How to deal with the big yet complicate business of fragrances: let’s think outside the bottle!
Ask any woman about fragrances and she will tell you that finding the right “perfume” is almost as hard as finding the right man.
Since 2700 B.C. when the rich elite of the Egyptian society invented scents, using them in religious ceremonies, burial preparations and daily wear, fragrances have always played a very important role in the lives of both men and women, who used to adorn themselves with these aromas to denote their status or to increase their appeal and beauty. In addition, scents have always had not only a “decorative” purpose but also a strong emotional component.
In fact when one smells a particular fragrance, unconsciously connects that smell to a portion of his memory. For instance, I remember so well the perfumes of my parents (Joy de Jean Patou used by my mother and Pour un Homme de Caron used by my father) and when I smell these scents at any time the memories that come back to me are very strong and range from feelings of laughter or tears.
So if scents are so essential in our lives and since every human being on earth is a potential fragrance customer (children included), why is this incredibly huge business struggling?
As of today, the fragrance market is worth approximately €22bn a year globally and mainly run by 3 giants like Coty, L’Oreal and Estee Lauder who all seem to have solid growth forecast for the next five years. Still the fragrance market is said to be in the midst of a tough moment, especially the mass perfume segment which is stalling. While celebrity fragrances have long been in decline, losing around 25% across all markets (as they lost part of their target of tweens and teens), now even Designer fragrances are slowly losing their popularity.
These are normally business deals traditionally “under license” and historically in a license agreement the two parties have slightly different interests and business purposes. Fashion houses use fragrances as an entry-point into the brand for customers who might aspire to own the designer clothing one day, but also as a means to further establish the brand message and identity. Licensees on the other hand are of course cashing in on the fact that not all customers can afford designer clothings, turning their spending into their entry price products. But is this brand building and market positioning always a match to the strategy of the “Maisons”?
Many experts, including my self, believe that in a lot of cases some relevant gaps are noticeable. Very telling is the experience of Saint Laurent, during the tenure of Hedi Slimane, on the house fragrances produced by L’Oreal. As Mr Slimane was not in charge of perfumes &cosmetics and as his ready to wear collection even had a different logo, it was never possible for the YSL management to combine the two images. The result has been a huge confusing marketing message for all consumers.
During those years there were such glaring differences even between the instagram posts and how they were managed that no brand building for the fragrances has been accomplished. Somebody might question that Kering should have given Mr Slimane also the power to advise on the YSL fragrances business but it is evident that not only we are talking about two different companies (Kering and L’Oreal) but also that, even if this could have been feasible, probably Mr Pinault would have never agreed. This was also the exact reason why Mr Arnault, for example, never allowed Toledano to bring back his darling Slimane to Dior. Hedi back to Dior would have meant giving him complete creative direction including fragrances&cosmetics and under no circumstances was LVMH ready to see Dior lipsticks and mascaras packaging destroyed and changed just to please the latest creative director.
This example highlights one of the main elements characterizing the modern management of the perfume licenses: while some brands intentionally decide to have two different images and communication models on perfumes vs garments, in many cases one single image might benefit both parties. Still licensees are struggling with the image of the brands they represent due to the high turnover of creative directors and are not always prepared to forecast and react.
But is the final consumer really so sensitive about the switch of a creative director? A recent research shows that fragrances customers are even more sensitive to any changes in the strategy of the brand of their dreams, compared to bigger spenders.
Before the era of social networks only those who could afford the luxury part of a brand knew about heritage, collections, inspirations and seasonal proposals. Nowadays the same affluent customers have developed a very specific and precise taste and consequently buy what ever they like no matter who the person is who created it. On the contrary, the aspirational portion of the consumers, who constantly checks the brand’s instagram and facebook, has a very large knowledge of the brand, religiously follows its development and is savvy about all the new products. As the aspirational client is more careful while investing, is likely to be more effected by any discrepancy in the brand.
Therefore, confusing images between garments and perfumes have the potential to create disasters on a large scale as they risk to disappoint a wider portion of clients.
But lets look even deeper into this.
Nowadays it is evident that many luxury brands count on a fragrance license to have rich royalties to finance their garment collections. In fact many of them like Tom Ford, Viktor&Rolf or Jean Paul Gaultier have such a successful business with fragrances comparing to their much lower turnover in their ready to wear and accessories business to the point that in many countries they are perceived as just “perfume brands”. Still the funds coming from this business are crucial for them to survive despite such an inconsistent market perception. The problem arises when the final consumer who was until yesterday faithful to the brand and always bought the same scent for years now wants something different.
The numbers indicate for example that more and more consumer preference has shifted towards niche perfume brands, which has added nearly a quarter of a billion dollars to the market in the past three years. These artisanal scents often present natural ingredients, are usually sold in small boutiques and are less likely to be heavily marketed, focusing more on the originality of the scent and on the after sale service.
So how should Coty, L’Oreal or Estee Lauder prepare themselves for the next ten years period? Should they start buying the brands they have the licenses for (like spanish Group Puig who bought Carolina Herrera, Paco Rabanne, Jean Paul Gaultier just to protect their fragrances business)? Should they invest in small niche projects like Lauder did with The Labo? Or should they simply increase their portfolio of brands in order to minimize the risks? If I were them I would probably be less complicated than this and I would focus on two main points.
First I would secure my present business by building “bridges to the brands”. Let’s be honest: while a Maison has a very emotional and visceral way to create and then promote its products, the licensee has a more realistic, technical and marketing oriented approach in handling the same brand image. The result is, as it often happens also with other licenses, that licensor and licensee proceed on parallel ways which seldom cross each other. “Building bridges” would mean that the licensee should hire managers with extensive experience on the brand side and who are experts in a mix of marketing / branding / commercial / image. While working for the licensee, they would enjoy, thanks to their experience, the respect and the trust of the brand. Being the guardians of solid bridges between the two parties and assuring a correct and constant flow of information and a seamless and coherent communication strategy, would allow these new managers the opportunity to grow the business faster, combining the efforts of both sides.
The second point I would focus on would be “online”. When we talk about fragrances, the web unfortunately seems to be an useless tool: E-commerce is great for so many product categories, but not for perfumes. In fact, an essential component while buying a fragrance (unless, as often happens, the purchase is made just for the strong packaging and beautiful bottle), is, still, smelling the scent. So how to solve this limit on the web? There are start ups that send at home “smelling kits “ to customers before they commit to the “real purchase” or others who realize bespoke scents based on the study of the customer’s skin.
Finally, while none of these solutions may be a miracle for the growth of perfume industry, wouldn’t it be an incredible step forward for the fragrances giants if the internet could one day satisfy all our senses together with sight, hearing and even the nose?
When food started to feed fashion
January 9th, 2018: Gucci opens star chef Massimo Bottura Osteria in Florence, naming it “Gucci Garden”. Uncountable are press headlines: a new phenomenon of “food meets fashion” is born.
Yes, ehm, in a way.
For those among us who are not only “impatient foodies” (recalling the most famous food blog for fashion people) but also luxury experts and refined “connaisseurs” of the history of fashion, these articles might sound a bit too much.
Am of course not talking about the beauty of the Gucci project, the care for details, the incredible colors palette, the choice of unusual furniture and decor, the interesting menu list at a very affordable price in a such breathtaking setting that only Universal Studios might be able to replicate. Am talking about the fact that, as usual, fashion people have often very short memory.
I remember, instead, another important date: January 17th, 1981.
I have a clear souvenir of that day, because exactly on that day I turned 8 years old. Of course for the world of fashion, my birthday is not relevant, but definitely relevant is what happened on 17/01/81 in Paris: another italian born Pietro Costante Cardin (for all, Pierre) bought the already famous restaurant in rue Royale Maxim’s and made of it not only one of the best restaurants in town, but created from it one of the most incredible fashion-food business, ever seen. The “Cardin Garden”, ante litteram.
Already one year later, in 1982, Maxim’s restaurants would open, with same decor, colors and menu, also in London, New York and Beijing, followed by an impressive offer of food items labelled Maxim’s. Jams, wines, salts and peppers, but also “moutarde”, pickles and even a fantastic mineral water produced (even today) in the area of Arezzo in Italy.
On the light of the above, probably, is not 2018 the year in which food started feeding fashion: but for sure, we can state that this is the year in which food started to feed fashion “instagram”.
Like in crime novels, the interesting part is never what, who, or where, but is “why”. The motive for a murder is always the main pillar of any dark story, as, by understanding it, we can easily discover the killer. So going back to our dissection on the reasons of this forced coexistence of the fashion and food industries, our role is to understand the picture in a deeper way.
First of all, is not Gucci the only fashion house who recently invested in restaurants and food: the Ferragamo family since years produces wines in Tuscany and owns beautiful hotels in Florence and in the country side (like the stunning property of Castiglion del Bosco). Ralph Lauren has opened Ralph’s cafe’ and Polo Bar Restaurants. Armani built hotels, Emporio Cafes, Nobu restaurants and sweets lines (Armani Dolci). Versace opened hotels in Dubai and Gold Coast, Zegna Family a fantastic “Bucaneve” starred restaurant, as well as Trussardi or Bulgari had already done. So it seems that in some way fashion is strongly investing outside its natural perimeter: but, again, why?
It might seem a stretch at how two such different industries have found a way to coexist and feed each other. But, may be, this might not be such a stretch if we consider that both of them have a basic simple connection: creativity.
Well, this for sure was the reason that pushed Cardin to buy Maxim’s: a creative genius but also a smart businessman, our italian “Pietro” very soon understood the big potential and additional value of investing in food. On the contrary am not sure this might be the today’s “why” of such proliferation of “food-meets-fashion” activities.
We are living in a very connected world, where the dialogue between a luxury company and its followers and, hopefully, customers have to be maintained “hot” and “live” like a singer with his fans also when he has no albums to release.
For maisons like Gucci, whose consumer target is used to be solicited with stronger and stronger messages, colors, images and cut-off-heads, creating contents for communication and social media has become as important as creating collections (which will be then used as content as well). On the light of this, it seems not anymore crazy the idea that a fashion house might start to invest the same amount of money, to create products and to create media contents: both will feed the customers, keeping them faithful and engaged.
When I took part to the amazing Gucci Garden opening, so honored to attend such an incredible night and while admiring the setting and the project, I happened to buy also a pair of slippers in the annex boutique of the restaurant. In a blink, I had become the result of such an incredible experiment: food fed fashion who fed me who fed back fashion. And I also instagrammed all this process myself for my 15k followers. And here we found the “why”: the lasagne at the Gucci osteria might be at just 15€, but an instagram post of them is priceless.
The ideal woman
A very interesting result came out from a recent research in Europe about which size should a woman have to be considered “ideal” from a man point of view. Size 44 italian as a first choice, size 46 as a second choice and just at the third place size 42 or lower.
Honestly this does not surprise me at all! The fact that is a beautiful size 44 lady the person most part of the gentlemen would like to invite for dinner or have a love affair with, shows that when we talk about “size” are women the worst enemies of them selves and not men. Women can be extremely critical on this specific subject and never a man would dare to call “curvy” a woman who is not a showroom model: on the contrary female world would! And this has strong consequences on fashion production and on which female models are chosen for promotion and advertising on social media.
Despite the fact that sizes 44 and 46 are normally covered by all designer collections, still a lot of women are often not satisfied by the market offer in the bigger sizes and a lot of times trendy styles are only available in smaller sizes which often brings us to realise that fashion is may be just for slender bodies.
Honestly speaking, in general, designers and retailers have long thought of the plus-size segment as high-risk. Predicting what these customers will buy can be difficult, as they tend to be more cautious about styles. Still higher sizes are a very big market potential, above all in territories like for example USA where 60% of women consider them selves “curvy”.
I recently went through a very interesting and hilarious blog “Trendy – curvy”, where women are finally accepting, defending and promoting a new shape of female model, also thanx to the modern ways of communication. Social medias have definitely played an important role in changing attitudes in the fashion business, by promoting successful women like Rihanna, Beyoncé or the Kardashian sisters. Fashion, on the other side tried to answer this challenging yet potentially very big market by developing collections suitable for any shape of body but without renouncing to elegance, trendiness and comfort. The numbers involved in this particular business are huge: revenues in the plus-size category increased by 14% between 2013 and 2017, compared with growth of 7% for all apparel. Takings were $21.3bn only last year.
So where are designer cloths? Why Prada or Dolce are holding back? Probably, if you check carefully, they are not.
First, is not uncommon that in high fashion boutiques in Us, Dubai or London, designer or catwalk pieces are largely available even in size 48 italian; secondly it is without doubts true that the affluent segment of women who can afford Dior or Vuitton are often in their 50s and with a couple of kilos more.
I was recently in the Fendi boutique in Paris while a beautiful lady who was not a catwalk size model, was happily trying on a set of stunning furs, while sipping champagne and picking chocolates from a silver trail. While admiring such a fitting process, two things confirmed me my theory: first the lady was alone and she also clearly stated that thanks God she had not brought any girlfriend along or she would have never managed to buy even one piece. Secondly she told the sales team that she was looking for a great outfit has the man of her life had invited her to the Opera Garnier followed by dinner on that night.
So girls: try to be less critical with your selves as we, the boys, are very simple: we pretend to have Victoria Secrets models on our screen saver, but in real life we adore enjoying the beautiful smile and the smart brain of a 44size woman.
Alessandro Maria Ferreri is the CEO of The Style Gate
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