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“How does a fragrance speak to an individual consumer?” asked Karen Grant, senior beauty industry analyst at the NPD Group during Cosmetic Executive Women’s “Fragrance Rainmakers” event in New York. Grant and her fellow panelists addressed the current crisis in the fine fragrance industry and outlined solutions for future success.
Grant noted that seven out of 10 men use fragrance today, while eight out of 10 women do the same. Meanwhile, the number of fragrance users and frequency of that usage continues to decline. The industry saw 2008 sales fall 2%; in 2009, the industry went into the holiday season down 10%. While fragrance is widely beloved by consumers, she said, as an industry “we’re not really able to capitalize on that emotional connection with the category.” Part of the problem, Grant explained, has been the “sameness” of many fragrances, olfactively and otherwise: “It’s increasingly [difficult] to create success today.”
Moderator Jenny Fine of WWD Beauty Biz pointed out that 2008’s the top women’s fragrances were Beautiful, Coco Mademoiselle, Light Blue, Chanel No 5, Cashmere Mist, Happy, Pleasures, Euphoria, Sensuous and Romance. Grant noted that the majority of those scents have been at counter for a number of years. The fact that Sensuous is the only recent addition to the top tier, she said, shows that “it’s very difficult for a new launch to create sustainability.” Still, she said, the remarkable performance and resilience of established fragrances prove that “they continue to be important to women and drive business overall.”
Unfortunately, that sustainability is often driven via promotional means. “As much as 50% of the sales of the top brands are coming from gift sets,” Grant noted. This means that the juice is not driving the sale, a situation that is escalating. Fragrances traditionally introduced gift sets after six or 12 months on the market. Today, however, those sets are often introduced as early as three months into a commercial release. Consumers, Grant said, are increasingly focused on deals and aren’t given time to fall in love with a fragrance. In addition, a new launch is typically going to be off-counter within 12 months, exacerbating the lack of familiarity. Grant added that fine fragrance sales between October and December represent about 50% of sales for the year. More than 20% of the business is done in just two weeks. The stakes are remarkably high. The main reason women buy fragrance is confidence, to feel better about themselves, Grant said. “Companies need to reconnect with that.”
Ann Gottlieb, founder of Ann Gottlieb Associates, concurred. Addressing issues in the U.S. market, she said, “We’re not offering fragrance that inspires and is beautiful and as magnificent as it used to be.” Consumers understand this reality, she said, and take their money elsewhere. Gottlieb added that, “We have abandoned the majority of the market in favor of targeting a 25-and-under consumer. Older consumers feel somewhat neglected.” Meanwhile, she explained, “Younger consumers are not particularly loyal.” In fact, despite the industry’s focus on that group, they represent the largest faction leaving the fragrance market.