Duty-free spending in the UK is expected to fall by 70% between 2019 and 2025 due to new rules introduced in January 2021 which only allow alcohol and tobacco to be purchased duty-free.
Germany and France will overtake the UK’s top spot to become Europe’s largest duty-free markets by 2025. The UK’s share will drop from 23.6% in 2019 to just 8.0 % in 2025.
According to GlobalData’s recent report “Europe Duty Free Retailing Market Size, Sector Analysis, Consumer and Retail Trends, Competitive Landscape and Forecast, 2021-2025”, Brexit rule changes will lead to a drop in duty free spending in the UK , rising from $3.8 billion (nearly £3 billion) in 2019 to $1.1 billion (£0.9 billion) in 2025.
With alcohol and tobacco being the only categories where duty-free shopping in the UK is possible, there will be no duty-free spending on cosmetics and toiletries – previously the largest area of goods by far – and for food, jewelry and watches, electrical appliances or clothing.
Sofie Willmott, Retail Analyst at GlobalData, comments: “As many UK consumers haven’t traveled by air or transited through an airport for almost two years, the changes to duty-free shopping have gone mostly unnoticed. Duty-free prices are now a thing of the past. for most products and while we expect retailers to continue selling a wide range of beauty items, watches and apparel, shoppers will need to be warned if they want to grab 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 try to maintain the perception that airports are offering lower prices than those on the main street.
Willmot continues: “Many airports are now set up to guide passengers through retail stores en route to the departure lounge and many consumers are used to making discretionary purchases to indulge themselves before starting their vacation.
“Removing duty-free shopping for items such as makeup and fragrances may prevent some price-conscious consumers from buying and deter impulse purchases. Duty-free operators, like World Duty Free and DUFRY, will need to get creative with promotions and prizes to convert what were duty-free sales into regular retail sales at UK airports.”