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ket . They're reluctant but hase little
choice, what ieith an overcrowded
market <strong>and</strong> department store consolidations
. Simon Falic, Perfumania's
34-year-old chairman, claims lie now
purchases oN er 70% of his merch<strong>and</strong>ise
from manufacturers .
But problems remain . As a condition
for selling to Perfitmania, some
perfumers insist that Falic not advertise
their wares . Worse, he has to raise
prices . Where once he offered a minimum
discount of 20%, his mcrchair
dise is noic priced as little as 5'7o below
the competition's . "By discounting
less to a certain extent, we iere able
to exp<strong>and</strong> our assortments," Falic
explains .
Last tiscal rear Perfumania crept
into the black : S L3 mii':ion, 21 cents a
share, in net income on sales of
5115 .5 million . Falic is opening
stores now at the rate of 25 a yea.r .
But the stores still h .ne limited
stocks of man ' v items ; for many'ur<strong>and</strong>s
the company still must depend upon
the gray market . Over the past two
vears Perhtmania has been sued by
Givench v, Boucheron <strong>and</strong> Cosmair
for copy right infringement <strong>and</strong> patent
violations . Pending an outcome
ofdu lawsuits, it has had to pull from
its sheh'es Girenchv's Amarige <strong>and</strong>
Ysatis perfumes as well as Boucheron,
<strong>and</strong> Cosmair's Tresor <strong>and</strong> Paloma
Picasso perfumes
. No one is talking anv longer about
h .tiing 4,000 stores or making comparisnns
with Toys "R" Us. ~
Sha(k s of gray
IN A nUStVESS where image
is a major-perhaps the
major-part of the product,
perfume makers must
spend heavily to launch a
new scent . Tlte price of admission
ranges from $5
million to S20 million . To
launch designer IG rl Lagerfeld's
Sun Moon Stars
last fall, Unilever flew actress
Daryl Hannah to
Monte Carlo, where for
tnvo dars the fashion photographer
Peter Lindbergh
fussed over an advertising
shoot to create that
special "heavenly" feeling .
At S200 an ounce, the
stuff darned well has
to seem heavenly to
I customers .
But how heavenly can a
product seem in a rather
'! shabby store <strong>and</strong> heavily
marked do rn? Yet the fact
remains that up to half
the S5 billion perfume
<strong>business</strong> is done by mass
merchants, drugstores <strong>and</strong>
supermarkets .
Not all that product
II comes off the gray market .
Many manufacturers
ii cannot resist ihe tempta-
' tion to sell to the
I dreaded discounters . After
all, the gross profit per
ounce is so huge <strong>and</strong> the
overhead to be recovered
so heast• that it pays
them to do so .
The traditional ot¢Iet,
the department store, is
getting harder to deal
new fragrances were
launched into this turbulent
market, half again as
many as was customary in
the recent past . Occasiomall}°
one is a blockbuster
success-which is what
keeps the launches com-
Shcpping at Kreger
Department stores are squeezing perFume makers' margins .
with, dem<strong>and</strong>ing deals nnw
<strong>and</strong> special promotions .
It's often simpler to turn to
a grocer like Kroger .
Most of the 1,300 Kroger
supermarkets have set up
perfume counters serviced
by a salesperson . "The
designers want to keep
their image, but they
looked at the traffic in our
stores . We have over 3
million customers a Ns•eek,"
says Paul Bernish, Kroger's
spokesman . "That's a
big market ."
Last year at least 30
ing . Like Calvin Klein's CK
oNE . Within four months
of its introduction last September,
csoNt sold S45
million at wholesale, more
than recouping the cost
of its estimated S20 million
launch .
But 90% of new perfume
launches are failures .
The life span of a hot perfume
is shrinking : five years
compared with ten years a
decade ago .
An unintended beneficiary
of all this is publich
traded Model Imperial,
based in Boca Raton, which
sells in the gray market .
Last year it sold S 160 million
worth of perfume,
including Yves Saint Laurent,
Christian Dior <strong>and</strong>
Ralph Lauren .
Unilever unloads on
the gray market an annual
$40 million worth of its
perfume, including True
Love by Elizabeth Arden
<strong>and</strong> Lagerteld's Sun Moon
Stars . Elizabeth Arden
Chief Executive IGmberlv
Delsing refuses to com- ment
. No surprise . In her
public utterances she
bashes the gray market .
Givenchy slaps discounters
with lawsuits for
selling its Amarige <strong>and</strong>
Ysatis perfumes, but negotiatcs
with Model Imperial
to sell some of its older
br<strong>and</strong>s, including Givenchy
III <strong>and</strong> Monsieurde
Givenchy .
Vincent Basden of Sanof
Bcaute is dealing with an
overcrowded market by
dropping slow -selling
scents . He has dumped
22 lines-including Geoffrey
Beene, Perry Ellis
<strong>and</strong> Stendhal-<strong>and</strong> is concentrating
on the eight
remaining, which indude
Yves Saint Laurent, Oscar
de la Renta <strong>and</strong> Nina Ricci .
"I don't want to sell to
the gray market," says Bastien
. "It's not a strategy .
You kill your name ."
-Z .iI,i. =
Fnrhr, . A ag ,sr 14, 1995
2 0 4 6 6 7 3 3 0 2 }s p ~' t.
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