If you have a good nose for fragrances, trends and personal care products, you may be thinking of starting your own perfumery / drugstore. But how can this project succeed in view of the great competition? Which topics, strategically important fields of action and business decisions are important? The following article would like to set an orienting ‘fragrance brand’ in this regard and outline the central framework conditions for opening a perfumery / drugstore.
Starting your own business with a perfumery: fields of action for setting up a business
- Analysis of the initial situation
- strategic options for positioning on the market
- target-focused alignment of the range of services
- Is the Internet an alternative worth considering?
- What are the formal requirements?
Starting up a business with a perfumery / drugstore: Analysis of the initial situation
Starting your own business with a perfumery or drugstore means nothing more than starting a business in the field of Retail. In this respect, it is already clear that the competition is enormous. In addition to large specialist chains, which are actually present in every city, the growing range in large supermarkets should also be considered. In Germany alone there are over 3,000 specialist shops that generate billions in sales every year. And finally, the sale of perfumes and personal care products on the Internet has also increased significantly in recent years. As far as sales in this business area are concerned, women’s fragrances make up more than a third, which certainly means that a certain strategic focus is already in place.
Starting your own business with perfumery / drugstore: Assessing the opportunities
The starting point is quite complex, as the market is quite saturated and the competition is fierce. If you want to open a perfumery or drugstore, you shouldn’t count on a sure-fire success. On the contrary: the initial situation forces start-ups to start a occupy profitable niche or customers ‘fragrant’ Added value to offer that the competition cannot deliver in this form. In this respect, a lot of planning work is necessary in the run-up to self-employment with a perfumery: The business plan is the right formal framework to coordinate the fields of action in a goal-oriented and holistic manner. In addition to the sustainable potential of the business idea, the unique selling points should also become clear. A professional business plan will only be able to convince external financiers if the financial planning is coherent and, above all, realistic.
Practical tip: This is how a business plan for a perfumery becomes a success
What belongs in which form in the business plan? What functions does this document have to fulfill? here entrepreneurs can familiarize themselves with all content and requirements.
‘The right nose’ for the range of services and target group
One of the keys to success in this highly competitive area of trade will be clever strategic positioning in the market being. The business plan to be drawn up in the planning phase of the start-up will have to deliver convincing and, above all, viable concepts in this regard. Ultimately, it depends on the location: If there are already a number of perfumeries / drugstores within a radius of X kilometers, opening a store will only make sense if your own offer clearly stands out. In this respect, it is not necessary to start with a wide range of products. It can make some sense niche to occupy. One could think of special care products, perfumes from certain brands (which ideally are hardly available anywhere else) or exquisite luxury products. If necessary, trends can also be successfully filled by only selling organic products from this area. Ultimately, the offer must match the target group and the location. This is the only way to achieve a good sales base.
Good location and sensual presentation of the goods
A good location for a perfumery / drug store is that it has every day lots of walk-in customers attracts. Easy parking is also a very important criterion if the shop is not in the city center. The external and internal appearance of the perfumery / drugstore should do their part to attract customers who are willing to buy. Perfumes in particular can be effectively staged with the sense of smell, with suitable music making a further contribution to a feel-good atmosphere. Psychologists have found that a long stay increases the overall likelihood of purchase. In this respect, pleasant smells and music can make an effective contribution to keeping customers in the store. The internal and external design of the sales concept should literally not be saved. It is no coincidence that perfumeries / drugstores in particular place great value on a well-groomed impression in every respect!
Practical tip for a ‘great’ business idea:
As a classic, perfume is one of the most popular gift ideas. Almost 50% of Germans receive perfume as a Christmas or birthday present. In this respect, setting up a business can also go in this direction. Personal specialist advice could provide added value. After all, you don’t always know which scent you might like. At Christmas time in particular, gift ideas should be the focus of sales activities.
Online perfumery / drugstore as a viable alternative?
Since a good location is not easy to find and a lot of money will have to be raised to open a business, the alternative of opening an online perfumery / drugstore can also be examined. If there is space for storage and the necessary logistics processes, there would be no high shop rent and initial investment costs, and the entrepreneurial risk would be limited. It should be noted, however, that the competition on the Internet is also fierce, which opens up a merciless price war, which ultimately always has a negative effect on profit margins. In addition, online trading in this area has often fallen into disrepute in recent times because counterfeit products have been sold. For many customers, the internet will not be the first choice in this area, as the sensory product experience is clearly lacking. Of course you could ask for a smell sample, but that would be a bit complicated. However, it may be promising to integrate the Internet as an additional sales channel. In this way, regular customers could easily and conveniently reorder their favorite product or their favorite fragrance online.
Becoming self-employed with a perfumery / drugstore: Cooperations and product procurement
Based on counterfeit products, which are unfortunately not uncommon on the Internet, prospective start-ups should think about where the products should come from and under what conditions. One-sided dependencies on suppliers should always be avoided in order to put yourself in a stronger (negotiating) position and to spread the entrepreneurial risk more broadly. Industry knowledge and advanced knowledge with regard to the products are very important in order to be able to understand the quality of the purchased products as decision-makers. Ultimately, therefore, a certain relationship of trust is necessary, because strict hygiene and declaration regulations must be observed, especially with regard to cosmetic products.
Quality has its price…
The quality of the products should be in view of the target group be matched. Ultimately, the (perceived) quality has a direct influence on the price sensitivity of customers and the possible profit margins of dealers. The perfume sector in particular enables extremely high profit margins. Very expensive and exclusive fragrances, which often cost around 100 euros, sometimes have manufacturing costs of only around 5 euros. This shows how valuable a strong brand can be. In principle, starting your own business with a perfumery / drugstore can also be achieved through a franchise solution. One of the disadvantages, however, is that the entrepreneurial freedom of action is significantly restricted and the financial hurdles caused by start-up capital and franchise fees are by no means insignificant.
Make perfumes and / or care products yourself?
In view of the possible profit margins just described, quite a few come up with the idea of wanting to manufacture perfumes or care products themselves. These products could then be sold in your own perfumery / drugstore. It should be noted, however, that there are many regulations to be observed, so this endeavor requires in-depth knowledge. In particular, the Cosmetics Ordinance must be observed, although there may be different guidelines from state to state. Certificates would have to be obtained for all raw materials used, for which an expert may have to be consulted. Those who operate worldwide will quickly reach their limits in view of the demands of the German bureaucracy. And high safety and hygiene guidelines must be observed for production, which can be checked in the event of unannounced controls. And for the profit margins mentioned, a brand name would be needed that would have to be painstakingly built up over the years. This strategic variant is not impossible, but it is very costly and labor-intensive. Ultimately, in-house production is only recommended for experienced experts from this industry.
Opening a perfumery / drugstore: which formalities have to be observed?
Regardless of whether a shop for a drugstore / perfumery or an internet shop is opened, a business registration is mandatory. When is the business registration necessary? Basically, the approved trade license must be available before business can start. Since it is a trade in retail, neither special knowledge nor an extended permit requirement is to be expected. In individual cases, this would result from the specific range of services that has to be described comprehensively in the course of the business registration. Registering a business is much more complicated and extensive if you want to manufacture your own cosmetics or care products. In addition to hygiene guidelines, statutory declaration obligations with regard to all components used and possible allergens are of central importance in this area. For a shop, the statutory opening times in the respective federal state must be observed, as well as the requirements for parking spaces, sanitary facilities and structural safety regulations.
Start your own business with perfumery / drugstore: summarized basics for starting a business
- There is no alternative to holistic business planning and orientation in view of the enormous competition
- You need ‘fragrant’ added values and unique selling points in order to be able to hold your own in this market over the long term. A niche strategy can be the right way to effectively set yourself apart from the competition
- Entrepreneurs need a really good nose in order to gain clarity about the target group, the range of services and sales-boosting trends / products.
- The Internet can be examined as an alternative business basis, but it does not offer a shopping experience as sensory as the specialist trade
- If you want to manufacture perfumes, care products, etc. yourself and then sell them, you have to observe numerous legal provisions
- Before opening a drugstore / perfumery, a business must be registered. This also applies to the operation of an online shop. The scope of any obligation to obtain permission or evidence is based specifically on the individual range of services.