Behind the Beautiful Facade 2: When Discounts Become a Drug – How the Perfume Industry Devalues Itself

Ever new discounts, ever smaller margins: Why the battle for the cheapest fragrance ultimately damages the entire market.

Luxury in the shop window, clearance sale at the checkout

The perfumery industry sells luxury. At least, that's what it likes to claim. It talks about rare raw materials, renowned perfumers, artistic flacons, exclusivity, and the emotional power of a fragrance. At the same time, it has taught its customers a completely different message over the years: just wait a little while – there will be another discount somewhere soon. Black Friday, Black Week, Summer Sale, Friends & Family, newsletter discount, app voucher, birthday promotion, Shopping Week, Flash Sale, and then perhaps an additional code on the already reduced price. What was once intended as an exception has long since become the norm.

The customer has understood this lesson. Not necessarily the perfumer's story, not the quality of the raw materials, and sometimes not even the idea of a brand. Above all, they have understood that the advertised price apparently only applies to those who are too impatient to wait for the next promotion. This is where a problem begins that is much larger than a single retailer.

"No fire sale" – a phrase that almost borders on satire

The case of Bodo Thiemann, owner of Parfümerie Thiemann, which has been in insolvency proceedings since June 2026, provides an almost textbook example. On its own restructuring page, the company explicitly states that it does not want to cheapen the brand; the goal is "no fire sale." A reasonable claim – yet customers are simultaneously met with a sales world of changing promotions, Summer Sales, vouchers, and sometimes significant price reductions.

In the online shop, selected products were advertised with price reductions of up to 70 percent off the recommended retail price. This, of course, does not mean that the entire range is sold with a 70 percent discount. But it shows how naturally even extreme markdowns are now used as a sales argument. The exciting question is therefore not whether a retailer occasionally reduces goods. Of course, they do. The question is: When does sales promotion turn into a permanent conditioning of the customer not to pay the regular price?

Discounts work immediately – and that's precisely why they are so dangerous

The great temptation of the discount lies in the fact that it works. A bottle for 200 euros isn't moving? Then try 179. Still not enough? 159. With a promotion code, perhaps 139. Suddenly the till rings, the warehouse empties, sales increase, and liquidity appears in the bank account. For a brief moment, everything looks better.

However, business administration has the unpleasant characteristic of not caring how good revenue feels. A retailer does not live from the number on the cash register display, but from the amount that actually remains after the sale. Personnel, rent, energy, testers, samples, packaging, shipping, payment fees, returns, marketing, inventory management, and administration must be paid from the trade margin. Therefore, reducing the selling price by 20 or 30 percent does not simply reduce profit by the same percentage. Depending on the calculation, it can destroy a large part of the entire gross profit.

Smaller margins, more sales, even more discounts – welcome to the hamster wheel

This is where the spiral begins. Smaller margins mean that more units must be sold to achieve the same contribution margin. More units require more customers. More customers, in turn, are to be gained through further promotions. The next discount level depresses the margin again, so even more goods must be moved. Eventually, the company runs faster and faster and wonders why so little remains at the end.

This is why focusing on revenue is so dangerous. Ten million euros in revenue sounds impressive, twenty million even more so. But revenue alone reveals almost nothing about a company's economic health. A retailer with five million euros in revenue and a healthy margin can be more profitable and stable than a chain store with twenty million that constantly moves its goods through price. Revenue is a number. Margin is the business.

The customer has been perfectly trained – unfortunately, to the wrong expectation

The industry has, to a large extent, created its current situation itself. Anyone who shows their customer for years that the next discount is guaranteed to come, cannot then complain when no one wants to buy at the regular price anymore. A customer who pays 220 euros today and two weeks later sees the same fragrance for 169 euros does not feel particularly luxurious. They simply feel poorly informed.

For the next purchase, they wait. This permanently changes price perception. The RRP is no longer understood as a normal price, but as a decorative starting figure from which something will, of course, be deducted. The real damage of permanent discounting therefore lies not only in the lost margin of a single sale. It destroys trust in the price itself.

Eventually, it's not the discount that's cheap – but the normal price that's too expensive

Let's take a niche fragrance for 220 euros. Retailer A sells it regularly and finances consulting, personnel, testers, samples, and assortment from their margin. Retailer B offers the same fragrance with a voucher for 179 euros. Retailer C ends up in the sale at 149 euros. The customer sees no different cost structures and no different economic situations. They only see 220 versus 149.

At some point, retailer C no longer appears astonishingly cheap, but retailer A absurdly expensive. This is where the real market destruction begins. The economically sound retailer is punished for their prudence, while the one with the lowest price sets the new reference value. And this value remains in mind, even if the promotion has long since passed.

The healthy pay the price of the sick

This mechanism becomes particularly problematic when aggressive prices arise from economic pressure. A retailer with tight liquidity has a strong incentive to convert inventory into cash as quickly as possible. For them, it can be rational in the short term to sell goods with a weak margin if invoices can be paid today.

For the rest of the market, the same decision can be devastating. The economically healthy competitor then has to explain why the same fragrance costs 40, 60, or 80 euros more from them. Yet, they might be the very one who pays their suppliers on time, employs enough staff, offers advice, and doesn't have to squeeze new liquidity out of their warehouse every month. This creates a grotesque situation: An economically struggling retailer can damage the calculations of healthy retailers through their pricing strategy.

Niche perfume thrives on desirability – not on bargain bins

For ordinary mass-produced goods, this mechanism might be annoying. For niche perfume, it hits the core of the product. A niche fragrance doesn't just sell liquid in a glass container. It sells an idea, origin, signature, rarity, advice, and a piece of distinction. This is precisely why customers accept prices of 180, 250, or even 350 euros.

However, if the same fragrance constantly appears with a 20, 30, or 40 percent discount, its story begins to crumble. A brand can speak poetically about precious raw materials, independent creativity, and extraordinary craftsmanship – but if a red percentage sign is constantly blinking next to it, the percentage sign ultimately wins. The customer then no longer asks: "Which fragrance suits me?" They ask: "Where is it cheapest?" Niche perfumery becomes a price comparison.

Udo Heuser says "No to discount battles" – and hits a raw nerve

One of the most prominent critics of this development is Udo Heuser, CEO and co-shareholder of the NOBILIS GROUP, one of the most important distributors for prestige and niche perfumes in Germany, and also President of the Fragrance Foundation Deutschland. In 2026, Heuser publicly stated unequivocally: "NO to discount battles." He criticized ever-lengthening promotional periods and the creeping devaluation of luxury brands.

It's interesting that Heuser explicitly thanked the Beauty Alliance for its stance. This is the very Beauty Alliance to whose members and shareholders Bodo Thiemann belongs. This does not mean that the Beauty Alliance or NOBILIS can dictate Thiemann's final prices – under antitrust law, pricing power generally rests with the independent retailer. But this is precisely where the exciting contradiction arises: one can jointly appeal against discount battles, but has limited means to prevent an economically pressured retailer from monetizing their inventory through pricing.

Brand value meets insolvency law

On paper, everything sounds simple. A brand should remain stable in value, a retailer should calculate prudently, and the customer should be willing to pay for advice and quality. In a crisis, this theory suddenly works differently. Rent is due, staff want to be paid, banks expect installments, suppliers expect money, and the warehouse is full.

Then the flacon is no longer just a luxury object, but a liquid asset. The faster it is sold, the faster tied-up capital is released. This explains why strong discounts are so tempting for companies in difficult situations. They solve an immediate problem – and can simultaneously create a long-term one.

Because once a brand has been visible in the market with a 50 percent discount, that memory cannot be erased. The customer stores the price, competitors know it, and comparison portals certainly do. The brand can then defend its RRP as confidently as it wants: the market has already learned that things can be different.

The industry is by no means innocent in the discount culture

However, it would be too simplistic to place all responsibility on retailers. The discount culture was not invented solely in Bautzen. Large beauty chains, department stores, online platforms, and international corporations have themselves worked with promotions, shopping weeks, giveaways, and special offers for years. At the same time, many brands were distributed ever more broadly, because more points of sale initially promise more revenue.

But the more retailers sell the same goods, the more they compete for the same customer. If advice, delivery time, and assortment are similar, eventually only the price remains as an easily understandable difference. Then the industry wonders about the discount battle, to whose prerequisites it has itself contributed.

Brands and distributors also want growth. Sales teams have targets, retailers are supposed to order as much as possible, new doors initially mean more reach. As long as the market grows, this game works. If sales become more difficult, suddenly there is too much merchandise in too many places – and someone starts with the discount. The rest usually follows astonishingly quickly.

Luxury with permanent discounts eventually becomes just expensive mass-produced goods

The most dangerous consequence, therefore, does not even concern the individual retailer, but the positioning of the entire industry. Luxury thrives on a product being able to credibly justify its price. No one expects a manufacturer to never reduce prices. But if customers can assume that every price will be negotiable within a few weeks, the product loses some of its exclusivity.

This is particularly true for niche perfume. If independent houses end up in the same discount merry-go-round as mainstream products, precisely that differentiation with which they justify their higher price disappears. The bottle can still be hand-numbered, the perfumer still so renowned, and the raw material still so precious – but at a 40 percent discount, even great perfumery eventually looks suspiciously like leftover stock.

The case of Parfümerie Thiemann is therefore more than just Thiemann

It would be wrong to declare Bodo Thiemann the inventor or sole culprit of this development. Rather, he is a particularly visible example of a mechanism that has now gripped large parts of the perfume market. A retailer in economic distress uses prices to move goods and liquidity. Other retailers have to react, customers get used to discounts, brands complain about devaluation – and at the same time, everyone involved still needs sales.

This creates a system in which almost everyone knows that it is harmful in the long term, and yet hardly anyone voluntarily steps out first. Because anyone who says today "I don't offer 20 percent" risks that the customer will simply buy from the next shop. The individual retailer can hardly solve this problem alone, but the longer the cycle runs, the more difficult it becomes to break it at all.

Perhaps luxury needs to learn to say no again

Perhaps the industry needs fewer promotions and more courage: the courage not to want to win every customer through price; the courage not to give a brand to every possible point of sale; and the courage of a retailer not to take a sale if it doesn't make economic sense.

A sale that ultimately leaves no reasonable contribution margin is not a success just because a package has left the warehouse. A customer who buys solely because of a 30 percent discount is not automatically a loyal customer. And a brand that makes sales everywhere but can no longer enforce its regular price anywhere may have lost more than it gained.

The perfume market will therefore have to decide what it wants to be: a luxury business or a permanent special sale with particularly beautiful bottles. Both at the same time don't work well in the long run. Discounts can clear inventory and create liquidity in the short term, but they don't fix wrong locations, lower excessive rents, or eliminate structurally too high costs. Anyone who constantly fights such problems with lower prices often only swaps a liquidity problem for a margin problem – and in the end, mathematics always wins.

That's precisely why our next trail leads away from the individual price and into the system behind it: to purchasing associations, distributors, central regulation, personal relationships, and the question of who actually has how much influence in the German perfume market.

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