According to ‘Europe Duty Free Retailing Market Size, Sector Analysis, Consumer and Retail Trends, Competitive Landscape and Forecast, 2021-2025’ report, changes to rules due to Brexit will lead to duty free spend nosediving in the UK, falling from $3.8 billion (almost £3 billion) in 2019 to $1.1 billion (£0.9 billion) in 2025.
UK duty-free spend is forecast to plummet by 70% between 2019 and 2025 owing to new rules introduced in January 2021 which only enable alcohol and tobacco to be purchased duty free.
Germany and France will overtake the UK’s number one position to become Europe’s biggest duty-free markets, by 2025. The UK’s share will have dropped from 23.6% in 2019 to just 8.0% in 2025.
With alcohol and tobacco being the only categories where UK duty-free purchases are possible, there will be zero duty free spend on cosmetics & toiletries – previously the largest product area by far – and on food, jewelry & watches, electricals or clothing.
As many UK consumers have not travelled by plane or journeyed through an airport for almost two years, changes to duty free shopping have gone mainly unnoticed. Duty free prices are now a thing of the past for most products and although we expect retailers to continue selling a wide range of beauty items, watches and clothing, shoppers will need to be savvy if they want a bargain.
Duty-free prices are now only available on alcohol and tobacco with retailers required to offer their own discounts if they want to entice travelers to buy and attempt to maintain the perception that airports offer lower prices than the high street.
Many airports are now configured to guide passengers through retail stores en route to the departure lounge and plenty of consumers are in the habit of making discretionary purchases to treat themselves to kick off their holiday.
The removal of duty-free shopping for items such as makeup and perfume may stop some price-conscious consumers from buying and deter impulse buys. Duty free operators, like World Duty Free and DUFRY, will have to be creative with promotions and pricing to convert what were duty free sales into regular retail sales at British airports.
WHAT TO TAKE AWAY FROM THIS ARTICLE:
- Duty free prices are now a thing of the past for most products and although we expect retailers to continue selling a wide range of beauty items, watches and clothing, shoppers will need to be savvy if they want a bargain.
- Duty-free prices are now only available on alcohol and tobacco with retailers required to offer their own discounts if they want to entice travelers to buy and attempt to maintain the perception that airports offer lower prices than the high street.
- Many airports are now configured to guide passengers through retail stores en route to the departure lounge and plenty of consumers are in the habit of making discretionary purchases to treat themselves to kick off their holiday.
