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4 Trends that will Help the Fragrance Industry Get Back into Growth

For too long, the fragrance industry has been defined by Christmas.

In the six weeks running up to Christmas Day, brands and retailers abandon all attempts at connecting with fragrance users and focus in on shifting stock to meet their year-end targets.

The towers of coffrets cluttering up perfumery halls are testament to brands’ strategy of Christmas gifting. Never mind what the recipient wants; it’s all about the nicely presented box at a bargain price.

Thankfully, last Christmas saw a move away from coffrets towards standard fragrance items, but the gifting sentiment remains.

Retailers have to sell stock in order to hit sales targets upwards of 50% of annual turnover. So discounting is considered to be the main means by which to stimulate sales.

The Black Friday trend has given the fragrance industry a reason to extend seasonal discounts with promotions rolling throughout December.

Just about every major retailer discounts fragrance, even John Lewis, who regularly match competitor’s price cuts, without resorting to any of their own.

These days, Christmas without discounts is unthinkable.

But does discounting work?

Looking at recent sales trends suggests not. Value sales growth for the total fragrance market has averaged just 1.5% annually over the past three years.

Discounting is not the answer.

Challenges Facing Fragrance

So why isn’t discounting working?

The clue lies with consumers who are not engaging with fragrance in the ways that brands and retailers think they are.

The Fragrance Retail Experience is Failing Consumers: Retail sales declined 0.2% in 2016, while online sales grew by 18%.

The internet only accounts for 1 in 10 fragrance purchases, but if this trend continues, consumers may prefer to buy fragrance online rather than face shopping in perfumery halls.

Too Many Brands: The number of fragrance launches is absurd: 2,095 new fragrances launched globally in 2016, compared to 581 in 2003.

Flankers and limited editions are an easy option for brands, but short-termism is not a recipe for gaining customer loyalty.

Celebrity Fragrances have Lost their Glamour: It is one of the most successful sectors since the 1990s, but consumers are becoming bored with celebrity-endorsed fragrances.

Signing another reality star/recording artist is not the way to win over consumers in fragrance.

Advertising is Stuck in the 1980s: Fragrance advertising has always been about image, aspiration, sex and glamour, but tells people nothing about the product.

Most ads are interchangeable, distinguished only by the inclusion of a celebrity. Are fragrance brands even aware that consumers are disengaged with their advertising?

The Impact of these Trends

The fragrance industry faces a long-term decline unless the following issues are addressed: too frequent launches, lack of support for long-established brands, disregard for consumer needs and wants, and ill-conceived discounting.

Despite these failings, the fragrance industry is changing and evolving with much to be commended.

Our research for this year’s Fragrance Report, has highlighted a number of emerging trends that offer massive opportunities for growth that remain as yet untapped.

They include:

Genderless: Despite growth of this sector, retailers have yet to embrace this trend. Until they do, its huge revenue potential will go untapped.

Niche: Artisan brands have a massive opportunity to break into the mainstream but first need to break from convention.

Scent: It’s the heart and soul of every fragrance. It’s also the key purchase driver and yet its potential remains untapped by brands and marketers.

Women Over 45: The demographic most likely to experiment and yet sadly overlooked by brands and their marketers.

By focusing on these four growth areas, fragrance businesses should be able to reduce their dependence on the transient Christmas period and build a strong year-round business.

However, they require a fresh way of thinking and, in some cases, a rejection of the status quo that has hampered growth for too long.

In this year’s Fragrance Report, out this month, we investigate each of these trends and identify how they can help the fragrance industry turn the corner and move back into growth.

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(2) Comments

  1. I’m a little confused by this article. The industry is in decline where? Is it retail just in the UK? The industry as a whole is growing. Online as you say and will continue to grow. Look at Waft (www.waft.com) and many others. I also don;t agree with the comment on Niche brands. I’ve done a lot of work on this and worked with several Niche fine fragrance companies. Happy to discuss separately as its a topic in itself. Niche does not need to be mainstream, that’s the point. I also don’t understand the comment on ‘Scent’.. please expand upon this. If you mean the majority of heavily supported fragrances are ‘me too, mundane and mediocre’ I agree.

    • Hi Simon. Thank you for your comment.

      The article refers to the UK where retail sales are sliding and online is on the rise. In our forthcoming Fragrance Report, we analyse the impact that Waft, amongst other niche concepts, is having on the category.

      Many niche brands will always remain so, because that is where they want to be, but equally, there is a strong trend for successful niche brands to become more widely available and effectively appeal to a wider mainstream audience. In the report, we analyse the stumbling blocks to this happening.

      Finally, by ‘scent’, I mean ‘smell’. The smell of a fragrance will always be the most important factor determining consumers’ purchasing and repurchasing of fragrances. I do agree that many heavily supported fragrances leave a lot to be desired!

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