BW Confidential - Issue #13 - March/April 2013 - (Page 48)

Retail European perfumeries Dark days ahead? European perfumeries are juggling an economic crisis, thrifty consumers and escalating price points. We analyze the challenges facing retailers in the market by Alissa Demorest E uropean perfumery retailers had little to celebrate at the end of 2012. Prestige retailers in the region registered losses of between 2 to 15% for the year, according to industry sources and the market witnessed an unprecedented wave of discounting. The prestige market in Greece and Portugal was hit especially hard with decreases of 5% to 15%. According to market-research company NPD, last year sales fell in Italy by 3.6% and in Spain by 6.7%, while in France the market saw a decrease of 0.9%. The slowdown in the market began in earnest in September and is not forecast to bounce back anytime soon. Germany, however, did better, with prestige sales up 2% in the last quarter of 2012. While retailers in Austria, the UK and Scandinavia are still seeing robust sales, this trend may be short-lived. Retailers polled by BW Confidential note that sales in northern and Eastern Europe, notably Poland and the Czech Republic, began slowing from mid-2012. “In 10 years in the business I’ve never seen such negative growth rates—it started in southern Europe and is progressively moving north to all 48 countries. We are entering a tough period,” an executive from a leading prestige retail chain confided to BW Confidential. Discounting on the rise This has seen retailers implementing more promotions. Indeed, discounting is at record levels in Europe. The market saw discounts in selective perfumeries in Western Europe in the weeks running up to the end-of-year holidays of up to 50%. In some cases, the entire store was discounted by 50%. “You kill the business when all you talk about is discounting. You can do it from time to time, but in many places it happens regularly,” explains German brand ArtDeco marketing director Anna Blasco-Salvat. This situation is also creating a confusing shopping environment. “The consumer is seeing both the base price of products going up and discounts getting out of control, so all of the work that brands and retailers are doing to create value for the category is being destroyed due to a few players. This massive discounting is also not targeted and brings nothing to the market apart from immediate cash to the retailer,” comments one retail executive. Some retailers however, argue that discounting is the only way to counter escalating prices. “ The real problem with discounting is that the retailer passes these reductions on to the brands so they […] eat away at our business in a phenomenal way ” Interparfums ceo Philippe Benacin “Brands are compensating their loss of unit sales by boosting prices, with the idea that retailers will attenuate these price hikes by discounting. The result is that perfumeries have now become expensive,” comments Robert March-April 2013 - N°13 - BW Confidential

Table of Contents for the Digital Edition of BW Confidential - Issue #13 - March/April 2013

Cover
Comment
Contents
Update
- Brand & retail news recap
- Companies on the move
Take note Market facts, figures & trends
Best of BW Highlights from our e-publication
Launches The latest in fragrance, skincare & make-up
Interview Natura Cosméticos evp José Vicente Marino
Insight: Make-up
- Category overview
- The latest trends
- Social media
- Retail viewpoint
- Retail case studies
- Increasing usage
Retail
- European perfumeries
- Store concepts
Digital Mobile strategies and brand case studies
Strategy spotlight Trends to inspire
Market watch: US
- Country overview
- Department stores
- Specialty stores
- Industry viewpoint
Emerging markets Company profile: Jequiti
Radar A profile of six up-and-coming beauty brands
Travel retail: Brazilian travelers
- Overview
- Passenger profiles
Packaging Designs for travel retail
Last word The Beauty Company’s Alisa Marie Beyer on new ways to converse with consumers

BW Confidential - Issue #13 - March/April 2013