A few years ago, the fragrance industry was in the midst of a big transformation.
After decades of selling cheap products to consumers in the US, most of whom did not want to pay much more, fragrances were finally being sold in stores for far less than their original retail price.
And they were not just being sold on the cheap, either.
Fragrances sold in the $4k-per-bottle range had to cost over $10,000 in the early 2000s.
But now that we have the luxury of buying from the likes of Marc Jacobs and Chanel, who are doing so much more to innovate, it’s time for the price to start dropping.
The price of a $5 bottle of perfume is now $4.79, compared to $4 in 2005.
That’s $10 in one year, and $5 in the next.
The same trend is now happening in the luxury department.
A study released last year by retail consultancy firm Euromonitor International found that the price of $50 items in a retailer’s catalogue has fallen by a third over the last 10 years.
That means the average cost per bottle of an $80 fragrance has gone down by $20 since 2005.
In the US and Britain, this is likely to be driven by the shift towards mass-market brands, such as Chanel and Ralph Lauren.
And in some countries, it could be driven, at least in part, by the advent of disposable cosmetics, which now have the same price as fragrance-making products.
According to Euromonitors, the average price per bottle for disposable cosmetics dropped by $50 in the last five years, from $14 to $10.
The trend is expected to continue as mass-distribution companies like Target and Sephora, as well as online retailers such as Amazon and Ebay, increase their pricing of the products they sell.
“In the luxury industry, we have seen this trend in the past and it’s only going to accelerate in the future,” said Sami Salih, senior analyst at Euromoncer.
“But it’s still early days.”
What’s behind the price drop?
It’s not clear.
It’s possible that the trend in retail pricing is driven by consumer behaviour, said Samy Shah, senior market analyst at market research firm eMarketer.
“As we move towards mass retailing, the price is going to start to drop, which may be good news for luxury brands, but bad news for the consumers,” Shah told The Independent.
“As long as you are a premium brand, you want to attract people with disposable income and disposable income is going away.”
But the same could be said of many other luxury brands.
“It’s a lot of money for some people,” said Mark Karpinski, a luxury goods analyst at eMarketers.
“They’re going to pay more for a product they’re buying, and they may end up buying a more expensive product because of the extra cost.”
Is the trend good news or bad?
While we’re at it, how do we explain the drop in price?
It is likely that the increase in disposable incomes will increase sales, said Shah.
“[People] are buying less and less,” he said.
“And they’re going for brands that are more affordable, such a Chanel or Ralph Lauren, or that have a reputation of being more affordable.”
But there is also the possibility that prices will drop because more consumers will become aware of the cost of buying fragrains.
“The big retailers will be less profitable,” Shah said.
What we do know for sure is that the current trend in fragrands is bad news, says Sami Karpinskas, a fragrance analyst at the consultancy PwC.
The trend in perfumes is likely bad news because it’s a trend driven by consumers, who do not want their money being spent on luxury items.
And there is the potential for the fragrand industry to fall even further.
“There is a huge possibility that fragrancing will disappear in the coming years,” said Shah, adding that it’s likely the fragrant industry will collapse.
Is there a solution?
It seems the answer is yes, said Karpinksi.
If you want a luxury fragrance, it may be worth investing in a more affordable fragrant.
“I think the big question is: Is it worth the cost?
Are people going to stop buying expensive fragrants?”
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