Imogen Matthews, consultant05.01.20
With retail shops firmly shut across Europe for the past two months, the impact of coronavirus on the fragrance industry has yet to be fully understood. Online may yet become the sole beneficiary, but growth from a low base will do little to stave off losses. Yet, despite all the gloom and despondency, the European fragrance industry strives to remain upbeat and is planning for better times ahead.
Euromonitor International published its forecasts for 2020 in a pre-COVID-19 world, but even then growth expectations for the European market were subdued: sales of men’s and women’s fragrance were expected to grow 1.5% in both eastern and western Europe. It is safe to assume that this will change when the full impact of the lockdown in most European countries is known. Euromonitor has confirmed its fragrance sales data for 2019 which stands at more than $14.5 billion for western Europe and more than $3.7 billion for eastern Europe. When it comes to top markets, the UK, France and Germany run neck-and-neck at around $2.6 billion apiece, followed by Spain ($1.7 billion) and Italy ($1.4 billion). Russia sits atop the eastern European fragrance leaderboard, with sales of more than $1.5 billion last year.
According to NPD, fragrances remained the main driver for growth in Europe within the premium category in 2019. Among the top five countries, Spain and Italy grew 8% and 6%, respectively; however, losses of 8%, 6% and 3% were sustained in the UK, France and Germany. Some losses were offset by stronger online sales, such as in Germany where online fragrance sales soared 38%.
Online Moves to the Fore
The digital sphere is proving to be a key channel for companies looking to maximize sales until the coronavirus outbreak subsides. Mintel research conducted in March 2020 revealed that 34% of UK shoppers were worried about the risk of being exposed to the coronavirus, peaking at 46% among those aged 25-34, a situation that surely deteriorated since lockdown restrictions in late March closed all but essential retail outlets.
Mintel’s Armando Falcao, a retail analyst, observes that a number of retailers have turned to creating and opening omnichannels for customers to buy products through various digital channels instead of in-store. For example, after suspending store trading in most European markets, German beauty retailer Douglas opened its online marketplace to small retailers and brand shops, who are likely to be hardest hit. In addition to offering these smaller businesses a lifeline, Douglas is shielding itself from losses generated as a result of its retail shop closures. In a separate move, Dior launched its virtual beauty boutique modeled on the brand’s Paris Champs Elysées location, where customers can virtually walk around the store and watch short video clips of the fragrances.
Despite such initiatives, NPD warns that online shopping will not compensate for the decline in retail as it cannot replicate their physical touch and smell environment: in 2019, 78% of all premium beauty purchases took place in-store.
Meanwhile, leading UK fragrance logistics firm, BDM, received a boost to its online business since its main revenue stream, the major department store and perfumery retailers, was cut off by coronavirus.
“It’s too early to say what the impact of Covid-19 will have on fragrance companies, but it’s likely to make them aware of the reliability of sources of supply and possibly consider local production,” observes Charles Kessler, chairman, BDM. “The need for flexibility and a fast response to change has never been greater.”
COVID-19’s Impact
Aspects Beauty is a UK distributor of luxury fragrances. Although its products cannot be regarded as essential purchases, Aspects Beauty still plays an important part in sustaining the livelihoods of its European brand owners, which include Italian brands Versace, Moschino and Salvatore, and French brands Chopard and E.Coudray.
“We service 30 brand owners, whose livelihood is selling perfumes. Many smaller, niche suppliers have sunk their entire savings into launching and developing their precious brand. Larger brand owners employ hundreds of people and have a network of suppliers, all of whom have families, mortgages and children to support,” explains Jill Hill, co-founder, Aspects Beauty.
So far, the company has resolved to stay open, service its brands and work on strategies for internet selling as well plans for the second half of the year and the all-important holiday period.
Conscious Consumer
According to NPD, beauty consumers are discovering the benefits of buying less and using fewer products, opening the way for new packaging initiatives to minimize waste and lower carbon footprints. In fragrance, larger bottle sizes, refillable formats and a focus on sustainable packaging are key trends, with French brands rolling out a number of initiatives.
Dior removed all cellophane and cardboard wedges from its products and is swapping plastic display shelving on counters with glass. Thierry Mugler’s Angel was a pioneer in refillable fragrances in department stores, and is now available as an online service. Meanwhile, Molton Brown launched a refill service in select UK stores for its 27 fragrances, as has Lancôme for its best-selling Idôle fragrance. Personalization, too, has taken a sustainability twist. Guerlain introduced its digital fragrance atelier where consumers can choose to have their fragrance packaged in a personalized bottle with an engraved name or message.
The Future
Aspects Beauty created a “future panel” that accesses research on attitudes to purchasing in a post coronavirus world, enabling it to implement initiatives to anticipate change, such as what sustainability really means; a return to on-shore supply chains; what gifting means; how to make fragrances a gesture of love again and not just a self indulgence. One of the big questions is where people will want to buy and from whom—is direct contact ever going to re-emerge? Despite all the questions, BDM’s Kessler holds an optimistic view of the world post COVID-19.
“People in lockdown are less likely to put on fragrance, but once they’re allowed out there could be a big release. They might forgo glamorous holidays, but fragrance will allow them to dream again.”
Imogen Matthews
Headington, Oxford UK
+44 1865 764918
www.imogenmatthews.co.uk
Imogen Matthews is a respected consultant, journalist and researcher who commentates on trends in the beauty industry. She regularly contributes to many of the world’s foremost beauty trade titles, has served on the Board of Cosmetic Executive Women (CEW UK) and won the prestigious Cosmetic Executive (UK) Achiever Award. Founded by Imogen in 1993, The Premium Market Report remains the only in-depth report to examine trends in the premium cosmetics, skincare and fragrance industry.
Euromonitor International published its forecasts for 2020 in a pre-COVID-19 world, but even then growth expectations for the European market were subdued: sales of men’s and women’s fragrance were expected to grow 1.5% in both eastern and western Europe. It is safe to assume that this will change when the full impact of the lockdown in most European countries is known. Euromonitor has confirmed its fragrance sales data for 2019 which stands at more than $14.5 billion for western Europe and more than $3.7 billion for eastern Europe. When it comes to top markets, the UK, France and Germany run neck-and-neck at around $2.6 billion apiece, followed by Spain ($1.7 billion) and Italy ($1.4 billion). Russia sits atop the eastern European fragrance leaderboard, with sales of more than $1.5 billion last year.
According to NPD, fragrances remained the main driver for growth in Europe within the premium category in 2019. Among the top five countries, Spain and Italy grew 8% and 6%, respectively; however, losses of 8%, 6% and 3% were sustained in the UK, France and Germany. Some losses were offset by stronger online sales, such as in Germany where online fragrance sales soared 38%.
Online Moves to the Fore
The digital sphere is proving to be a key channel for companies looking to maximize sales until the coronavirus outbreak subsides. Mintel research conducted in March 2020 revealed that 34% of UK shoppers were worried about the risk of being exposed to the coronavirus, peaking at 46% among those aged 25-34, a situation that surely deteriorated since lockdown restrictions in late March closed all but essential retail outlets.
Mintel’s Armando Falcao, a retail analyst, observes that a number of retailers have turned to creating and opening omnichannels for customers to buy products through various digital channels instead of in-store. For example, after suspending store trading in most European markets, German beauty retailer Douglas opened its online marketplace to small retailers and brand shops, who are likely to be hardest hit. In addition to offering these smaller businesses a lifeline, Douglas is shielding itself from losses generated as a result of its retail shop closures. In a separate move, Dior launched its virtual beauty boutique modeled on the brand’s Paris Champs Elysées location, where customers can virtually walk around the store and watch short video clips of the fragrances.
Despite such initiatives, NPD warns that online shopping will not compensate for the decline in retail as it cannot replicate their physical touch and smell environment: in 2019, 78% of all premium beauty purchases took place in-store.
Meanwhile, leading UK fragrance logistics firm, BDM, received a boost to its online business since its main revenue stream, the major department store and perfumery retailers, was cut off by coronavirus.
“It’s too early to say what the impact of Covid-19 will have on fragrance companies, but it’s likely to make them aware of the reliability of sources of supply and possibly consider local production,” observes Charles Kessler, chairman, BDM. “The need for flexibility and a fast response to change has never been greater.”
COVID-19’s Impact
Aspects Beauty is a UK distributor of luxury fragrances. Although its products cannot be regarded as essential purchases, Aspects Beauty still plays an important part in sustaining the livelihoods of its European brand owners, which include Italian brands Versace, Moschino and Salvatore, and French brands Chopard and E.Coudray.
“We service 30 brand owners, whose livelihood is selling perfumes. Many smaller, niche suppliers have sunk their entire savings into launching and developing their precious brand. Larger brand owners employ hundreds of people and have a network of suppliers, all of whom have families, mortgages and children to support,” explains Jill Hill, co-founder, Aspects Beauty.
So far, the company has resolved to stay open, service its brands and work on strategies for internet selling as well plans for the second half of the year and the all-important holiday period.
Conscious Consumer
According to NPD, beauty consumers are discovering the benefits of buying less and using fewer products, opening the way for new packaging initiatives to minimize waste and lower carbon footprints. In fragrance, larger bottle sizes, refillable formats and a focus on sustainable packaging are key trends, with French brands rolling out a number of initiatives.
Dior removed all cellophane and cardboard wedges from its products and is swapping plastic display shelving on counters with glass. Thierry Mugler’s Angel was a pioneer in refillable fragrances in department stores, and is now available as an online service. Meanwhile, Molton Brown launched a refill service in select UK stores for its 27 fragrances, as has Lancôme for its best-selling Idôle fragrance. Personalization, too, has taken a sustainability twist. Guerlain introduced its digital fragrance atelier where consumers can choose to have their fragrance packaged in a personalized bottle with an engraved name or message.
The Future
Aspects Beauty created a “future panel” that accesses research on attitudes to purchasing in a post coronavirus world, enabling it to implement initiatives to anticipate change, such as what sustainability really means; a return to on-shore supply chains; what gifting means; how to make fragrances a gesture of love again and not just a self indulgence. One of the big questions is where people will want to buy and from whom—is direct contact ever going to re-emerge? Despite all the questions, BDM’s Kessler holds an optimistic view of the world post COVID-19.
“People in lockdown are less likely to put on fragrance, but once they’re allowed out there could be a big release. They might forgo glamorous holidays, but fragrance will allow them to dream again.”
Imogen Matthews
Headington, Oxford UK
+44 1865 764918
www.imogenmatthews.co.uk
Imogen Matthews is a respected consultant, journalist and researcher who commentates on trends in the beauty industry. She regularly contributes to many of the world’s foremost beauty trade titles, has served on the Board of Cosmetic Executive Women (CEW UK) and won the prestigious Cosmetic Executive (UK) Achiever Award. Founded by Imogen in 1993, The Premium Market Report remains the only in-depth report to examine trends in the premium cosmetics, skincare and fragrance industry.
