WHY pay full price at the perfume counter when you can buy a new scent for a fraction of the cost?
That’s the rationale behind the booming discount fragrance industry that is putting pressure on the big department stores.
But how do they manage to keep prices so low, and can we rely on them to give us the real deal?
Analysis by Euromonitor International reveals that discount chemists and online retailers, many of them operating in a so-called “grey market”, are taking a bite out of Australia’s $502.7 million fragrance industry.
Instead of paying the retail price of $120 for a 100ml bottle of Calvin Klein Euphoria Eau de Parfum, customers are walking into a Chemist Warehouse and grabbing it for just $38.99 — that’s a whopping 68 per cent off.
Scents from premium brands like Yves Saint Laurent, Dolce & Gabbana, Marc Jacobs, Tom Ford and Giorgio Armani are reduced by between 10 and 25 per cent.
The Euromonitor report said that parallel importing, also known as the grey market, was disrupting the industry, allowing consumers to buy premium fragrances “at largely discounted prices”.
While not illegal, the grey market operates outside officially sanctioned sales channels, with perfumes shipped from countries where they were intended to be sold at a cheaper price. This happens without the manufacturer’s endorsement.
Brisbane consultant Mia Morrison, who runs online recommendation service Perfume Profiling, is sceptical about discount stock.
“They are not genuine fragrances,” Ms Morrison claimed.
“Chanel and Dior have agreements set up with Myer and David Jones, who only sell to them so it stays exclusive,” she said.
“They never, ever discount their products. Any discounted perfumes from these brands, I would not trust that they’re genuine.”
It’s a view espoused by many a beauty blogger, but is it always true that cheap equals untrustworthy?
Not according to Sally Desancic, health and beauty development manager for Chemist Warehouse, a 30-year perfume industry veteran.
“We do not deal in the grey market,” Ms Desancic said emphatically.
“Our main business is not fragrance, it is pharmacy. We would never risk the goodwill we have built up by selling a bottle of fake fragrance.”
While grey market does not necessarily mean fake, it carries a connotation of being less reliable.
Ms Desancic said Chemist Warehouse was able to offer low prices because it drove a hard bargain with reputable, mainstream suppliers and was able to operate on a lower margin than the department stores, where mark-ups can be as high as 600 per cent.
“We forecast 12 to 24 months in advance and give them a high volume order, therefore we are able to reduce the cost,” Ms Desancic said.
“We bring it very carefully to our warehouse through our own channels of transportation, which can handle the goods appropriately.”
That meant no lingering in hot warehouses where perfumes could be damaged, one scenario that is often evoked to warn against buying cheap perfumes.
About 20 per cent of stock came from overseas, she said, much of it discontinued.
Ms Desancic said Australians had traditionally paid too much for luxury items, but the tide was turning as consumers became more aware of international pricing.
An Ibis World report on online perfume sales in Australia found that the grey market was the source of cheap perfumes sold on many discount beauty websites.
It caters to the increasing number of Aussies looking to tap into cheaper pricing available on the international market.
Parallel imports have been criticised by commentators who allege that they cannot be relied upon for quality or authenticity.
Consumer group Choice warned that “highly sophisticated knock-offs” were finding their way onto Australian shelves, with some fake perfumes “almost indistinguishable from the real thing” — but posing a potential health risk.
It is unclear which retailers are operating in the grey market, but theWall Street Journal reports that international distributor Coty struggled to stop its designer perfumes from being diverted to unauthorised retailers.
Coty is the distributor for Davidoff and Calvin Klein, whose fragrances are among the most heavily discounted on Australian shelves, and is the biggest player in the domestic market with a 12 per cent market share.
The WSJ also claimed that perfume manufacturers were known to “turn a blind eye” to the grey market in the United States, in order to prop up sales.
However, Coty Australia’s managing director Gavin Blackburn told Choice his company had taken steps to protect itself from counterfeits, restricting sales to Coty’s network of authorised stockists, including select online retailers.
The Australian Competition and Consumer Commission says parallel imports may benefit Australian consumers “by offering products at lower prices and providing access to items which otherwise may not be available”. However, it adds that customers need to be able to identify when the grey market was in effect and “be aware of your rights when purchasing these products”. Consumer laws apply to parallel imports, but can be more difficult to enforce.
David Jones beauty general manager Sophie Kalofonos said the department store remained the destination for exclusive releases like Clinique’s new women’s fragrance Aromatics in Black.
“Customers know they can shop in comfort and with confidence at David Jones, and those who are looking for a new fragrance will benefit from the advice of our fragrance experts instore,” Ms Kalofonos said.
A Myer spokesman said the retailer was “well accustomed to competition” and worked closely with suppliers to keep prices down, while differentiating its brand “by providing wonderful service as well as offering a range of department exclusive brands and promotions”.
HOW TO SPOT A FAKE PERFUME
● Fake perfumes might have a similar top note to the original, but smell different as time goes on
● The scent will not last very long, wearing off after an hour instead of the six or more hours that they are supposed to last
● Fake scents often have a bitter smell, and tests have allegedly found traces of urine in some products
● Telltale signs of a fake include misspelled brand names on the packaging
● If the price is extremely low, it might be too good to be true. Choice claims that even if the perfume is authentic, a lower price “may indicate that it’s passed its use-by date or has been stored incorrectly or for too long”
● You can only be sure a perfume is real if you buy it through an authorised distributor. Check with the seller that they guarantee authenticity and source their stock through approved channels.
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