Tarnished halos and outlet mall stores.
Allan Mottus in the current issue of The Informationist finds the toll on department stores devastating, as consumers shopped online or in discount stores for prestige fragrances. But in many ways, department stores were not innocent bystanders.
Fragrance manufacturers have used high-end department stores to launch prestige products, paying a king’s ransom for the privilege of using the “halo-effect” for launch activity. It is a “wink and nod” operation where retailers pocket promotional money, knowing that these launch products will be in mass outlets in six months.
The wink and nod diversion business imploded last year, destroying the marketing model used in department stores for the past 45 years. Multinational fragrance manufacturers have used the U.S. as a dumping ground for 25 years. But that ended in 2009, as consumers shopped for bargains and department stores cut merchandise by 15 percent or more over the past two years.