THE FRAGRANCE FOUNDATION’S

2011 STATE OF THE INDUSTRY

On November 17, The Fragrance Foundation hosted its annual State of the Industry luncheon at the Harvard Club in New York City. Each year, industry experts weigh in on the current economic environment, its effect on the personal care market and forecast what’s to come. The speakers at this year’s event included Wendy Liebmann, Founder, CEO and Chief Shopper for WSL Strategic Retail; Carrie Mellage, Director of Consumer Products for Kline & Company; Lynn Franco, Director of the Consumer Research Center for The Conference Board and Michael Edwards, Author of Fragrances of the World.

WSL Strategic Retail’s Wendy Liebmann and Kline & Company’s Carrie Mellage join The Conference Board’s Lynn Franco and Michael Edwards of Fragrances of the World.

This year, the overall US personal care market surpassed pre-recession levels, which Kline & Company expected to come in at $56 billion dollars in sales for 2011. While Ms. Mellage partially credited the sales boost to a stronger stock market, robust launch activity and consumers growing tired of being frugal, she attributed key growth to a record number of foreign tourists, up 13% to prior year, seeking luxury brands and attracted to the weak US dollar. The increasing use of the Internet and mobile apps, allowing consumers to shop more conscientiously, additionally factored into the rise in sales.

Ms. Liebmann also acknowledged the smarter shopper, noting a complete shift in the consumer mindset. “The fears from the recession aren’t going away, but there is an extraordinary resilience in the mind of the American shopper,” she said. “The consumer has accepted her new reality and is learning to be smarter about her money.” She recognized that consumers have a larger skill set for wiser purchasing than they did even 12 months ago, stating that technology is driving business forward. Data from WSL Strategic Retail found that 47% of shoppers use their mobile phones while shopping in-store. Consumers reported using their smartphones to compare prices, send photos to their friends for their approval, upload coupons as well as search for product information and customer reviews.

Despite a multitude of apps providing instantaneous access to information, Mr. Edwards said that consumers still experience confusion when purchasing fragrances. He revealed that in 2011, there were 1,200 additions to the fragrance market, compared to just 76 new launches in 1991. With this hearty number of introductions, he stated that there is no doubt uncertainty exists for the average consumer. It is only further confounded by the various—and largely inconsistent—terminologies used to describe scent. Mr. Edwards proposed that retailers must unite together to create a common language that will educate customers and help them discover, and purchase, their ideal fragrance.

While there has been an uptick in the personal care market, unemployment rates and general financial insecurity do not lend themselves well for consumer spending, affirmed Ms. Franco. The current economic environment continues to suppress consumer confidence, and looking ahead, she remained apprehensive. As consumers are dipping into their savings for purchasing the necessities, little room is left for discretionary spending. “We see low confidence levels with consumers. With affordable luxuries in the fragrance and beauty categories, there is a clash between desire and ability to spend.” However, she acknowledged, “incentives and creative discounting will get
consumers in-store and online to purchasing. Customers will spend extra if they’re enticed.”


Palm Beach Beauté’s Paul Smith with Ted Boccuzzi of Advanced Distribution Systems	Pochet’s Gerald Walle with Rochelle Bloom of The Fragrance Foundation	Robertet’s Jennifer Powderly with Alison Chaneski of Givaudan

Coty’s Ruth Sutcliffe (2nd l.) with Arcade Marketing’s Eric Dalbo, Debra Leipman-Yale and Larry Berman	Symrise’s Jessica Wolf with Mark Knitowski of Victoria’s Secret Beauty	Arcade Marketing’s David Teets with Coty’s Laurie Welsh, Givaudan’s Rose Eckert and Ms. Sutcliffe

IFF’s Julianne Pruett and Lorenzo Cavallaro (r.) with Dana Kline of Fusion Brands	SGD’s Peter Acerra and Schéhérazade Chamlou with Art Spiro of Elizabeth Arden	Gaia One’s Elizabeth Gaynes and Nick Graham (r.) with Cosimo Policastro of Givaudan