News

Candle market needs a hint of brand recognition

BY CSA STAFF

Candle sales growth isn’t exactly burning at both ends, but the category might be a victim of its own success. From potpourri to scent diffusers to flameless candles, any number of aromatherapy products have honed in on the candle’s success even as low-priced producers have depressed margins in the mid- and lower-price product spectrums.

Adding profitable sales, its seems, will be a function of adding value in new ways.

A Mintel study reports that the high-end segment is the only candle segment that continues to see strong growth, in large measure because luxury manufacturers have positioned their products as home decor items. As a result, the sales in the luxury segment rose from $132 million to $772 million in the period from 2004 through 2006.

The expansion of candles in the mass market has accounted for a significant proportion of the high-end growth. Initiatives such as the creation of Yankee Candle boutiques in Bed Bath & Beyond and Linens ’N Things certainly helped raise awareness of the luxury part of the business.

Yankee Candle has itself been having a pretty good run of late. Total company sales for fiscal 2006 were $687.6 million, a 14.4% increase over fiscal 2005, primarily driven by the addition of new wholesale locations and an increase in same-store sales.

Outside the luxury segments, though, things are different.

Between 2005 and 2006, candle sales declined by 7% to $2.3 billion, Mintel estimates. Yet, a basis for sales growth remains. The Mintel study indicated that the percentage of people who purchase candles rose from 64% in 2002 to 77% in 2006. And almost one-third of consumers said that they now purchase candles once per month or more.

One major candle sector conundrum that Mintel identified is that companies still suffer from a lack of product distinction. In the study, even Yankee Candle got only 39% of responses regarding the candle brands purchased within the last two years, while 36% of candle buyers were hard pressed to name any brand they have purchased at all in the time period.

Some producers are trying to change all that, introducing new strategies that more closely target potential customers. Kathy Ireland Worldwide, with its partner Hanna’s Candles, recently received a Good Housekeeping Seal of Approval for its Jardin du Jour aromatic outdoor candles.

The Kathy Ireland Home by Hanna’s Candles brand targets users and occasions, such as outdoor living enthusiasts relaxing on the deck, rather than concentrating on seasonality first. The program has a line of candles that targets men, too. Although men and candles might not seem to mix, Mintel reported that 65% of men surveyed said that they purchase candles and 64% of male candle purchasers agreed that there should be more male-targeted candle products.

KIW president Kathy Ireland told Retailing Today that by carefully considering the needs and preferences of specific consumer groups, the company can create products that aren’t subject to the price crunch affecting much of the market. KIW has been working with a quilters program called the Quilts of Gee’s Bend and currently is developing a candle that reflects a craft-made value proposition.

“The Gee’s Bend candle in the production stage was inspired by one of the quilts the women designed. It’s going to be higher-end but absolutely an amazing value, maybe in the $35 range, but the woman who is purchasing it is going to get a piece of art and a gorgeous container to keep and use after the candle is through.”

While the Gee’s Bend candle is particularly high end, the Kathy Ireland Home by Hanna’s Candles products hit a variety of price points but are always substance designed with a particular consumer and desire in mind. For example, candles based on KIW’s Aloha style guide evoke the atmosphere of Hawaii for the consumer who wants to remember a trip or just pretend to be on one. “Candles ought to be fun,” Ireland said.

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FINANCE

Shareholders Approve Name Change to Macy’s

BY CSA STAFF

Cincinnati, Federated Department Stores said Friday that its shareholders approved its corporate name change to Macy’s Inc., effective June 1, 2007.

On that date, the company’s shares will begin trading under the New York Stock Exchange ticker symbol M, which Federated proposed in late March. Federated has traded on the NYSE under the ticker symbol FD since 1992.

“Today represents a milestone in the history of our company,” Terry Lundgren, Federated’s chairman, president and CEO, said in a statement. “By changing our corporate name to Macy’s Inc., we are demonstrating that we are a consumer-driven company focused on growing the Macy’s and Bloomingdale’s brands. In particular, this move will increase awareness of Macy’s, which represents about 90% of the revenue of our corporation.”

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FINANCE

Nordstrom 1Q Profit Rises 19%

BY CSA STAFF

Seattle, Nordstrom Inc. said Thursday its first-quarter profit rose 19%, helped in part by a change in the fiscal calendar that meant the quarter started and ended one week later than in 2006.

For the quarter ended May 5, earnings climbed to $156.8 million from $131.2 million during last year’s first quarter.

Revenue rose 9% to $1.95 billion from $1.79 billion in the year-ago quarter. Comp-store sales grew 9.5%, bolstered by interest in spring merchandise and ahead of Nordstrom’s internal expectations for the quarter, the company said.

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