Inside Sephora’s Niche Fragrance Strategy

When Europerfumes founder Vicken Arslanian purchased the shuttered fragrance brand Commodity in 2019, he didn’t have much of a plan on how to revive the cult line. But he did know one factor was key to unlock the brand’s future: get back on the shelves of Sephora.

“Sephora doesn’t leave success for chance,” he said. “They’re working with a brand on a consistent basis, to talk about activation, to talk about in-store visual merchandising, to talk about sampling, all of the above.”

After a brand refresh, which included a logo update and new scent profiles, Commodity made its Sephora comeback in 2022. Like countless other retailers, including department stores and discount shops, Sephora stocks fragrance scents from giants like Dior and Tom Ford, but the inclusion of Commodity — with its accessible price point, limited availability and scents that straddle the boundary between niche and mainstream — exemplifies much of what has made Sephora’s fragrance offering distinct today.

“They understood, before a lot of the competitors, that niche is going to be the mainstream of tomorrow,” said Romano Ricci, founder of Juliette Has a Gun, which has been sold at Sephora since 2016. Juliette Has a Gun was part of an early wave of fragrance brands to debut in Sephora like Kayali in 2018, Boy Smells and Phlur in 2022, and Nette in 2023.

“What the client has told us over time is they love to discover things with us,” said Alison Hahn, senior vice president of makeup and fragrance merchandising at Sephora. “What we started to do was take our knowledge and our passion about incubating brands into the fragrance world.”

Getting onto Sephora’s shelves means playing by Sephora’s rules, however.

“They are probably the most demanding client that we have in terms of timing,” Ricci added. Joining Sephora means not only having the inventory to match its sizable audience, he noted, but also the resources to participate in its robust sampling program and deliver assets months ahead of schedule.

“Your marketing team needs to have a foundation, you need to ensure that you can support the growth, with that obviously comes inventory, with inventory comes upfront investments,” said Dedcool founder Carina Chaz, who launched at Sephora in 2022. “Some brands can’t make it because they don’t have infrastructure.”

For brands that can meet those demands, the payoff can be immense. Ricci estimates that Juliette Has a Gun distributes roughly 1.7 million samples through Sephora each year. According to Arslanian, Sephora — the exclusive retailer for Commodity outside of its own ecommerce platform — accounts for around 65 percent of the brand’s $10 million in annual sales. Chaz says Sephora now drives 40 percent of overall sales for the laundry and fine fragrance line.

But the rest of the beauty world is catching onto indie fragrance’s mainstream appeal; last year, Ulta Beauty brought on DTC fragrance line Snif, and in April expanded the brand to all 1,385 of its stores across the US. Later this month, the retailer will welcome Noyz, the unisex, vegan fragrance line developed by beauty incubator Beach House Group and perfumer Jérôme Epinette. According to Ulta’s earning report for the first quarter of 2024, fragrance comprised 10 percent of the retailer’s $2.7 billion in net sales.

Sephora in turn is setting its sights on more fragrances outside the youthful, under-$100 scents that make up much of its offering. This fall, the retailer will welcome Montale, betting that its audience is willing to spend $180 on the French niche brand’s powerful oud and floral scents.

“When you talk about the Neimans and Saks of the world, they have to experiment with how low they can go [in price],” said Arslanian, whose company Europerfumes is the US distributor for Montale and Juliette Has a Gun. “With Sephora, how high is high?”

Indie Incubation

When Mona Kattan launched Kayali with Sephora in November 2018, she recalls fragrance was “a dead category” compared to the likes of skincare or color cosmetics. She had faith in the sector’s eventual growth, but her line of Middle Eastern-inspired perfumes was not an instant hit among North American consumers.

“[Sephora] told us, ‘Let’s make a fruity floral together.’ Because fruity florals do really well in the North American market, and it’s not my typical type of fragrance that I create,” Kattan said. The resulting fragrance, Eden Juicy Apple, launched in December 2021 and is now one of the brand’s top four scents in North America. The following year Kayali was given shelf space at Sephora on a trial run, precious real estate among newer brands. Currently, the line is negotiating for more space.

While Sephora is drawn to founders with a strong point of view like Kattan, the retailer also takes an active role in its brands’ success, offering advice on how to spend marketing dollars, how to price fragrances and guidance on the naming and commercial viability of a given fragrance.

By cultivating those rising indie brands, Sephora has in turn benefitted from their ability to quickly catapult on trends, like the minimal skin scents of Phlur’s Missing Person or sweet gourmands like Kayali’s viral hit Yum Pistachio Gelato.

“They are agile, they can pivot, they can really identify the trends,” said Lisa Payne, head of beauty at trend forecaster Stylus, of emerging lines. “They don’t have all of that red tape that’s holding traditional or big or heritage brands back.”

Sniffing Out the Future

Identifying trends goes beyond banking on just scent families. In 2023, Sephora launched candle brand Nette’s debut fine fragrance line, which claims to improve mindfulness and well-being; earlier this year, the retailer welcomed Charlotte Tilbury’s “mood-boosting” fragrance line. Ulta Beauty, too, is on this trend, launching Bella Hadid’s Orebella in May.

And the timing couldn’t be better: according to research from Stylus, 71 percent of fragrance consumers are looking for a scent that lifts their mood; 50 percent are interested in fragrances that they link to physical or wellness benefits.

But there is one growing sector of perfume Sephora has all but sidestepped: celebrity fragrances. While some recent celebrity launches from the likes of Harry Styles and Victoria Beckham have gone for high-end retailers like Dover Street Parfums Market and Bergdorf Goodman, many celebrity perfumes, from Hadid’s Orebella to Kylie Jenner’s debut fragrance, are camped out at Sephora’s main competitor, Ulta Beauty.

For Payne, steering clear of the celebrity category is wise for Sephora, even if it leaves potential money on the table. “If they were to open the floodgates and let through lots of different designer [scents], very ultra mainstream fragrances and lots of celebrity fragrances, then independent fragrance brands might not necessarily want [their] products aligned.”

And Payne adds that fragrance prices are upwards into the luxury sphere versus affordable celebrity scents, even amongst younger consumers.

Ricci, who is also co-owner of Parisian niche perfume retailer Nose, is skeptical however that Sephora can speak to that top echelon of the market. In 2018, Sephora brought on Estée Lauder-owned Kilian, whose $300 perfumes remain something of an outlier in its fragrance offerings. “I don’t think that Sephora is really optimized for that. I think today with Juliette, we are almost below the mainstream price, so it’s a good fit,” said Ricci.

Time — and sales — will tell if the fragrance consumer is willing to go to Sephora rather than Bergdorf for high-end scents, like Montale.

“The audience will dictate this,” said Payne. “Sephora is going to host the brands that it knows its audience likes. And predominantly, it’s going to choose the products that have a little bit more commercial value.”