The Perfume Department is a large mall venue located on the Flying Dutchman's ship. The store contains humans, many of whom attempt to assault Spongebob and Patrick with various perfume. These humans are very hostile, and will go as far as removing protective equipment to spray unwarry travellers with their noxious gases. SpongeBob and Patrick narrowly manage to survive the onslaught.
SpongeBob states that he "always hated going in there." It is assumed that SpongeBob has been through a Perfume Department before.
It can be considered strange that The Flying Dutchman has an entrance to a perfume department of some store (or possibly even the entire perfume department) on his ship.
In the audio commentary it is mentioned that this scene was shot in a Macy's store.
Unlike most locations, the Perfume Department is shot in live action as SpongeBob and Patrick run through it.