Holiday Central

Homebound shoppers are finding comfort in scented candles, home fragrances this holiday season

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Key Points
  • Fragrance has been one of the rare bright spots for beauty retailers during the pandemic, as shoppers buy home scents, such as candles and diffusers.
  • In the third quarter, makeup sales were down by 31%, but fragrance sales grew by 1% year over year, according to The NPD Group.
  • "Home scent has been a strong performer all year," said Larissa Jensen, vice president and beauty industry advisor for The NPD Group. "All of that's really tied to the fact that we are more homebound than ever."
Voluspa scented candles for sale at Bloomingdale's Inc. flagship department store in New York, U.S., on Wednesday, Oct. 21, 2020.
Nina Westervelt | Bloomberg | Getty Images

Perfume and cologne are typically popular holiday gifts. This year, however, the beauty industry is getting a boost from a different kind of fragrance: Home scents.

The reason? Shoppers are buying candles, diffusers and other scented items as they take comfort in smaller indulgences during the coronavirus pandemic, said Larissa Jensen, vice president and beauty industry advisor for market researcher The NPD Group.

"Home scent has been a strong performer all year," Jensen said. "All of that's really tied to the fact that we are more homebound than ever."

The category has become a rare bright spot for beauty retailers as shoppers skip eyeshadow and lipstick while social distancing and wearing a mask. Fragrance sales declined 17% from January to September year over year, according to The NPD Group, which tracks sales in department stores and specialty beauty retailers. During that same period, home scent sales grew 13% and sales of home scent gift sets, such as a candle paired with a lotion, grew 22%, according to NPD.

Fragrance, which includes everything from perfumes to candles, has also rebounded quicker than any other beauty category during the global health crisis. Makeup sales dropped by 31% in the third quarter year over year, according to NPD. Fragrance, on the other hand, grew by 1% during the three-month period.

"Fragrance has been this 'Little Engine That Could' in many ways," Jensen said. "The speed of its recovery is really surprising."

She said fragrance gift sets have gained popularity, too — and not just as an item to wrap up for a friend or family member. Some shoppers see the packages as a better deal, especially if they have lost income or a job during the pandemic.

"Consumers are really looking for that value now, more than ever," she said.

Jensen said she's contributed to the home scent trend, too. She's stocked up on candles and now burns them throughout the day to make her home feel brighter and more cozy.

"We all want to escape this year," she said.

When Ulta Beauty reported its third-quarter results Thursday, the company said fragrance and bath was its top category for sales, with double-digit growth. Other categories dragged offset this growth, however. Sales at stores open at least 14 months and online during the quarter dropped nearly 9% year over year.

Ulta shares closed Friday down 3.45% to $279.54, dragging down its market value to $15.7 billion. The company's shares are up about 10% year to date.

Bath & Body Works, owned by L Brands, has gotten a bounce from fragrance. Andrew Meslow, CEO of L Brands, said at an investor conference hosted by Morgan Stanley on Wednesday that Bath & Body Works customers are engaging more with brand, a trend that "has really been accentuated or accelerated here in the Covid timeframe."

Not only are customers buying more soap and hand sanitizer, he said they are also "wanting to make the home even more personalized and a place that feels pleasant to be in more frequently, whether it's as an office or as a school or whatever purpose it may be serving."

That is bringing them back to look for new scents and seasonal fragrances. And, he said, some see candles, body lotions and fragrance mists as "affordable luxuries" during the recession.

Bath & Body Works had record sales and profits in the third quarter. Same-store sales jumped 56%. The company said two-thirds of its dollar growth came from the home fragrance and body care categories, while one-third of the growth came from soaps and sanitizers.

Shares of L Brands have more than doubled so far this year, bringing its share price to $38.25 and its market value to $10.6 billion at market close Friday. Pandemic-related trends have helped its Pink brand, too, as shoppers buy pajamas and comfy clothes and offset declining sales at Victoria's Secret.

On retailers' websites and at the beauty counter, Jensen of NPD said customers have been more willing to splurge when buying perfumes and colognes in recent months. She said they are choosing juices with a higher concentration of fragrance oils that cost more but last longer.

She said shoppers may be willing to spend more on scents because they're closely tied to emotions.

"Scent is especially unique to everybody," she said. "Maybe people are looking to bring back the memories of what time was like before the pandemic and going back to old fragrances that they used to love."