Holiday Gift Buyers Carry a Torch for Candles

Thomas Edison might have a hard time believing it, but more than a hundred years after he pioneered an alternative, candles this season made a comeback as one of the hottest Christmas gifts.

Now candle companies are hoping their newfound popularity will extend year-round.

Purveyors of upscale candles and fragrant room sprays are marketing themselves as providers of minor luxuries. These items, they say, are the perfect consumables for an over-programmed population desperate to spend more time at home with their families.

Retailers across the board are angling for a piece of the market. Grocery stores sell fat, cranberry-scented, pillar candles. Home improvement stores offer tea lights, housewares stores push tall dinner tapers in the color “celadon” and discount superstores try to offer a smattering of all of the above.

And at least two adept specialty store players, Illuminations and Bath & Body Works’ new White Barn Candle Co. concept, are working to ensure that the fad-turned-trend doesn’t go up in smoke.

“It should be a gigantic Christmas for candles,” said retail analyst Todd Slater of Lazard Freres, who credited the retailers with creating their own good luck. “Consumers are not all of the sudden saying, ‘Hey, why don’t I use candles?’ Candles are strong because companies like Bath & Body Works are bringing it to them.”

It is also because of those companies’ expertise, Slater said, that the candle business is unlikely to burn out too quickly. As they enjoy booming sales of candles that look and smell like fruit preserves and Christmas trees, the stores’ real challenge is yet to come--convincing consumers that candles are good for more than holiday gifts.

One newcomer to candles is actually a veteran. White Barn Candle Co., a division of Intimate Brands Inc.’s personal care specialty stores, for years has been selling home fragrance products from its White Barn shelves.

With the separate store, the company aims to do for home scents what it did for toiletries: Sell products nicer than those at the supermarket, cheaper than those at fancier stores and with a selection broader than both put together.

Privately held Illuminations, meanwhile, is hoping the smaller company can compete with clever store displays, a booming catalog business and a tight focus on appealing to a specific customer base.

Stores such as Williams-Sonoma and Target also seek to garner their fair share of the “home fragrance” and candle market, a roughly $3-billion business growing at about 15% each year.

“Everybody recognizes that this is a high-growth market,” said Dennis Carroll, Illuminations’ president and chief executive. “You can’t go to a retailer and not find candles as part of the assortment.”

The nation’s largest specialty candle seller essentially serves a more downscale niche, analysts said. Yankee Candle Co., a South Deerfield, Mass., chain of about 100 stores, mostly offers more moderate fragrance and novelty candles--for now leaving the more upscale, indulgences market to the newer players.

White Barn made its official entrance this fall and already boasts almost 85 stores filled with room sprays, candles and accouterments for specific holidays and special occasions. The new chain, run by Victoria’s Secret sister company Bath & Body Works, expects to open a minimum of 50 stores annually for the next two years.

Illuminations, on the other hand, attempts to market its candles as a spiritual experience. Consider:

“We look at them as places people come and find something to enrich their daily life,” said Carroll, the company’s chief executive. “We try to present the customer with a place they can go to develop ritual in their life, lighting a candle or having a centerpiece that is beautiful on their table brings a little bit of betterment to their daily lives.”

Based in Petaluma, about 45 miles north of San Francisco, Illuminations is the brain child of Wally Arnold, a longtime retailer who sold an earlier chain of eye-wear stores to Sunglass Hut International Inc.

Now with 39 stores in 15 states, the 4-year-old Illuminations attributes 60% of its revenues to retail sales, 20% to catalog and Web buyers and about 20% to buyers of wholesale products, which are produced by the Illuminations-owned factories. The privately held company does not release sales or profit.

Although there is plenty of competition this season to sell cranberry candles and cinnamon room spray, analysts say that the market is likely to support the two specialty stores and their broader offering, maybe even for the longer-term future.

“I would argue that stores selling inexpensive pick-me-ups stand to do well in just about any type of environment,” Slater said. “When the market turns south, are people going to be less likely to buy cars, apparel or $8 candles?”