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Dec 1, 2009
by Kevin Zimmerman
Indeed, while most sectors experience the holiday season as their busiest time, it's particularly true of the fragrance industry. "This is always the time when people start shopping for fragrances," says Ann Briglia, owner of Zelda's Aromatics (www.zeldasaromatics.com), which offers perfumes, incense, aromatherapy oils and other such products. "These are timeless gifts that have a regular demand." This news could not come at a better time. According to market research company, the NPD Group, overall prestige fragrance sales in the U.S. decreased by six percent in 2008, and retail perfume sales fell by seven percent during the first quarter of 2009. Estée Lauder, the American company that owns or licenses such scent brands as Tommy Hilfiger, Tom Ford and Sean John, reported that its fragrance sales fell by 20 percent during the fourth quarter of 2008, and quoted its chief executive, William P. Lauder, as saying it was, "One of the worst holiday seasons in decades."
Heading into 2009, the picture hardly looked any better, with NPD reporting that prestige fragrance sales had dropped ten percent for the first half of the year, as compared to January-June 2008. And while new fragrance launch sales generated $57 million in the first six months of '09, that still represented a decrease of 17 percent from the previous year, due in part to a decline in new launches of women's fragrances, down 31 percent. New launches of men's fragrances were up by 23 percent. Currently the perfume industry's annual sales are estimated at $25 to $30 billion. However, according to NPD, while overall sales during the period may have declined, premium fragrance products, defined as those priced at $100 and above, have actually increased, generating $26 million in sales for Q1 2009, a ten percent increase over Q1 2008. And in a perfume industry application of the trickle-down economic theory, many experts believe that as top tier sales increase, so too will sales of lower priced items.
Also expected to help in the business' recovery is the fact that brand loyalty may be becoming increasingly deferred. According to the eighth annual, "Luxury Goods Worldwide Market" study published by global management consulting firm Bain & Company, more cosmetics consumers this year expressed a willingness to trade down to premium or sub-premium products. Such has been the case at Zelda's. "We're adding new products all the time, but it all seems to even out," Briglia says. "Some things go out, others come in, but our sales have remained fairly steady." While brands like Coach, Juicy Couture and Black Code Armani, which appeal to younger consumers, continue to be strong sellers, Briglia notes that there is also a growing willingness to "mix in" older fragrances, like Karl Lagerfeld, as a means of experimentation. "I'm seeing less of the, 'I want Chanel No. 5, and that's it,' attitude," she says. "There seem to be more people willing to take chances with their scents."
Zelda's does well by its perfume oils, bulk priced at $30 per 16 oz. container ($18 per 8 oz., $12 per 4 oz., $7 per 2 oz.), and its 1/3 oz. perfume roll-ons, priced at $1.90 each. Handpoured colognes are priced at $1.90 each for 1/3 oz. sprays, $1.25 each for 2 oz. bottles, and $2.75 to $2.95 for 2 oz. sprays. "There is a lot of competition with wholesale body oils right now," she says, noting that the roll-on category in particular has taken a hit for Zelda's. "We're known for the quality of our products, but lately, some customers are too afraid of the economy to be willing to pay a little more."
Zelda's incense offerings have picked up some of the slack. "People know what they're getting. There aren't any buzzwords you need to come up with - it is what it is." Bundles of 100 eleven-inch sticks are offered at $1.85 each, while bags of 200 cones are priced at $5 each. The company also offers a special of 24 bundles of approximately 100, eleven-inch sticks at $44.40 each, and a flat shipping rate of $9.80.
Incense is the longest established component of Paine Products' business, according to Vigue. Reflective of its Maine headquarters, Paine's scented products mostly revolve around woodsy aromas; its incense, available in balsam fir or red cedar scents, is available in cone, stick, or log shapes, priced at $4.50 to $7.50. Paine also offers a range of burners beyond the standard ash catchers that many incense sellers offer. Log cabin-styled burners, priced $7 to $12 depending on size, come with ten or 20 pieces of incense as well. Brass incense holders, featuring flora or fauna, go for $8 to $12, depending on design. Scented pillows, sachets and hot pads are also available, priced at $5 to $20 depending on item and design, while its balsam-filled draft stops, priced at $14 each, have been their best sellers recently. "Stores have typically been selling out of those early, each of the past few holiday seasons."
Incense sales are also burning up at Killer Beads (www.killerbeads.com), according to sales manager, Michelle Mosscrop. "Over the last six months, we've noticed quite an increase in sales," she says, "and as we approach the holidays, it seems like it's getting to be even more popular." Maintaining popularity are its 24-stick Killerscents line, priced at $0.75 each, as well as its bulk bundles of 100 sticks at $2 each ($1.85 each for orders of 100 bundles or more). The company also offers closeout specials at $12 to $18 per 12-unit bundles. Relatively new to the store are its licensed rock 'n' roll incense lines, which mercifully do not emit the essences of Ozzy Osbourne, Kiss, et al., but are instead 24-stick variety packs priced at $1.50 each (six pack order minimum). Those items, along with ones dedicated to Jimi Hendrix, Sublime and Bob Marley, join a growing list of licensed incense from the likes of Playboy, Cheech & Chong and pin-up artist Michael Landefeld, priced at $1 to $1.50 each (six pack order minimum).
As indicated by its name, Killer Beads also offers a range of jewelry and other gift ideas. Mosscrop says the company's website has been, "Very successful; we've gotten a lot of good leads and orders through it," but adds that updates are likely. "Right now it's not password protected," she says, "and that's something that a lot of our customers are asking about. We'd also like to make it easier for our customers to browse the products."
Also looking to improve its web presence is Designer Fragrances. "We're looking to launch our own secure website by the first of the year," Lawrence says, "and we want to be able to process credit card orders immediately." Designer Fragrances promotes itself as the largest distributor of name brand original, alternative and discount fragrances in the United States. "We sell a different type of product," Lawrence says, explaining that the company also manufactures its own private line, DFI Fragrances, which promises the same quality and character as the original designer fragrances. Since the designers whose names appear on the fragrances are not the actual manufacturers of the fragrances themselves, their trademark only appears on DFI's packaging, not on the fragrance itself. DFI's packaging states that it is the company's version of the scent in question. Thus, Designer Fragrances is able to offer such names as Coach, Gucci and Guess at $6.99 each. "Typically our customers are mom and pop shops," Lawrence says. "They buy bottles from us at our price, and then charge a 300 to 400 percent mark-up." The company also boosts sales by regularly offering deals on warehouse clearances, she adds.
Meanwhile, at Fragrance X (www.fragrancex.com), owner Ron Yakuel says, "Business is good. We can't complain." At least not when you're selling over 6,000 different fragrances every day, as Yakuel says Fragrance X is doing. "There's no doubt that there have been some tough times," he posits, "but we just keep trying to do our best, and do what we can to help our retailers succeed by offering products that perhaps they couldn't sell before." As opposed to other companies, Fragrance X's top sellers, "haven't really changed very much over the past five to seven years," he says. "The tried and true continue to do well. Most of our customers have built an affinity for bands over time, much like they do with the music they like."
As evidence, Yakuel points to the company's current best sellers, which feature such longstanding favorites as Elizabeth Arden's Red Door, Calvin Klein's Eternity, Opium by Yves St. Laurent, and Elizabeth Taylor's White Diamonds. Most scents are available in a variety of presentations (fragrances, bath and body, gift sets), at a discount of anywhere from eight to 80 percent off the suggested retail price. Fragrance X is "always looking" to make improvements to its website, he adds. The site has steadily added such features as seasonal fragrance tips and a gift wrapping option ($2.95 per package), as well as primers on pheromones and what makes particular scents sexy and/or masculine. Shipping is free for orders over $59; otherwise it costs $5.95.
The following companies were interviewed:
John Vigue, co-owner
Paine Products Inc.
P.O. Box 1056
Auburn, ME 04211
Toll Free: 800-524-0546
Bonita Lawrence, sales manager
Designer Fragrances Inc.
2925 Corunna Road
Flint, MI 48503
Toll Free: 800-726-5663
Ann Briglia, owner
154 Esopus Avenue
Kingston, NY 12401
Toll Free: 800-647-8202
Michelle Mosscrop, sales Manager
P.O. Box 18797
Panama City Beach, FL 32417
Toll Free: 800-399-7830
Ron Yakuel, owner
4810 37th Street
Long Island City, NY 11101
Toll Free: 888-557-3738
Topic: Product Trends
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