As foot traffic in department stores dwindles, the perfume counter and its stalwarts, like Chanel No.5 and CK One, are losing relevance. According to NPD, mass-market fragrance sales in the U.S. declined last year, with prestige fragrances increasing by only 1 percent. Coty Inc., which owns the licenses to Burberry and Marc Jacobs fragrances, saw sales in its luxury fragrance division decrease by 3 percent in the fiscal year ending on June 30.
In this wake, a host of younger, direct-to-consumer fragrance brands, including Phlur, Commodity Goods and Pinrose, are rising up to offer customers more affordable options with millennial-friendly branding (which is to say: minimal).
But perfume doesn’t transition quite as easily as other categories to millennials’ preference for both online shopping and all-natural everything. As a result, these new brands must build sampling opportunities into their businesses and spend more time experimenting with new ingredients that won’t scare off today’s consumers.
For our latest confessions, in which we grant anonymity to someone in the industry to speak openly about their profession, we spoke to the founder of a perfume startup about the fragrance industry’s institutionalized markups, its “bullshitty” marketing speak and the sham that is “all-natural.”
What void in the market were you trying to fill with your perfume?
We wanted to move the market away from celebrity stuff, which we always thought was kind of stupid, and toward a more niche, craft-oriented product. A lot of the perfumes out there right now are also ridiculously expensive; even though the juices in most of them cost a few dollars, at most, they’re selling for a couple hundred dollars. We wanted to do something more accessible. You don’t have to pay that much for something that smells good.
What accounts for the exorbitant pricing in perfume?
There’s a big markup across the industry because none of these companies are selling huge volumes. The fragrance industry is currently worth around $8 billion, which is nothing compared to the clothing sector [worth $3 trillion].
Is creating other products necessary to sustain your business, then?
I think, to grow the way we want to grow, we need to expand into other categories like candles and home fragrance. Going into home fragrance is, frankly, smart, because the stores we’re in now have a demand for it. Plus, it’s an easier buy for most people than perfume, since they don’t have to weigh whether or not they want to put it on their body.
Why is the “all-natural” movement problematic for perfumers?
“All-natural” is a pretty bullshit trend that isn’t really grounded in much science. Not all synthetic materials are unsafe, and plenty of natural materials are. Just look at poison ivy. It’s like organic labeling; there’s no regulatory or legal framework for it, so even if a brand uses non-synthetic fragrances without any chemical processes involved, there’s no evidence that their product is any better for you. People are just into that these days and immediately associate “natural” with something beneficial.
We’re just focused on making really good perfumes, using whatever materials are both safe and best for production. It’s very hard to make something stable and good-smelling that’s truly all-natural.
What’s something that most consumers don’t realize about perfume production?
That almost all of the big houses are using the same perfumers. Yes, there are a few brands, like Cartier, that have in-house perfumers, but the majority license out most of their fragrance names to a small group of talented perfumers, like Firmenich and Givaudan, that control the market. I don’t think the field can really support that many perfumers, so it’s incredibly competitive, and there are only a limited number of positions. Most of the people who excel in this business are French, although some are Swiss or American.
What’s the real benefit behind marketing your perfumes as unisex?
For starters, it increases your potential market share. On top of that, any supposed divide between what’s considered masculine or feminine has always been a bit of a sham. Sure, bright florals might seem super feminine, but there’s a very big spectrum in the middle. Gendered scents are really just a marketing ploy.
Speaking of marketing, perfume descriptions can get pretty lofty. How do you avoid overdoing it?
To some degree, the bullshitty descriptions are inescapable when you’re selling something invisible. Yes, perfume may have a strong impact when someone smells it, but you have to first sell people on an emotion. I think our [millennial] generation sees a lot of that overdramatic stuff for what it is, so we try to tone it down — but you can’t get out of it entirely, because when people shop for perfume, they are trying to buy into a certain tribe with certain aspirations.
How challenging is selling perfume in a digital world?
We launched online, which was very challenging. You definitely have to have a sampling program to survive. Sustaining an online-only business and growing in this category would be very expensive, marketing-wise, which is why we expanded to wholesale. It also makes sense for our product to be discovered in stores, but as we grow, online will become more important; it’s easier to thrive there when you’re a well-known brand.
How do you determine which wholesale accounts to pursue?
Our criteria for a wholesale [partner] is just that it’s a cool store. We also look at what other perfume brands the store is carrying to make sure they’re the same price point or higher, and that they’re brands we’re okay with being associated with. We like being in smaller boutiques, but we are also thinking more about potential opportunities in the alternative landscape: hotels, health clubs, lifestyle shops, etc. Department stores, however, seem to be dying, so we’re not super focused on them.
What’s one of the challenges of relying on wholesale accounts?
We don’t have to deal with the big stores, like Macy’s, which are very difficult in terms of their demands — they have delivery guidelines and require specific technology, for instance. Since we deal mostly with smaller accounts, it’s been a lot easier — but they’re not always on top of things, which can be an issue. Some of these stores will run out of your product and not tell you for a few weeks, so you can miss out on potential sales opportunities. You have to be on top of them.
Is it important to rely on a level of scarcity in the market to stay cool?
There’s definitely something to be said for being a cool, underground brand and staying that way as long as you can. If Target approached us, we’d be in a really tough spot; there would obviously be a ton of tempting money on the table, but once you go there, you’re not likely to then go into a store like Barneys. You can do the reverse — go from Barneys to Target — much easier, so you don’t want to go downmarket too early.