Duty free departments of international airports are usually full of luxury goods and they get sold out fast, but in 2020 the sales faced a big block.
The evil of 2020 a.k.a the global pandemic shook the business world quite hard and first of all it hurt the brands relying on International customers. In the past it was hugely beneficial for luxury retailers to make their money while setting their services at International Airports all around the globe. But as the lockdown phases stepped into the routine of the majority of the world, carrying on the profitable buy and sell faced an enormous wall. Being only the tiny percent of the global market airport duty free services were still moving rather fast, appearing in constant demand day and night.
Duty Free Services in Different International Airports: The Fall of Demand
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When converting into percentages, studies in the UK showed that while in 2019 the luxury market hit an overall of 4 percent growth, the sales of luxury goods in duty free airports experienced an add up of 11%.
Expanding the vision further in the longer-term, airport sales were estimated to reach 64 billion dollars by 2020, while in 2018 they were already 78 billion dollars according to the Swedish Generation. Even though the prices Can be high, customers want to benefit from duty free trying to pick a favorite drink, a perfume or a fashion accessoire.
From now till the end of 2021 the shops and restaurants might experience big chunks of losses as economists predict. However there is still a belief about getting back to normal for airport sales will be much faster than for the rest of the market.
Now when legendary companies like Kering and Estee Lauder Co understood this principle, their primary focus in the upcoming future will be on travel retail, multiplying revenues in airports instead of regular shops and boutiques.
Looking at the path of the German duty free operator Heinemann, things look disheartening. Before November the drop in the airport sales at Germany based airports rolled down to sixty percent. Now amid the second wave of the global pandemic positive rebounds yet will be far away. The case is not much different in other tourist hotspots, like in Dubai.
International Shoppes, the corporation that carries out duty free services could not skip losing either, taking into account that the residents of China could not visit the United States because of the travel ban. Even though the Chinese made only 5% of their customer list, they were likely to stop at the duty free as domestic travelers inside the US rarely stand out in means of interaction with tax free shopping.
Leisure travelers and business travelers nowadays still act cautious, trying to isolate themselves while walking through the airports as much as possible. Perhaps they are afraid of getting infected, that’s why the sales reduction is not only the impact of travel bans.
Source: Frank Busch/ Unsplash
Future solutions brought the idea of transferring the luxury goods from airport duty free to e-commerce and shippings to home. South Korea approved the wishes of travel retailers to sell goods to local customers in this way, once these goods pass at the six-month period. The tax-free business sounds pretty alluring but it does not mean in future it will not be cut down.
Setting a little bit of space in private airports might be another solution for “getting rid of” the collected luxury goods. however these are a few in number – for example in Harrods Aviation. Anyone will agree – it is a common habit to look up your preferred luxury goods in the row of duty free products,while waiting for the registration.