On the scent of a discount at Boots

BOOTS, the largest retailer of luxury perfumes, has been forced to cut its prices as competition intensifies from discounters sourcing in the unofficial 'grey market', writes Patrick Hosking.

The 1,100 Boots The Chemist stores yesterday slashed 25 per cent from the prices of 20 of their biggest-selling lines, including Chanel No 5, Rive Gauche and Opium.

Boots has about 35 per cent of the pounds 400m fragrance market, one of the highest margin areas of retailing. But it denied the discounting would have much impact on its profits.

The move may be a serious blow to the fragrance market, where manufacturers recommend prices and restrict supplies by vetting retailers. Last month these arrangements were referred to the Monopolies and Mergers Commission, after lobbying by Superdrug, which the fragrance houses refuse to supply.

The discounts are until 24 December, a period when huge quantities of perfume are sold. Boots is estimated to sell pounds 60m of fragrance in the run-up to Christmas. It is planning a follow-up promotion in January. Alastair Eperon, director of corporate affairs, said: 'As far as we're concerned this is a normal promotion. It's not a big deal for the bottom line.'

The discounts follow aggressive price cutting by Superdrug, Littlewoods, Asda and Poundstretcher, which source from approved wholesalers who break the rules. The biggest losers from the price war are the department store chains, which have lost market share.

Steven Round, marketing controller of Superdrug, said: 'I don't suppose the fragrance houses will be very happy. The cosy club of retailers and manufacturers seems to be breaking down.'

(Photograph omitted)