BW Confidential - Issue #4 - October/December 2010 - (Page 41)

Industry viewpoint Insight: Fragrance A different approach by Alissa Demorest Four small fragrance brand owners talk about the challenges of being independent and share their vision of today’s fragrance retail landscape Distribution: The first thing I look for in a retailer is a luxury environment and the second thing is my competition. I want a retail partner, and I’m ready to give exclusivity in the beginning for a year or two, but it can last much longer if it’s a good partnership. Exclusivity is motivating for retailers as they have what their competitor doesn’t have. We are both in the same game—we have a brand that we need to grow. Creativity, from the juice to the packaging, is what makes the brand work at the point-of-sale. Consumers have a million things to choose from, so if you bring something to the market it had better at least be new. Product development: I often come out with limited-edition scents, but I wouldn’t launch more than two fragrances a year. Making a profit: I do most of my sales in department stores. When you have counters and staff you expect more business, but your profitability isn’t the same, because there is a lot of expense per door. My brand ranks in the top-five in its distribution, so I’ve been profitable since year two. Either you are in a ‘take the money and run’ business, or you are in the business of building a brand, which requires a lot of effort. I train every business manager myself and I do every door opening. Today’s fragrance market: Luxury retailers will carry more exclusive, premium brands and will start to remove masstige brands. Exclusivity has become the number-one battle—how do upscale department stores show that they are a real luxury retailer if they carry the same brands as Macy’s? (By Kilian was founded in 2007 and is headquartered in Paris) By Kilian president & creator Kilian Henessey on: Distribution: Getting lost in perfumery chains isn’t what I’m after. The noblest point-of-sale for me is the department store. While it’s expensive for the brand, it allows us to build our image and the service offered is a fit with what we sell. Buyers from department stores are also very different from those in perfumery chains; they have a strategic vision and form real partnerships with brands. In today’s market, retailers are looking for a brand that will build a loyal clientele and that’s why they talk to brands like ours. The biggest challenge for retail today is getting repeat purchases. Product development: I launch a fragrance when I can pay for it, although I usually have a dozen scents in the works. My retail price depends on manufacturing costs and I try to be as inexpensive as possible (between €80 and €100), so I give up some of my margin. I don’t cut corners when it comes to the juice and the packaging. Making a profit: We hope to be profitable next year [Thévenin bought the brand in 2003]. Today’s fragrance market: Perfumery retailers are taking bigger and bigger margins so they can open more stores and dominate the market. The result is that brands give up more margin and devote less money to the fragrance, so in the end everyone makes the same product. That’s ideal for a brand like mine, as we can stand out. The fragrance market is clearly splitting into two parts: brands in perfumery chains that are global and lifestyle-based and ‘premium fragrances’ with a true identity. Premium may only make up 5% of the fragrance market, but they keep department stores vibrant. (Parfums Lubin was founded in 1798 and is headquartered in Paris) n n n October-December 2010 - N°4 - BW Confidential 41 Parfums Lubin ceo Gilles Thévenin on:

Table of Contents for the Digital Edition of BW Confidential - Issue #4 - October/December 2010

- Brand & retail news recap
- Digital digest
- Companies on the move
Take note
- Market facts, figures & trends
Best of BW
- Highlights from our e-publication
- The latest in fragrance, skincare & make-up
- BPI president Rémy Gomez
Insight: fragrance
- Category overview
- Retailing
- Industry viewpoint
- New opportunities
- Launch roundup
- Airport Spas
- Spa case studies
- New store concepts
Travel retail
- Market overview
- Retail strategies
- Interview: World Duty Free & Aldeasa
Show preview
- TFWA World Exhibition
- Six up-and-coming beauty brands
Market watch: India
- Country overview
- Industry roundtable
- Retailing analysis
- Sector outlook
- Sustainability
Last word
- Mintel head beauty consultant Nica Lewis

BW Confidential - Issue #4 - October/December 2010