Tucked away in a TriBeCa basement, behind a sliding glass door, is a by-appointment-only custom—fragrance studio, elegantly decorated with antique furnishings, floral pictures and South African artifacts.
It’s all part of Sue Phillips’ strategy to infuse her one-of-a-kind fragrance shop, Scenterprises Ltd., with an air of exclusivity. And inside the 350-square-foot space, Ms. Phillips reinforces that mystique as she helps patrons discover their olfactory preferences and then blends fragrant drops from assorted small bottles to create scents just for them.
Private one-hour consultations run $350 per person and include a half-ounce bottle of handmade, personal perfume. Refills run $85 for a half-ounce.
“For a while, people didn’t understand custom fragrances, and now it’s a trend,” said Ms. Phillips, who projects $500,000 in revenue this year. The five-year-old custom-scent operation moved last month to its subterranean digs from Ms. Phillips’ Upper East Side home. She is the only full-timer at the profitable business, but she hires as many as five contract workers for another aspect of her company: creating custom perfumes at corporate events.
As websites that turn brand-name perfumes into discounted commodities proliferate, a growing number of local entrepreneurs are taking an opposite tack. They are parlaying their senses of smell and style into brick-and-mortar retail businesses for custom-made, limited-edition and artisanal fragrances. And many are prospering, courtesy of a formula that mixes tastefully appointed interiors; rare, aromatic products; and highly personalized service with an aura of luxury.
“Bespoke” fragrances are “coming into their own,” said Milton Pedraza, founder and CEO of the Luxury Institute, a Manhattan-based research and consulting firm.
“The money is there,” he said, “and so is the demand because people don’t want to wear the fragrances that everyone else has.”
Although Mr. Pedraza described niche fragrances as a “low-volume” business, with an estimated $300 million to $500 million in annual U.S. sales, he predicted that the market is destined to grow in New York because of its “huge concentration of wealth” and large population of people from regions where perfumes are very popular, such as Europe, Latin America and the Middle East.
“New York City will be a mecca,” he said.
The scents have caught consumers’ attention at a time when the U.S. prestige-fragrance market, which includes brands carried by department and specialty stores, is flat. Sales remained at $3 billion in 2013, according to Port Washington, L.I.-based market-research firm NPD Group.
For marketers, niche fragrances are particularly appealing. “You don’t need to sell a lot of volume to get high profit,” said Mr. Pedraza. “And once [customers] get hooked on a personal fragrance, you can have them for life.”
A former Tiffany marketing vice president who has served as a consultant to such beauty companies as Avon and Trish McEvoy, Ms. Phillips has an eye on growth. She has already started signing up licensees, dubbed “fragrance ambassadors,” to blend and sell scented creations for the in-home party circuit.
The niche market has also attracted veteran fragrance marketers Eric Weiser and Stamatis Birsimijoglou. Last September, the business partners—who operate a profitable 13-year-old e-commerce site called Parfum1.com, which sells commercial brands and a smattering of limited-edition fragrances—launched a Boerum Hill, Brooklyn, emporium for small-batch and artisanal products.
Within the gleaming white, 650-square-foot Twisted Lily Fragrance Boutique Apothecary, imported European scents share the shelves with Brooklyn-made fragrances. Prices range from $85 for 1.7 ounces of Penhaligon’s Blenheim Bouquet from the United Kingdom to $525 for 3.4 ounces of Mona di Orio’s Oud from France. The profitable three—employee enterprise, which also has an e-commerce site, projects first-year revenue of $600,000.
“It’s about the experience—creating a perfume aura that people who buy will remember,” said Mr. Weiser. “But as an owner, you need to make sure the products don’t go to Amazon.”
A version of this article appears in the March 3, 2014, print issue of Crain’s New York Business as “Niche perfumers sniff opportunity”.