Fragrance retail has traditionally been dominated by the spray and buy tactics of the department store but its online presence is slowly increasing. Emma Reinhold looks at the challenges and opportunities of retailing fragrance online
Online beauty is big business. From Net-A-Porter’s recent foray into the sector, to feelunique.com’s acquisition and subsequent cash injection from private equity firm Palamon Capital, digital is a format that is moving beauty sales into new territory. While skin care and colour lend themselves well to the online concept, fragrance has traditionally been a harder sell. The lack of sampling opportunities and the very personal nature of scent selection has in the past meant that fragrance sales have been at a disadvantage when compared to other self-selection categories. However, this mentality is changing, and fast. “Consumers today are more comfortable to buy online and, as a result, retailers are focused on building their online businesses,” explains Jo Lee, Buying Director for beauty and jewellery at QVC. “There are big changes happening on the high street – rents are increasing and basket price is key, so retail has become much more polarised.”
“Online is critically important in terms of consumers,” adds Keran Fordham, Commercial Director at The Perfume Shop. “We’ve seen double digit growth for our online business but it’s not just e-commerce as a channel, it’s how people are buying these products which is interesting. Mobiles and tablets are a big part of the mix, particularly with younger consumers.”
Social media has formed a key part of The Perfume Shop’s marketing strategy to tap into this opportunity, which Fordham believes is essential, not just for e-commerce but across all retail channels. She adds: “The key here is about interacting with customers and building relationships for the future – it’s not just about price and promotions. The tools to build these relationships [Facebook, Twitter, YouTube etc] are free so everyone has the opportunity to do this. Consumers want more than just a store these days.”
Educate and entice
Despite having a channel dedicated to beauty, fragrance has not, up until now, been a big market for home shopping channel QVC. Fragrance is a key focus for QVC, adds Lee. “Unlike the high street we don’t have a big fragrance business, so this is a huge opportunity for us and we have ambitions to grow this to a serious proportion of our mix.” This ambition has started with the signing of the brand’s Penhaligon’s and L’Artisan Parfumeur, says Lee, while Liz Earle’s transition into fragrances – the brand is one of QVC’s most popular – has given the retailer a bigger opportunity to explore fragrance.
“The underlying point is that when you walk into a department store you don’t always know what you want. It’s often a pushy environment – whoever shouts the loudest wins, so it’s very hit or miss for the consumer. The TV selling process is very different because you have a captive audience,” Lee adds. “The consumer can relax and take their time to look at the bottle and listen to the narrative, which is frequently missed in a department store environment.”
Lee admits there is a challenge with non-traditional retail channels. “Obviously the consumer can’t try the fragrance, which is why sampling is so important, but the description of the fragrance, the language used and the tone of that language is also essential. It’s about setting the mood of the brand, educating the consumer on its history and on the ingredients, packaging and bottle.” For the launch of Liz Earle’s Botanical No 15 fragrance, for instance, the brand’s commitment to sustainability was also explored. The juice contains a blend of natural botanical ingredients, 90% of which are derived from natural sources, which Lee says adds real depth to the story.
QVC is looking to enhance its shopping experience further by partnering with a fragrance expert to educate the QVC customer. “The QVC customer loves education and we want to talk to them about fragrance with authority,” she says. “It’s not just about the fragrances themselves, it’s about the bigger picture, looking at fragrance families and providing an educational service for the viewer.”
While TV shopping lends itself well to experiential marketing, for Fordham, online retail has more of a functional positioning. “Online is not really about the experience,” she says. “If you are looking for a new fragrance, it’s more about the store, but for repeat purchase and promotion, online is a good fit. “It does very much depend on the customer’s motivation however. You may have someone looking for a gift with a specific price point in mind. Online enables them to browse at their leisure, whereas someone looking at self-purchase would veer more to a store. People still want to smell the fragrance before they buy it.”
‘Smellovision’ becomes reality
A research team at Japan’s Tokai University has developed a new display system that combines sights, smells and air currents for an enhanced experience while viewing the screen.
Tentatively called ‘Smellovision’, the system, now at a prototype stage, could represent an innovative new way to market products and could have applications such as digital displays, signboards and advertising, or any environment where it could be useful to blow fragrances toward viewers to give them the sensation of smelling what they see. The developers also envisage their system enhancing cinematic experiences by wafting odours that relate to events on screen.
The display consists of an array of LEDs spaced 2.5mm apart. The spaces between the LEDs are taken up by holes through which fragrance capsules are blown out toward the viewer using air blowers behind the screen. Although the fragrance capsules quickly vaporise, the molecules move as a group pushed towards the viewers.
Surviving the surcharge
While increasing online fragrance sales is a challenge in itself, e-tailers have been hit by a new issue involving shipment. In January this year, a new legally required dangerous goods shipping charge came into force, affecting fragrance companies looking to ship their scents abroad. For prestige fragrance brand Ormonde Jayne, the new legislation has forced them to adapt their business model.
“We were presented with a real dilemma and it put the company in the twilight zone – people were still ordering but we were at a standstill until we could find a way to comply with the new law,” says owner Linda Pilkington. “As a result we’ve had to put a number of plans into action. Firstly, we’ve had to subsidise the shipping cost, which has wiped out any profit we made; secondly we’ve had to look into pick and pack options for the US, as 65% of our customers are from the US, and thirdly, we have had to think about how we supply our customers around the world. “Our shipper does not ship everywhere and so there are clients we can’t ship to anymore. It’s made us speed up our business plan and look at an international presence more keenly.”
A significant proportion of this plan will involve online, she says. “In the next few years I see our turnover online equalling that of our Bond Street store, which has been going for 12 years. Online retail is not the poor relation of the bricks and mortar boutique, and we have worked to ensure customers receive the same experience both in-store and online.”
This drive for equality online and in-store means Ormonde Jayne’s unique personalised Perfume Portrait service is also available for online customers, echoing the bespoke service offered in its boutiques, while the packaging for online purchases mirrors the bitter chocolate and antique gold hues used in the boutique. “It’s about creating the right mix for the customer, whether that’s in-store or online,” she adds. Pilkington has also invested in a comprehensive SEO platform involving third parties, where the brand’s banners appear on other websites. “It’s a pay per click agreement and so far it’s been a good way to grow organically,” she says. The Perfume Shop’s Fordham sees third parties as more of a challenge. “There is an element of nibbling in the industry – a lot of people are trying to be the middle man between us and the consumer,” she explains. “They are taking a proportion of the margin and the challenge is how to grow our online footfall without losing the margin. We are being approached by at least two of these companies a week but you need to choose affiliates in a sensible way.”
Opportunities for everyone
While online and on-air channels are presenting retailers with an exciting and profitable opportunity, most agree that bricks and mortar still plays an integral role in the future growth of the category. “A customer shopping has expectations and it’s about them knowing that you have all channels available, it’s not an either/or issue,” says Fordham. Lee agrees: “All formats have a place. We shouldn’t want to lose our high street stores. The service, the surroundings and the experience are still very important and a key part of what makes beauty so special.”