October 13, 2020 | 1 minute read

Abolition of Duty Free shopping poses a taxing challenge for airport retail and luxury brands

Managing Director

Airport retail is already suffering due to the dramatic decline in numbers of people travelling and the luxury sector is experiencing disruption like never before. The prospect of tax free airport shopping ending in the UK is yet another factor for airport retailers and luxury brands to tackle.

There is little the airport retailers or luxury brands can do to stimulate increases in travelling but the implications for both sectors in the UK are profound if shopping incentives are removed. In addition, the impact of depressed tourist numbers on the wider retail industry are likely to inhibit much needed transformation across the entire sector. Removing a significant driver of both consumer traffic and the incentive of better value products will not be welcome news.

Add to this changes in Chinese consumer habits – a key demographic for both airport and luxury retail – and the situation looks even more challenging. Health, home, habit and hygiene have become key considerations for consumers across the globe. Early results from our annual Singles Day research (the 2019 results can be found here) show some interesting shifts in Chinese consumer behaviour. Value and savings are likely to be key drivers for Chinese consumers going forward. This is underpinned by even greater adoption of online channels. While luxury brands will be less severely affected, the longer term implications for airport retail are more serious.

While the decision was seen initially as likely to be detrimental to luxury retailers primarily, removing incentives for tourists to visit the UK could have a knock-on effect across the country and the retail industry at a time when sales and profitability are under pressure because of the coronavirus pandemic.