More than 200 new prestige perfumes--those sold in department stores and cosmetics shops, rather than drugstores or supermarkets--were unveiled in the U.S. in 2006, according to NPD Group. But
sales of these high-end perfumes--which make up 60% of the overall fragrance market -- have been slowing. Total revenue is expected to grow less than 3% globally this year, according to Euromonitor,
while the overall luxury goods sector is up by about 12%.
The reason is olfactory overkill. To lure consumers, perfume brands have mounted huge advertising and distribution campaigns,
selling perfumes in their own boutiques as well as in department stores and airport duty-free shops world-wide. They have also kept prices low; while high-end leather bags and sunglasses have steadily
risen in price, most designer perfumes still cost less than $100.
The plethora of perfumes has also hit bottom lines. With so much competition, many companies spend as much as $50 million to promote a major new scent. That's equivalent to an entire year of sales for most perfume brands, making it increasingly difficult to recover the costs.
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