The demand of global perfume market was expected to increase
globally and regionally especially in the developing countries due to the
increase in spending. The industry experts expected a growth in sales in the Middle East region especially the UAE and other GCC
countries, as their culture appreciate perfumery.
As there is a very competitive perfume market industry
globally and regionally, there are many strategic issues facing this industry.
And we can classify them in four categories:
The regulations continue to change for the benefit of the
consumer and the environment. The new regulations can affect the perfume
industry as it could increase the cost and the time of product to launch the
market and thus, decrease sales.
For example, if the new regulation is to ban a specific
ingredient for the aim of consumer protection, then the perfume companies will
change the formula of the perfumes which contain that ingredient. And that will
lead to increase the cost and the time to launch and lower the sales.
In UAE, the perfume companies should follow the regulations
and standards of Emirates Authority for Standardization and Metrology (EASM).
Those standards were put for the aim of consumer and environment safety.
In US and Europe, the sales
of perfumes are lowered by the high unemployment levels, lower spending,
reduced credit availability and lowered consumer confidence. Also, the
disruptions in the financial markets, fluctuations in foreign currency exchange
rates, inflation, currency devaluation and stoppages in travel and political
conditions had a big effect on the demand of perfumes and that lowers the
During the economic crisis in 2008, the perfume industry in
the GCC recorded one of the highest growth rates in the world. And as the Arab
spring movement affected parts of the Middle East,
the UAE was considered safe for tourists and investors and that led to increase
in tourism and sales at the country. The increase in the UAE travel and tourism
industry stimulates a long-term consumer confidence and growth.
Travelers and tourists is the growth factor of the perfume
industry market. As for more than one billion travelers, 30%-40% of them enter
retail stores and 15% make a purchase.
That’s why the airports became the stealth shopping malls of
this century. Also, the rapid expansion of airports and new luxurious airlines
in the GCC results in the development of the duty free zones and the increase
of the in-flight sales. Every year, more than one million travelers go to Saudi Arabia
Growth in the UAE’s travel and tourism industry, including;
hotels, leisure, retail sectors and airports, was an important factor in
stimulating long term consumer confidence and economic growth.
The demand of luxury products has been increased in the Middle East, and that intensify the competition between
the international perfumers.
In the Middle East, the
social media became more popular. The internet and facebook usage is high. And
that results in increase of the digital marketing campaigns to build brand
loyalty and make more sales. The companies used the internet to provide
information about the products and professional advice about usage.
Those campaigns used to launch fresh and exciting new
fragrances, to reach a huge number of consumers through the internet, and to
engage the younger generation which is a large and growing market.
As international perfume companies are expanding into the
Gulf markets and the region. They are serving their products to the local
consumers by merging the Arabian scents like oud, musk and amber with lighter
perfumes to meet the consumer trend for oriental and traditional fragrances.
And that intensify the competition between the regional and the international
perfumeries, in which the former tried to implement strategies to deal with the
Regional perfume companies had noted the trend of mixing the
Arabic scents with French techniques and are adding to their portfolios to meet
More strategies that can be implemented by regional
companies to remain competitive are listed below:
Reaching the trend of layering, personalizing
perfumes, and oil-based long lasting perfumes. In which two or more perfumes
are added together to make a bespoke perfume. And that helped individuals to
create their signature perfume. Recently, the new trend is to go to the perfume
store to create your personal fragrance by mixing your preferred scents in the
concentrations that suit your taste.
Making celebrity perfumes, which
most of their consumers are young and looking for a good perfume in a
reasonable price. For example, Elizabeth Taylor perfume which launched in 1991,
and made a huge success.
Modernization of the brand to make
it more appealing to consumers and using streamlined and more contemporary
Continuous focus on mass and
prestige retail customers in the region, while delivering expanded portfolios
to the international markets through licensing and key retailers.
Distribution through hypermarkets,
mass volume retailers, drug stores, department stores, airports, television
shopping, the internet, and specialty stores.
Continuous offering of fragrance
testing bars at mass retailers, as the studies indicate increase in the sales
of tested perfumes.
Tapping into digital market and
updated retail store designs. And using a phased approach which is based on the
revenue and growth by the region. For example, Elizabeth Arden planned to first
strengthen the sales in Europe and Latin America
–their two largest markets. As will as expanding through north America- third
market in size- followed by Middle East, Africa
and Asia Pacific.
Reengineering the supply chain
with the implementation of global software system that would enable the
companies to expand globally and take advantage of the growth in international
markets. And that will improve the supply chain efficiency and profits, and deliver
their products on a large scale quickly.
Organizing the products into
sections related to the targeted consumers and distribution channels throughout
the world. For example, L’Oreal was organized into four sections; the
professional products division, which distributed to hair salons; the consumer
products division that distributed through mass market retailers; the luxury
division that served to selected retail outlets; and the active cosmetics
division that distributed to health channels such as pharmacies. The aim of
these divisions is to offer their products to as many people worldwide as
possible by taking advantage of the sectors that were accelerating.
Digital media campaigns. By
focusing on evolving digital capabilities, such as mobile applications and
social media platforms. To reach a huge number of consumers. Especially the
younger generation. And to engage them through the right channels with the
right messages. And making the perfumes available in a range of price and value
Travel retail channels, which take
advantage of increasing of tourist numbers especially in the region. For
example, Estee Lauder experienced significant growth of sales in the Middle
East, China and Russia in 2011.
Despite declining consumer confidence and spending in the US and Europe.
Signing licensing agreements with other
regional or global perfumeries. This strategy can guarantee increase in the
revenue and brand credibility and recognition as the people now knows that the
production is the responsibility of the licensing company. It also can increase
competition because the competitor now has the right to use the same production
method. But that can be limited by the licensing company by making it
restricted to geographical area, time or quantity. Moreover, it will increase
the risk to expose your confidential production process.
Substantial investment in
advertising. To create a connection between consumers and the brand. Brand
differentiation through corporate marketing accounts for 35% of large global