Inditex on the move to take fragrance market by storm
Nov 26, 2018
Inditex wants to be more than a fashion company and in the diversification could be the future of the Spanish giant. What seemed to be a timid venture with a slow rollout is now becoming a real strategy for the group in the area of fragrance and cosmetics. Why would the company settle for a fashion empire when it can grow with a diversified and affordable offer in a sector with high profit margins?
Massimo Dutti is Inditex’s latest chain to take a step forward in the fragrance category with the launch of six new fragrances at the end of October. And while the company already had a number of fragrances, the relaunch has meant a breath of fresh air for the offering, refreshing the line with a more professional look. Including three fragrances for men and three for women, the collection has been fine-tuned in line with the brand’s positioning, reaching for its minimalist and refined image which is now best positioned in the premium fast-fashion segment. The move is not surprising, considering that Massimo Dutti has become the group’s fourth-largest chain by sales volume after Zara, Berskha and Pull&Bear. It has also recently opened key stores, such as an innovative space in Lisbon.
Titled ‘The Secret of Scents’, the collection is inspired by travel. At the launch party, it was accompanied by luxury packaging that included, in addition to samples of all the fragrances, two limited-edition books about the line’s creation and the history of perfume. While the existing Massimo Dutti fragrance line was distributed in a network of multi-brand retailers such as Douglas, El Corte Ingles and Amazon, the new collection has overhauled the distribution system and will be sold exclusively by Massimo Dutti. Customers will be able to find the men’s and women’s fragrances in 400 Massimo Dutti stores and online in a total of 32 markets.
Market analysis and product segmentation are key to the Spanish group’s strategy. So the rollout of fragrance products has been a process, going from small fragrances to a more established offer and now, whole lines. The development has been so gradual that the increasing prominence of the fragrance category now seems like a natural evolution. Of the eight chains, only Uterqüe has yet to launch its own fragrance.
Meanwhile, Zara sells men’s and women’s fragrances with prices ranging up to 20 euros, including Disney and Hello Kitty fragrances for children. The group’s other brands have also followed suit: Pull&Bear and Bershka, Inditex’ two teenage brands, have an even larger cosmetics offering. In addition to having their own fragrances, both brands launched makeup and cosmetics last year. Oysho, which has transitioned from a lingerie brand to a wider proposition with homewares and activewear, launched its first perfume in 2016. Currently, it has three unisex fragrances, as well as candles and skincare.
And Zara Home expanded its offer, dedicated to homewares, with the launch of ‘The Perfume Collection’ in early 2017. The line was created in collaboration with perfumers Alberto Morillas and Jérôme Epinett. Despite the efforts, Inditex’s rivals including Primark and H&M have also entered the market with prices similar to those of Amancio Ortega’s brands, but in terms of segmentation and differentiation, the strength and variety of Inditex is proving successful.
The group, which is working on selling all its brands online by 2020, seems to have found a window of opportunity in the fragrance market. According to Cosmetics Europe, a personal care association, the European perfume sector was worth 11.93bn euros in 2017. Meanwhile, Spain’s National Association of Perfumery and Cosmetics (STANPA) announced that sales of perfumes and fragrances grew 5.42% to 1.31bn euros in Spain in 2017, becoming the fastest growing category and enjoying its third consecutive year of growth. This means that fragrances could help Inditex boost sales even further, after posting revenue of 25.33bn euros in 2017.
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