As Nest Fragrances celebrates its 10th anniversary this week, the company is prepping for its next phase of growth.
In the last nine months, Nest has diversified its merchandising assortment, adding 45 new home fragrances to its existing lineup — cutting across its lines of candles, diffusers and lotions — and four new fine fragrances, which the brand originally introduced in 2013. According to founder and executive chairman Laura Slatkin, revenue has doubled year over year.
This comes on the heels of Nest completing a $70 million majority investment stake to Eurazeo Brands in November 2017. At press time, Tengram Capital Partners, which had previously invested in Nest in 2012, stated the brand had increased revenue “by nearly fivefold over the past five years.” Eurazeo’s Jill Granoff told Women’s Wear Daily she thinks Nest could double or triple the size it is today.
This is in line with larger industry trends. According to market research firm Euromonitor International, the fragrance category has seen 3 percent growth since 2016. Meanwhile, Kline Group reported in June that home fragrances outpaced growth in 2017, with direct sales channels increasing at a rate of 10 percent. Kline called out Nest specifically as one of the “strongest performers, with double-digit gains in 2017.”
Aside from looking for more opportunities in its merchandising assortment for this second phase of growth, Nest is ready to play up its digital marketing strategies — something new for the brand — to further reach that millennial consumer and invest in technology and physical retail.
“The reason why the brand has been so successful is we have a very well-diversified portfolio,” said Slatkin. For instance, this past spring, the brand introduced its Linen home fragrance collection with core product offerings like candles and lotions, and also debuted items it never had manufactured before, like laundry detergent and fabric refresher spray — tangential items relating back to home fragrance.
This was also the case with the brand’s liquid-less diffuser, which it launched in May 2017 within four top-selling core home fragrance collections. In just 17 months, those same diffusers have been added to four more home fragrance collections and two holiday home fragrance collections, and a separate refill is now available in eight core home fragrances.
Slatkin and CEO Nancy McKay said they’re also serious about reevaluating what fragrance is, beyond pure product. For starters, Nest is actively thinking about pushing the envelope in terms of technology: It’s looking to create its own smart devices or to potentially collaborate with programmable home automation player Nest Home (there is no relation between the two companies at this time) to facilitate Nest Fragrances scenting entire homes. “We are constantly trying to rethink what fragrance is and how it can be received,” said Slatkin.
Still, while newness is important, Nest is simultaneously playing up the appeal of old favorites. For the brands’s 10th anniversary this week, Nest is re-releasing three limited-edition, large three-wick candles in bamboo, grapefruit and Moroccan amber scents, and is also re-introducing 10 of its best-selling fragrances from the last decade in a “discovery” set. Since mid-August, the 10th anniversary set has ranked within Nest’s top-10 selling products on online channels.
Relaying the founder message
While Nest is employing an influencer marketing strategy, curated by marketing and gifting platform Octoly, for its anniversary, it’s Slatkin and her founder story that is driving the most engagement on its social channels. Eighty percent of Nest’s customer base is from the millennial and Gen X cohorts, and the company has seen 50 percent of its audience active on social. Facebook, where the brand has nearly 117,000 followers, drives the highest unpaid conversion out of social platforms.
On Facebook, Slatkin’s videos have garnered up to 10,000 views. For the 10th anniversary announcement, Nest is sharing its video content featuring Slatkin across platforms, said chief marketing officer Stephanie Davis Michelman.
“We posted a video featuring Laura on our homepage, in email, and on Facebook and Instagram,” said Davis Michelman. Slatkin added, “With fragrance, we are always talking about creating a mood and how to convey that online.” As such, Nest will continue to invest in more video content across channels to tell those “scent stories.”
Email particularly has also been a new growth area for driving conversation among millennials. While Nest would not release its total subscriber base, it said that 50 percent of subscribers are under 36 years old, and that by focusing on growing subscribers and increasing content there, it has improved email performance by approximately 30 percent year-over-year. This is a strategy Davis Michelman continues to employ going forward with new product launches and innovations.
Building the retail story
Nest’s products are sold on its e-commerce site and through retail partners; fine fragrance is sold at Sephora, QVC and select retailers; and home fragrance can be found at Neiman Marcus, Nordstrom, Bloomingdale’s and Saks Fifth Avenue. Currently, the brand has no standalone stores.
Still, Nest is trying to entice the customer where she is. For instance, at Sephora, Nest has honed in on its fine-fragrance strategy. Fittingly, the brand is in the top-10 fine-fragrance brands at the retailer, out of around 145.
To further this point, at Sephora’s 2017 Brand Summit, where around 400 industry leaders were present, Nest won the “Best Cast Engagement” award — this honor, which is given to a brand based on feedback from Sephora’s sales associates, or cast members, was not fragrance-specific; every beauty brand at Sephora was considered. Nest won for its video content, its “training-in-a-box kits” and the way it presented its new launches to sales associates in stores. Nest has been dedicated to energizing the Sephora team about new products: For its February 2017 Black Tulip fine-fragrance launch, it created scented tattoos — the tattoos were so popular among associates, Sephora and Nest later sold them on Black Friday.
Nest continued this strategy for its newest fine fragrance launches that debuted this past summer: Wisteria Blue and Cocoa Woods. The brand coupled the products with scented bubbles for the former, and scented pencils and branded M&Ms for the latter.
Nest has clearly done significant work with its retail partners, both from a messaging and product point of view, and it has the opportunity now — more than ever — to sell that message in its own standalone stores, as it’s doing on social and online. (Nest has seen double-digit growth in e-commerce sales in the last five years, according to McKay.)
“Retail is the next step for just about any luxury consumer goods brand experiencing the kind of significant growth we’ve been enjoying. This is an area we are actively exploring,” McKay said, emphasizing that Nest is still very North America–centric. Slatkin added, “We have to continue to look at how to bring the brand holistically together — home, fine and other categories, all under one roof. It’s a purer way for us to tell our story authentically.”