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The fragrance industry is growing again.



By Nancy Jeffries, Correspondent



Published March 25, 2011
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Revising and thriving in today’s fragrance market were the key takeaways at The Fragrance Foundation’s annual Spring Trends Forum last month, at New York’s Time-Life Building; and it was apparent that new business norms and realities are at the center of the changes. Rochelle Bloom, president of The Fragrance Foundation, greeted attendees saying that despite the economic downturn, the fragrance industry had not changed that much in the past ten years, and the stage was set to recharge.


On hand to analyze and strategize was a panel of fragrance industry experts who addressed the challenges facing the industry today, offering approaches to changing the game and moving the industry forward. Pamela Vaile, President, Pamela Vaile Associates, moderator, leading authority in fine fragrance innovation, and most recently the guiding force behind the Boyfriend fragrance by Kate Walsh, introduced the guests. Laurie Black, Executive VP, GMM, Cosmetics, Nordstrom Inc.; Frederic Jacques, VP Fine Fragrance North America, Mane; Donald J. Loftus, President & CEO, P&G Prestige, US; Allison Slater, VP, Retail Marketing, Sephora; and trend analyst, Judy Galloway, Managing Partner, G-Group Market Research, completed the roster.


The Only Constant is Change


Galloway began her trend presentation, stating, “The only constant is change,” and emphasized a new environment that is technology driven and omnipresent. “Technology will be stronger and faster, with innovation we can’t even imagine. It will be embedded, customized. It will drive our lives.” While technology will continue to impact both the affluent and non-affluent sectors, it will invariably lead to product entries featuring innovation at both ends of the spectrum.

 
Laurie Black, Executive VP, GMM, Cosmetics, Nordstrom Inc., Judy Galloway, Managing Partner, G-Group Market Research, Allison Slater, VP, Retail Marketing, Sephora, Rochelle Bloom, President, The Fragrance Foundation, and Pamela Vaile, President, Pamela Vaile Associates.
“The global opportunity is enormous, however it also offers emotional challenges to the consumer. Brands will need to address both their physical and emotional needs,” she said. Galloway foresees the growth of city centers of commerce, where sports, beauty, fragrance, and chemistry will combine in brand stories and relate them to consumers. These will balance the hi-tech with the artisanal, and provide touch points for consumers, allowing them to express their personal style. “Brands will need to support and improve the lives of consumers,” she said, noting that the three most important points for brands to remember going forward are technology, social media, and entertainment.


In addition, Galloway, creator of the G-Ometer Report, which tracks the characteristics and contours of our contemporary culture, recognizes an evolution in the art of perfumery. She emphasized truly celebrating the creativity of fragrance, and recommended telling the fragrance story in every venue, from sampling at Sephora, for example, to fragrance accompanying retail vignettes. “Let’s stop pushing purchase and start nurturing purchase,” said Galloway, explaining that passion, professionalism, and partnership, are now the keys to expanding the market.


Time to Up the Game

 
Pamela Vaile, quoting statistics provided by NPD, said that 2010 was a year of recovery. Fragrance grew by 1%, color cosmetics, by 3%, and skin care grew by 8%. However, according to Vaile, the fragrance category still struggles for growth. “We are selling 10 million fewer units and it’s time for us to up our game.” She placed the event in the context of a shared mission, with collaborative goals and mutual challenges.


“Here we are competitors and colleagues and we are trying to dive into the issues that are at the heart of this industry. Engaging the consumer and the issues, stepping out of the box, and challenging conventional thinking is the goal of the program today, and it is a shared passion of all in the room,” said Vaile.


Laurie Black, Nordstrom, shared a customer survey which revealed that the number one reason the Nordstrom customer buys fragrance is to replenish, and the number two reason is to buy a fragrance that she liked, for which she had received a sample, and returned to purchase. The Nordstrom customer also revealed she did not like to be around a fragrance model in the store, and noted that a strong customer response was achieved via their sampling program, which drove sales and built relationships.


Donald Loftus, P&G, responding to the popularity of replenishment purchasing, said, “If replenishment is the number one reason, then we really have to look at rebuilding the classics, and let customers know they’re really important by increasing their stage time.” He also cited the importance of vendor/retailer relationships. “Balancing classics and new launches can probably be achieved in two stages, alternating weeks,” said Loftus, adding “vendors and retailers can work better together by understanding one another’s needs.”


Allison Slater, Sephora, said, “We always look at client data across categories, and with fragrance, we put together a Sephora sampler mixing classics and new fragrances, in a choice of ten, which has been extremely successful. We’re elevating the in-store fragrance experience, showcasing fragrances, and on sephora.com, we’re giving information on fragrance notes, fragrance families, and style, and we’re trying to educate, as well as include the ‘nose’ behind the artistry of fragrance.” Slater further noted that Sephora is offering rollerball formats available in 50 fragrances, that retail for $15 - $20, making them ideal grab and go accessory purchases. This has been successful for Sephora, as has their sampling program. “I believe the fragrance story is very important, but if you don’t have a good juice, forget it,” said Slater.


Perfumers and Marketers Discuss Perspective


Frederic Jacques, Mane, said, “There are distinctions between the dynamics of prestige and mass. The meaning of mass is its value. The meaning of prestige is its ability to offer unique craftsmanship and a great juice.” Jacques elaborated, saying consumers can come to a product because of the story, but they will come back because of the juice. “Perfumers, I feel, are not the story tellers. The majority of the story telling comes from the brand, and the perfumers illustrate the story,” said Jacques. He said that a change is needed in the fragrance model as it works today. “By targeting everyone, we’ve made fragrance less unique. Maybe the new generation will change this model,” he said.


Vaile noted that part of the industry’s challenge is to be able to articulate what is unique about a fragrance. “It’s our responsibility as marketers to tell that unique story in our marketing,” said Vaile. Black, of Nordstrom, said, “The Nordstrom customer wants to shop the way she wants to shop. Sometimes she wants help, and sometimes she doesn’t, so we always look at customer service. Our customer has said that the juice and what it smells like are important, notes didn’t register for her.”


“The consumer is clear about who he or she is, and with consolidation of stores, and less differentiation, there is an opportunity in-store, to make it easier for her. The whole world has changed and we’re still working out of glass cases. It’s time we looked at changing this up,” said Loftus.


Slater cited the importance of having a good reason to launch a fragrance. “At Sephora we’ve just launched Hello Kitty and it’s a fairly sophisticated fragrance. It’s not the 11-year-olds buying it. It’s 30+. There’s got be something exciting about it. This has worked for us. The same is true with Kate Walsh’s fragrance at Sephora, which offers a sexy message that we know our customers love. We need to find those differentiators that resonate with our customers.” Vaile noted the number and variety of fragrances consumers encounter in retail environments. “Fragrance is a very subjective category. How does a consumer navigate 200 fragrances when she walks into a store?” asked Vaile. Loftus suggested that consumers are drawn to specific fragrances for reasons beyond their fragrance notes. “I don’t think fragrance families mean that much to women, for example, there was a rumor going around saying that women don’t like chypres, yet Chanel No. 5 is a chypre,” he said.


Generating Fragrance Excitement


Black shared Nordstrom’s Sample Saturdays as a way to generate interest and excitement about shopping for fragrance. “At Nordstrom, we initiated Sample Saturdays, with 15-18 points of sale for fragrance giving away samples that have been tweeted about all day. This has shaken things up a bit. We invite friends on our Facebook page and they come to our stores to ‘Stay and Play,’ trying a variety of fragrances. We also implemented a beauty stylist program to assist customers throughout the whole beauty floor, and match their selections with the fashion floors, as well,” said Black.


Loftus acknowledged that men’s fragrance has seen growth, and said, “We have to thank the Axe brand for that to some extent, which has opened the area.” Generating interest is still a big part of the celebrity appeal and a viable way to gain attention. Jacques said, “There are some celebrity fragrances that are good and some that are not. With anything we do we’ll have to learn to be more precise. Celebrity fragrances and flankers are not the issue if they are properly done,” he said.


“There are some excellent new launches, including some in celebrity, but every time we launch a product we have to look into it and be sure we want to put it on the market, or if it will be more noise. We don’t want to put something on the market and pollute the market, which brings the category down,” said Jacques. Further, he stated, there is the notion of risk, as well as such considerations as speed to market, but how much risk you are willing to sustain to give a product time to succeed is a challenge, noting that some products, even the iPod, was not an immediate success. “We have to reconcile the balance between return on investment with talent. It’s not so easy to take risks, but if we don’t we’re going to commoditize the category,” he said.


In addition to the interplay of digital and social media creating fragrance excitement, it was also stated that consumers are interested in brands with a good message, and ethical driving principles. “For consumers to wear a brand that they can say, ‘I’m wearing a brand that’s a good brand, that gives back,’” said Slater, is key in today’s market. Rochelle Bloom concluded the presentation reiterating the message of global consciousness and giving back, referring to the recent earthquake, saying, “It’s important that fragrance companies also donate some percentage of sales to Japan,” acknowledging the importance of industry-driven participation. Additional information about The Fragrance Foundation and its programs may be found at: www.fragrance.org.
 
 
 


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