: www.fragrance.org.