Flying Under the Radar: Why Sizing Down Might Be the Next Big Thing

In his book, “The Perfect Scent“, author and New York Times fragrance critic Chandler Burr recounts a story that reveals how important a fragrance can be to the fortunes of a famous fashion brand: “A man I know once sat next to Yves Saint Laurent at a Paris dinner party. He asked, ‘What portion of Yves Saint Laurent revenues are accounted for by perfume?’ Saint Laurent replied, ‘Eighty-three point five.’”

If the anecdote is true, then that’s an eye-opening bit of accounting.

Fast forward several decades, and brands like Marc Jacobs, Chanel, Hermes, Prada, Armani, Christian Dior and more push fragrance release after fragrance release onto the market in an effort to #1) draw attention to their rotating seasonal collections, and #2) finance continued brand expansions into China, Russia, India and the Middle East.

With fragrance taking such a central position in the marketing plans (if not master plans) of ambitious luxury houses, it’s no wonder that Booth Moore, a fashion critic for the L.A. Times, recently wrote of edgy, critically acclaimed (and yet, as of today, still fragrance-free) design house Rodarte: “Though there is certainly a place in fashion for collections that are about fantasy and hype, the question is: How long can they last — especially in this climate — if there are no fragrance or accessories sales to support them?”

Let’s do a little exercise, shall we? Just close your eyes and try to imagine where the Marc Jacobs brand would be today without the release of their hit fragrance, Daisy. Yes, I’ve seen all those handbags, shoes, scarves and dresses in the 50% Off sale sections, too. I think Daisy deserves a medal of some kind, preferably with an accompanying plaque that reads: “Thanks for dragging us across the finish line – your devoted friends at MJ!”

And I’m only fingering the Marc Jacobs brand specifically because Daisy was such a big success, and that makes it a perfect example for the point being made — that everyone’s having a hard time pushing clothes, shoes and bags lately. If the likes of Stella McCartney, Nina Ricci and Narciso Rodriguez didn’t have successful fragrance lines to shore up their bottom lines, they might easily have become the next House of Lacroix.

Yohji Yamamoto by Yohji Yamamoto for Men
With no hit fragrance, Yamamoto declared bankruptcy in early October, 2009

Worth noting: Christian Lacroix struggled for years to produce a fragrance hit. The Wall Street Journal writes that “a global perfume launch in 1988 was a flop,” and subsequent releases didn’t do any better. Lacking the revenue that a popular selling fragrance can bring in, the brand was forced to file for creditor protection this past July.

So with huge luxury and beauty conglomerates presently posting quarterly losses in the double digits due to the global economic slowdown, the question that seems to be floating across fragrance industry columns and luxury analyst reports is this: What can the luxury industry (or more specifically, the fragrance industry) do to save itself?

Octavian Coifan at 1000Fragrances.com suggests that a rebirth of “artistic perfumery” might revitalize an industry that’s gone moribund from lack of daring, with “the next level of luxury perfumery … devoted only to the creators” — the point being that actual artists & perfumers (and not the designer brand names and logos) should take center stage in both the marketing campaigns and the public’s imagination, jump-starting an interest in fine fragrance by spotlighting the creative faces behind the atomizers.

And then there’s Michelle Krell Kydd, writing at her blog Glass Petal Smoke, who observes that, “Great creations are inspired by artistry that pushes boundaries … reconfiguring the fragments so that every finished fragrance released resonates with another; not in sameness, but in thoughtfulness that engenders respect for the art of perfumery and results in a consumer’s desire to purchase fragrance.”

Steve Hicks, Procter & Gamble’s director of flavor and fragrance development, appears to agree with Coifan’s and Kydd’s assessments, though he phrases it in more no-nonsense terms, stating that quality just might be preferable to quantity: “We’re going to put more and more emphasis on big blockbuster fragrances that have real staying power and things that we can view as classics in time, as opposed to fragrances that just come and go . . . We’ve all built businesses giving (consumers) more and more, and now I think they want better and better.”

Note: the above statement is what’s known in polite circles as apologizing without really apologizing; but point taken, Mr. Hicks, and we the consumers are eagerly awaiting some good quality time.

Yet art doesn’t happen overnight, so while the rock-star-in-training perfumers are busy herding their dizzying array of patented molecules into the next blockbuster potion, the revenue-generating trend on the immediate horizon appears to be downsizing — and I don’t mean closing the factories, axing underperforming brands and letting go the staff.

What I do mean is the embrace of smaller packaging options as a way to keep newly budget-wary consumers interested in spending.

Sometimes Research Supports a Good Hypothesis

A 2007 paper published by the Economic Web Institute notes that while the prevailing wisdom has been that customers want more value for their dollar, those who purchase items focused primarily on the price per kilo (or, in the case of perfume, price per milliliter) are ultimately less satisfied than customers who focus on buying what they want but purchasing it in smaller, individual sizes regardless of whether or not it’s a good perceived value: “For the same budget, the kilo-price minimizers will exit the POS (point of sale) with fewer items and a heavier basket than item-price minimizers; even more importantly, they will be kept unsatisfied as they can afford fewer categories.”

In other words, the ability to purchase a greater variety of items is more important to the consumer than a great big bottle. That should be music to anyone’s
ears.

But that’s not the only good news for producers and retailers who are looking for smarter sales options — research published in the Journal of Consumer Science appears to suggest that smaller packaging can bypass a consumer’s internal braking system, an example of what can be termed, “Flying Under the Radar“.

The research focused on whether consumption habits differ according to packaging size by studying the response of university students that are casually confronted with various size bags of potato chips — the results showed that smaller packages were opened and consumed more readily (“Oh look! A tiny treat!”) and that the students involved ate twice as much when consuming from small bags as those who were presented with larger potato chip bags.

Okay, you’re thinking — so what? Well, here’s what a study about potato chip bags can tell us about real-world consumer habits: a larger package size appears to kick internal self-control functions into gear (such as, “I don’t really need that much, thanks anyway!”), while smaller “individual portion” packaging does just the opposite, flying right under our self-control mechanisms to encourage greater consumption while minimizing all that internal hectoring about diets (and/or budgets).

In summary: the smaller the packaging size, the more like a harmless treat or innocent pleasure the item is viewed — and don’t think that companies haven’t taken notice.

In an article published at the Columbia Business School website, researchers discovered that “selling in small quantities can … increase total sales of a given good, decrease product waste and result in higher profit because of the higher per unit prices of smaller-size units” — which is why we’re already in the upswing of what can arguably be considered the new trend: the increasing availability at the retail counter of smaller fragrance bottles, travel sizes and special purse spray packages.

Yosh Trompeur
Easily portable 8ml bottle of Trompeur from Yosh Han

Consumers are unwilling to buy more than what they need.

Back in early May, independent perfumer Neil Morris sent out an email announcing that his company was switching its Neil Morris Vault fragrance packaging from two ounce bottles to one ounce bottles. The email read, “During the past year, we have discovered that most of the people who purchase a Vault fragrance actually purchase multiple fragrances. And we had many requests to offer the scents in a smaller size in order to allow folks to build a fragrance wardrobe without breaking the bank.”

The financially spooked customer spoke, and Neil Morris listened.

In similar news, French perfume company Parfumerie Generale announced on September 18th (2009) that they would start offering a 30ml (one ounce) bottle size that “fits easily into a sports or week-end (bag) and naturally in a handbag.” Parfumerie Generale has been in the fine-fragrance business since 2002, with 50ml as their smallest available bottle — yet one economic contraction later and a 30ml bottle size is now a permanent fixture in their lineup.

Word for the day: adapt

Consumers desire to cut back on spending, but fragrance companies and luxury brands need to keep selling product to stay in business — a smaller bottle with a lower price point might just be the solution everyone needs.

Another option that lowers the price point while also pleasing consumers with its convenience is the travel spray or purse spray format. Purse sprays are not new (just as one ounce bottles aren’t new), but more fine-fragrance companies, mainstream and niche, are starting to offer them for sale.

For example, earlier this year, Kilian Hennessey’s high-end By Kilian fragrance brand unveiled an attractively branded travel spray set that offers four 7.5ml atomizer sprays along with an engraved magnetic concealer that retails for almost $100.00 less than a regular By Kilian 50ml bottle with case.

Consumers get the same quality scent plus the same high quality standards in packaging, but with less barrier to entry (i.e. a lower price), which is almost a hundred good reasons for first time customers to take a second look at By Kilian.

And on August 26th of this year, exclusive British fragrance company Ormonde Jayne announced the availability of its first ever Travel Kit, a set of four 10ml branded spray vials priced at about $30.00 less than its previous smallest bottle size. Then there’s rock-and roll tinged indie fragrance brand Juliette Has a Gun announcing a late September release for its “Purse Bullet” — an engraved and branded purse spray that sells for nearly $30.00 less than a 50ml bottle of its highest priced fragrance to date.

Other companies smartly leaping (or which have already smartly leapt) aboard the downsizing and purse spray wagons: Sonoma Scent Studio, Donna Karan, Issey Miyake, Missoni, Prada, Narciso Rodriguez, Dolce & Gabbana, La Prairie, Tom Ford, David Yurman, Juicy Couture, Ralph Lauren, Morgane Le Fay, Gucci, Acqua di Parma, Bulgari, L.A.M.B., Givenchy. . . are you sensing a pattern here? Good. Me, too.

Tauer Perfumes Une Rose Chyprée
Andy Tauer embraced the travel-friendly 15ml bottle for his latest release

While mainstream brands such as Jean Paul Gaultier, Guerlain and Marc Jacobs (among others) have all offered travel and purse sprays for various items (and at various times) in their lineups, adding niche and luxury fragrance brands to the mix elevates the “Only What You Need” concept from potential trend to full-blown movement. Toss in the growing numbers of environmentally-conscious consumers who want less packaging waste with more refill options, and it looks like smaller, more easily portable bottles and travel kits are poised to be game changers for an industry traditionally accustomed to the supersize (Chanel Les Exclusifs, anyone?).

And just in time, too, because when I’m standing in the fragrance department at the brand spanking new Neiman Marcus that just opened here in Bellevue, Washington, I don’t want to have to choose between what I want and what I can afford — and why would any sane company force me to? Because you know what, I can take that $100.00 I save purchasing the easily portable By Kilian Travel Spray set (rather than its bulkier 50ml cousin) and go spend it on one of the new, air-travel friendly 30ml bottles from Parfumerie Generale.

It’s a win-win situation.

The profit margins on smaller, sleeker items are just as high as on their larger counterparts, but as I exit the store, swinging my shopping bags while bathed in that special post-retail glow (and don’t pretend like you don’t know what I mean), I can feel like I (me, the consumer!) am getting more of what I want for my money as opposed to more than what I need. That’s a trend I think manufacturers, retailers and consumers should have no trouble supporting.

***This article is an expansion on the ideas first visited in the post: Less Is More: Packaging for the New Fragrance Consumer

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