The $11 billion home fragrance market in the United States continues to evolve, with slight category softness—such as a 2.1% dip in candle retail sales—persisting, finds Kline + Company’s latest study. Yet, not all categories are facing headwinds: diffusers, particularly tech-enabled options with features such as app integration, customizable scent controls, and smart home compatibility, are bucking the trend and capturing consumer interest.
As the post-pandemic boom levels out, brands are finding success through operational shifts, retail reinvention, and emotionally resonant branding, driving a new wave of growth even as the overall market remains under pressure. Here are three key trends defining the home fragrance market right now:
Domestic Manufacturing as a Strategic Advantage
With tariff threats mounting and global supply chains still strained, domestic manufacturing, particularly U.S.-based pouring, has evolved from a pandemic workaround into a long-term strategy for brands such as Illume, Nest, and Apotheke. As economic uncertainty extends into 2025, supply chain resilience emerges as a key competitive edge, especially for brands with agile operations and direct control over production. This shift also enables faster response to trend cycles and demand spikes amid economic uncertainty, which is critical in a category defined by seasonality and scent-driven replenishment.
Specialty and Gift Retail Gaining Ground
As mass channels such as Target see modest declines in Q1 2025, specialty and gift stores are proving to be high-growth environments, particularly for indie and prestige brands. These stores offer curated experiences that elevate brand storytelling and create discovery moments for consumers. Rep groups are playing a key role in helping indie brands break into regional gift shops and high-touch environments, while established players like Nest are expanding in off-price formats such as Nordstrom Rack and HomeGoods. This shift allows fragrance brands to reach new audiences and tap into local preferences, such as region-specific packaging and seasonal assortments.
Emotional Resonance: Nostalgia, Narrative, and Founder Stories
Consumers are looking for more than just a good-smelling product, new fragrance collections are not enough to move the needle. Consumers want meaning, connection, and memory. Top brands are driving a resurgence in nostalgic scent profiles, founder-led storytelling, and collaboration drops that evoke emotional ties. From Nest’s White Lotus candle to Apotheke’s artist-inspired collections, brands are embracing storytelling to build deeper engagement. Founders who share their sourcing stories, values, and creative inspiration are driving loyalty, especially among younger consumers who expect transparency and authenticity.
Looking Ahead at the Home Fragrance Market
As market growth recalibrates post-pandemic, strain is showing, especially among home fragrance indie brands that scaled too quickly. Otherland experienced softening momentum, and Boy Smells is rebranding to stay relevant. In contrast, legacy players such as Bath & Body Works remain resilient, returning to growth in Q1 2025 across home fragrance categories, driven by single-wick candles, Wallflowers, and home sprays and supported by buzzworthy launches, such as the Disney Princesses collection. Bath & Body Works’ mix of product innovation, emotional storytelling, and omnichannel execution highlight how heritage brands are well-positioned to drive durable growth as the category steadies.
The home fragrance market is still growing, but just settling after an extraordinary surge, as highlighted in Kline + Company’s latest Home Fragrances: U.S. Market Brief study. This analysis offers a detailed view of market performance, with category breakdowns, retail dynamics, marketing strategies, and an outlook through 2029. To get a copy, get in touch with us.
