5 Reasons Why Retailers Don’t Care About Your Perfume Brand
Retail distribution for fragrance brands is a crucial revenue channel that should be prioritized with a dedicated sales strategy and active tradeshow and event attendance. Retail stores allow people to be able to physically smell your scent before buying it. It provides social proof and brand awareness. It gives consumers an opportunity to buy your fragrance where they might have chosen another fragrance had your perfume not been available at a store near them. However, retail distribution comes with an inherent set of downsides that need to be weighed when determining how to allocate the advertising budget. This post will give an overview of how expanding into various retail stores isn’t a silver bullet for generating revenue and what brands can do to ensure they are making sales and building reliable revenue streams.
Negotiating with Retail
Fragrance brands that are trying to expand their stockist by selling their brand to retailers will be familiar with the negotiations and common themes that arise when communicating with store owners or buyers representing retail stores. The conversation about getting retail placement starts with, what are your historical sales? What is your price point and does it fit with my stores category pricing? Can your brand bring in customers? The overall theme is, can you make the store money? The sooner you understand this, the sooner your brand can start negotiating more successfully. Other factors such as the brand identity of your brand and the audience it attracts are obviously factored into the conversation, but if your fragrance brand has sales in existing retail stores and online retailers with an audience segment that the retail store wants to attract then your brand will have more negotiating leverage.
MSRP Pricing
Retail stores know they are a fundamental part of fragrance brands sales channels. They aren’t in the game of opening stores in order to promote interesting brands. They are in the game to make money, and they don’t make money by buying your perfume and fragrance lines at 80% MSRP. On average, reatil stores pay 20-50% MSRP for products. Higher-end retail stores have even more leverage because they understand the power of product placement on their shelves. For higher end department stores you can expect to sell your perfumes at 20-30% MSRP. Boutiques and independent retailers on average buy at 30-45% MSRP.
Fragrance brands need to understand that their incentives are not aligned with retailers. Retail expansion can dramatically help increase revenue, however, fragrance brands need to continuously be building their brands outside of the retail setting to ensure longevity and reliable revenue.
Your Perfumes Not Being Displayed
It is in the best interest of retailers to properly stock and merchandise your inventory for in-store shoppers. Unfortunately, this isn’t always the case. This trend is especially pronounced in department stores. Independent boutique stores and gift stores are normally very good at keeping their shelves stocked and merchandised. With department stores, the number of perfumes in large department stores, paired with anti-theft measures, and understaffing leads to cluttered shelves and many perfumes being relegated to behind the counter or knee-high level shelving. This obviously is not ideal for a perfume brand fighting for visibility.
Sales Clerks Are Not Incentivized To Sell Your Perfumes
Sales clerks are incentivized to sell perfume. They are not brand ambassadors for your brand. There is no extra incentive for them to sell your perfume. If the sales clerk works for a department store and is working on a commission, they will likely try and sell more well-known designer fragrances with more mass appeal and are pricier. In boutique perfume stores, the clerks tend to be more knowledgeable about perfume, but again, they are incentivized to help the shopper find a specific perfume. Gift stores and independent retailers that sell perfume are going to steer customers to whatever sells the easiest — normally a mass-appealing fragrance with rounded off top notes.
The hard work of building brand awareness and intrigue for your perfume lines should be happening long before the shopper walks through the doors of a retail store. This is why perfume advertising strategies that optimize for full customer lifecycles are so important.
Retail Marketing and Merchandising
Retailers are constantly running email marketing, direct mail campaigns, paid advertising, tv and radio promotions, and other Out Of Home (OOH) advertising for brands that they carry. This is a huge opportunity for niche fragrance brands to increase brand awareness and often times this advantage is factored into the MSRP. However, the marketing that they do to advertise your fragrance brand is often overestimated, especially with department stores that have huge selections of products.
Department stores are focused on advertising their apparel. Health and beauty retailers get a higher lifetime customer value from cosmetics and skincare. Independent perfume boutiques can offer great internal marketing for your brand but tend to have smaller customer lists which translates to moving less product.
For any type of retail store, advertising budgets are spent on bringing people to the store and marketing product categories. Advertising specific brands is an afterthought to getting shoppers into their stores who are looking to shop by product category rather than by brand.
Why Direct-To-Consumer Sales Are the Best
Fragrance brands looking to expand their stockist need to understand that retail distribution is not a silver bullet for generating revenue. For a niche perfume brand, independent perfume boutiques are going to be the first option for expanding. For a well-trafficked perfume boutique, a hot-selling perfume might make 10-14 sales a month. This isn’t going to take a perfume brand to the next level. Department stores offer more volume but the path to getting your perfume lines into department stores is much more difficult.
You Don’t Get the Customer Data
When someone buys a product form your website, you collect all of their data which allows you to:
Retargeting through multiple channels
Run better clustering analysis and customer sentiment analysis
Improved targeting for more effective perfume advertising
Learn more ways fragrance brands can utilize data from DTC customers.
Fewer Brand Touchpoints
When a product is purchased through a brand’s website, the brand has more direct control over:
communication with the customer
creating specialized orders
fulfillment process
customer service
This allows brands to create a more custom experience for the customer that intertwines more brand moments. When a perfume is sold through a retail store or online retailer, the only brand touchpoint that the consumer has with the brand is the perfume packaging.