Airports & Travel RetailersBlog

Introduction by: Peter Marshall

With TFWA Singapore just around the corner, this is a particularly appropriate feature for the industry. Recent research from Pi Insight has shed light on some shocking price differentials between duty free and downtown retailers in Asia. 

Did you know, for example, that duty free confectionery averages at +20% higher per 100g? Or that, in some cases, key brands are actually cheaper downtown?

In this week’s blog you will discover some startling facts behind duty free savings and the critical role of price awareness in today’s retail landscape. What is clearly highlighted is that travel retailers need to appreciate that today’s shoppers are more empowered than ever and have the ability to make informed shopping decisions. They may well just vote with their feet, and walk out of your store.

Duty Free Asia – Price Perception Or Price Deception?

As travellers venture into the duty-free shops across Asian airports, expectations of unbeatable deals on confectionery and alcohol items often fill their minds. However, recent findings by Pi Insight unveil a different facet of the story, shedding light on the importance of price awareness for both shoppers and duty free retailers.

A comprehensive examination contrasting prices of key brands from major suppliers across confectionery and alcohol categories at Asian airports and downtown retailers reveals an intriguing comparison: duty free prices for some key confectionery items average 20% higher per 100g compared to downtown counterparts. 

In certain locations like Hong Kong, this price gap can be as wide as 50% for some select products. 

Similarly, while Asian airport alcohol prices boast an average of 12% cheaper rates compared to downtown, this perceived discount may not always hold true. In the key hubs such as Seoul and Beijing, benchmark alcohol products can command prices up to 25% higher per 100ml than their downtown equivalents. Nevertheless, exceptions like Singapore, Hong Kong, and Kuala Lumpur stand out with substantially lower airport prices compared to downtown counterparts.

The allure of exclusive, rare and sought-after products available in airport retail may justify higher prices to some extent, with duty free shops boasting a unique selection not found in downtown stores. However, this exclusivity often obscures the true value of products, leading travellers to overestimate their potential savings.

For instance, travellers in Hong Kong may be taken aback to discover that certain confectionery items carry a staggering 55% premium per 100g compared to downtown retailers. Similarly, in Seoul and Beijing, some premium whiskies, American whiskies, and select Cognacs can be up to 25% pricier at the airport compared to downtown retail.

On the flip side, Singapore emerges as a beacon of affordability in the duty free landscape. With prices nearly 40% cheaper than downtown for selected alcohol products, Singapore Changi Airport offers travellers genuine savings.

So, what fuels these disparities in prices? While airports like Singapore and Kuala Lumpur manage to maintain competitive prices, others struggle to keep pace with downtown retailers. High import taxes and operating costs can contribute to inflated duty free prices, undercutting the perceived value for travellers.

In an era where shoppers have easy access to price comparisons and no longer take for granted that airport prices are cheaper than downtown, duty free retailers must prioritise price awareness. By ensuring that prices in airports are reflective of downtown comparisons and leveraging transparent pricing strategies, duty free retailers can maintain competitiveness and enhance shopper satisfaction.

Ultimately, the duty free landscape in Asian airports serves as a reminder for both travellers and retailers to approach shopping experiences with discernment and awareness. Through transparency and fair pricing practices, duty free retailers can cultivate trust and loyalty among travellers, while driving positive change in the industry. 

By embracing price awareness, travellers can make informed decisions that truly reflect their best interests, ensuring a rewarding and fulfilling duty-free shopping experience.

Peter Marshall

Founder: Arts
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