The Sweet Scent of Rosh Hashanah Savings on Perfumes

Prices have plunged ahead of the holidays. TheMarker survey shows that local retailers offer better value than online outlets.

Anyone driving along the Ayalon Highway through Tel Aviv recently couldn't have missed the huge Hamashbir Lazarchan store billboard heralding its "buy one perfume, get two free" sale, followed by, a bit further along, another billboard featuring model Esti Ginzburg advertising the April cosmetic chain's "two perfumes for NIS 299" deal.

Not to be outdone, rival drugstore chains Super-Pharm and New-Pharm have been launched their own perfume sales campaigns with brochures inserted in newspapers and advertising in all other media outlets.

The flood of perfume ads is a clear sign that Rosh Hashanah is around the corner. The drugstore chains are believed to have spent no less than NIS 10 million just on perfume ads.

"All perfumes except those by Chanel and Thierry Mugler are now marked down by 20% to 70%," says Super-Pharm Deputy CEO Danny Luzon. "That's why our stores have seen a 15% increase in sales over the past week." Other chains report similar figures, putting Israel in a respectable position for perfume use compared to other countries.

The perfume industry is highly seasonal, according to BDI-Coface business information group. Sales double around major holidays – especially the High Holidays and Passover – compared to other periods. BDI-Coface estimates perfumes account for 40%, or NIS 813 million, of all cosmetics sales. Promotions play an integral part in the competition.

"Perfume prices are now 40% lower on average, so profitability during this season gets eroded," says Luzon. "The competition is over market share. Perfumes are sold at just a 7% gross profit."

The store that wields a particularly strong influence on local perfume prices is located at the exit of the country, the James Richardson duty-free shop at Ben-Gurion airport. It is thought to account for 30% of the local perfume market.

Moshe Barokas, manager for cosmetics at Hamashbir Lazarchan, says Israel is the only country in which duty-free purchases are such a major market factor. He claims, however, that the price differences between ordinary stores and duty-free ones have narrowed considerably. "The differences between the stores and duty-free shops aren't supposed to exceed 25% but this wasn't the case in the past," he says. "So all leading chains changed direction and lowered their perfume prices across the board."

A survey conducted earlier this month by TheMarker showed that a shopper can save hundreds of shekels by comparing perfume prices at different stores during this season of holiday promotions. Often a chain that isn’t ordinarily considered low-priced can run a special sale on a specific perfume, offering it for the lowest price in the market.

Despite discounts at all pharmacy chains, there are still huge differences between them for the exact same perfume. TheMarker survey found that notwithstanding the fierce market competition, James Richardson still offers the lowest prices in most cases.

The Internet, where much cheaper alternatives to store-shelf prices are often found, doesn't come up on top in perfumes these days. A survey of several web sites indicates that as a result of current holiday promotions at Israeli stores and fierce competition between retailers, it isn’t even worth while ordering perfumes online from overseas vendors.

Don’t buy online

Several months ago, for instance, it was much cheaper to order perfumes online from the cosmetics site, StrawberryNet - even after adding on shipping fees to Israel - than it was to purchase those same items at the four leading pharmacy chains. But that’s not the case these days.

The prices of perfumes sold in pharmacies have become very close to, or even lower than, the prices at the duty-free shop. Hamashbir Lazarchan, which vowed in June to undercut duty-free perfume prices, has done so for just a select number of brands. When its prices are lower than those at the duty-free shop, however, the difference can amount to over 30%, which translates into savings exceeding NIS 100 per item.

Be warned: These savings are only available to Hamashbir club members. And even though the chain claims most of its customers belong to the club, Hamashbir is the last place, among the leading chains, to buy perfume if you are not a club member.

Super-Pharm placed second for the most economical perfume prices. Despite their holiday promotions, April and New-Pharm offer the least competitive prices, according to the survey. New-Pharm belongs to Hamashbir Lazarchan and accepts its Club 365 membership card, but it also offers specials to non-members too.

New-Pharm responded that the survey was conducted exactly one day before the chain launched its holiday promotions. "We are convinced that every customer entering the stores now can find a wide assortment of perfumes at attractive prices." The April chain did not respond to Haaretz’s request for a comment.

In Israel, the list price shown on the perfume package is almost never the price paid at the cash register. Barokas explains that the list price is intended only to establish the average price at which the perfume will ultimately be sold.

"Pricing policy is generally dictated by the suppliers who also determine how much discount they're providing," says Barokas. "They set a high list price in advance in order to provide vendors with discounts. The distributors want to keep list prices close to prices abroad – that's what they present to the global supplier – and this way they can claim that it's the chain that is lowering prices, and then insist on lowering the price further from the supplier."

TheMarker price survey was conducted on Monday, August 19 at Super-Pharm and April outlets at the Azrieli Center in Tel Aviv, the Tel Baruch branch of New-Pharm in northern Tel Aviv, and the Hamasbir Lazarchan store at Dizengoff Center, as well as the James Richardson duty-free store, eBay, and StrawberryNet (when the exchange rate was NIS 3.57 to the U.S. dollar). The survey included both classic perfumes that have led sales in recent years were chosen as well as perfumes launched over the past year.

Super-Pharm.
Nir Kafri