London based Retail Team Partners Carol Osborne, Paula Levitan and Sarah Atkinson talk to Christopher Yu, managing director of United Perfumes.
What was the toughest challenge you faced when starting United Perfumes?
We launched UP initially as a distribution business at the start of the global economic crisis which was a challenge in itself. On top of that, while we had a clear idea of what we wanted to do with UP, we did not properly assess the market at the time in terms of both monitoring what the market was doing and what customers wanted.
As the business developed, we had our "light bulb moment" and moved into consultancy work for a number of luxury hotels, corporates and high net worth individuals who were looking for a new approach to fragrance. The real turning point for the business though was in 2010/2011, following a chance meeting in the street with an industry contact who put us in touch with Fornasetti, and we secured our first licence to develop and market the brand.
Any new business needs to be open to seeing where the market takes it. We have had to move with the market and ended up with a very different business model from the one we started out with.
What are the main issues facing a new fragrance brand looking to develop and expand into new markets?
The fragrance industry is very different from the beauty industry. Buying a fragrance is an emotional purchase, it is not going to make you feel 10 years younger, and a new brand needs to understand how different markets respond to fragrance. For example and perhaps surprising to hear, the Asian fragrance market remains relatively small compared to Western markets. It does not have a long history with perfume, with the concept still being relatively new and not viewed as particularly important or a necessary product.
A new fragrance brand must be mindful not only of the different approach it needs to take with regard to different cultures, but also more specifically to the requirements of the end customer, which are very different to those of a retailer.
At the moment, you have a retail business for Cire Trudon and a wholesale business for both Cire Trudon and Fornasetti Profumi. What are the challenges you see as a retailer in the luxury fragrance sector in today’s market?
As I just mentioned, the key thing for any retailer is the end customer. The customer is king. Retailers need to ask and then listen to what a customer wants to keep up with their ever changing expectations. On the fashion side, retailers such as Burberry have listened to their customers who later this year will be able to buy clothes straight off the catwalk, rather than having to wait several months for them to become available in store and online.
Retailers also need to be incredibly organised. If a retailer is launching a new fragrance, the ordering process will need to have been completed many months in advance to be sure of meeting the launch date.
You are speaking at the Luxury Law Summit in London this year on routes to international growth. Can you share with us your experience and advice on the most effective strategies for international expansion?
I think a key strategy is to work with local partners, whether through a joint venture, distribution or agency agreement, and not be afraid to admit that you need help in new jurisdictions. Of course, it's important to choose the right partner and to understand that every agreement in each different market will be different and needs to be tailored to the specific circumstances.
From a legal standpoint, what do you see as the biggest challenges to success in the fragrance business?
There are a lot of legal issues for a new fragrance business to consider at the outset, when budgets are likely to be tight and all focus is on the creative and the product. Legal compliance and protection of intellectual property may not be seen as a priority cost and are often ignored or put on hold. On the compliance side, if a fragrance business is selling to different countries, the packaging requirements for each jurisdiction are likely to be different and should be checked. Protection of IP is obviously important, but the budget just may not be there. One way through this is to protect IP in phases, focussing on protection in markets key to the business to start with.