Fragrances, a highly sensorial category, was one of the winning beauty and personal care categories of the COVID-19 pandemic. The post-2020 resilience of fragrances was achievable thanks to its ability to transform sensorial experience into mood experience, with an omnichannel strategy that spanned social media, including influencers/KOLs (key opinion leaders), and celebrity ambassadors. In addition, e-commerce helped propel growth globally in 2021, but digital engagement beyond transactions will drive future momentum.
E-commerce becomes a pivotal channel, overtaking direct selling globally in 2021
Source: Euromonitor International
In just one year, e-commerce increased its channel penetration in fragrances by six percentage points, establishing a high baseline that makes its projected 23% share of total sales feasible by 2026. Although e-commerce is expected to account for almost a quarter of fragrances distribution by 2026, it still lags behind the almost 30% e-commerce penetration expected in skin care (31% for men’s skin care) and the 27% expected in colour cosmetics.
Stress from the COVID-19 pandemic creates a new need state in fragrances
High levels of stress globally ushered in demand for emotional wellness, tapping into the role of fragrances in providing comfort and indulgence at the onset of the COVID-19 pandemic and into 2022, as consumers grappled with outbreaks and lockdowns, high inflation, and geopolitical uncertainty.
Source: Euromonitor International Product Claims and Positioning, 2019-2021
To cope, the industry repositioned fragrances from sensuality and social occasions towards self-pampering and being special, and added functional claims related to emotional and mental wellness. This new positioning created a new need state for fragrances, therefore attracting a new kind of audience – one that is more worried about emotional issues such as stress and self-confidence, than about external beauty. At the same time, nostalgia drove consumers to seek out specific brands that would trigger a particular – and presumably happier – pre-COVID memory. As a result, claims including “relaxing”, “aromatherapy”, “mood boosting”, and “equilibrium” became more common among fragrance brands.
Digitalisation strengthens fragrances’ connection with online consumers
Many players incorporated surveys for consumers to interact and find their “own” brand, based on personality traits and, most importantly, what kind of emotions they wanted to feel. This kind of personalisation was particularly attractive in a difficult context of home seclusion, where the feeling of loneliness was high.
What further fostered engagement was the fragrance industry’s response to the consumer appetite for greater engagement. Players listened to consumers and transformed them into co-creators, also leveraging personalisation trends. Customer feedback and community recommendations played a pivotal role in fragrance brand discovery online, overcoming sensorial barriers that helped convert younger consumers, such as millennials and generation Z, into fragrance enthusiasts.
The industry witnessed early success through Dior, which heavily leans on livestreaming strategies in China. Dior was the first major luxury brand to launch on the Chinese video-sharing app Bilibili in 2020 and was an early adopter on TikTok. Currently, Dior is expanding its partnership with Tencent via video and is building up its capabilities in shoppable social media.
Younger consumers will continue to play an important role in solidifying fragrance e-commerce
The pandemic forced consumers from all generations to migrate towards e-commerce. Older generations are generally loyal to one or two particular brands. In the past they might have resisted fragrance e-commerce, but are now finding the channel easy, secure, and more comfortable.
Feedback-driven communication with consumers during product development and digital engagement with gen Z will help fuel competitiveness among fragrance brands, particularly in the premium segment. Since gen Z heavily relies on influencers for beauty purchase decisions, premium players should continue to leverage partnerships with influencers and KOLs, going above traditional celebrity endorsements to drive digital engagement.
Gen Z and millennials tend to keep a wardrobe of fragrances, placing great importance on usage benefits. “What emotion will the fragrance bring me?” and “How will it help me to enhance my wellbeing?” have become key questions for this cohort.
What is next in digitalisation technologies in fragrances?
L’Oréal Groupe is taking a multi-faceted approach. The creators of L’Oréal Groupe’s Viktor&Rolf’s SpiceBomb Infrared obtained a palette of sounds as close as possible to the sensations of smelling SpiceBomb Infrared’s accords (e.g., chili pepper, red berries, etc.), creating a non-olfactory way to experience fragrance. The company is also leveraging neuroscience to prove and guarantee its claims, having teamed up with neuroscience specialist Emotiv to develop a multi-sensory headset that uses machine learning algorithms to interpret behaviour, stress and the reaction from each consumer when exposed to certain fragrances. The aim is to identify their emotions and, from that point, build the best formula to trigger the desired emotion, such as happiness or relaxation.
Along the same lines, PUIG carried out an exclusive high-profile and disruptive pre-launch of PR Phantom at duty-free. It uses a combination of neuroscience and AI to select ingredients that stimulate sexiness, self-confidence and energy in this new fragrance, resulting in a bold scent with notes of creamy lavender, energising lemon and sexy woody vanilla. The brand is also vegan, and uses clean, ethically- sourced ingredients. On the top of that, the campaign is omnichannel, and the brand owns the first ever connected bottle. By placing their phone on top of the bottle, consumers have access to exclusive content, including interactive filters, personalised playlists, augmented reality, and interactive games.
Personalisation, enhanced technologies, and neuroscience will improve over time and expand the emotional and mental benefits of functional fragrances. These products will attract ever more exigent consumers, who are looking to meet their specific needs, and rely on science to ensure a guaranteed effect. Combined with new digital features, community gathering on social media through livestreaming and the metaverse, improvement of communication with customers, and even involving them in product development, this will surely consolidate and push e-commerce opportunities even further in the coming years.
For more on the world of fragrances, read our report, The Fragrance Phenomenon: Redefining Value and Priorities.