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Published
Feb 9, 2022
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UK to lose top spot in European duty-free sales table

Published
Feb 9, 2022

As retailers continue to campaign against the UK government’s changes to VAT-free shopping rules, new analysis from GlobalData claims Britain will lose its top spot in the European ‘duty-free’ market as spend is forecast to fall 70% by 2025.


Photo: Pixabay/Public domain



UK duty-free spend — which is crucial for both the fashion and beauty industries — is forecast to plummet by 70% between 2019 and 2025 owing to the new rules introduced in January 2021. Bizarrely, those rules still allow ‘unhealthy’ products like alcohol and tobacco to be purchased duty-free.

GlobalData said Germany and France will overtake the UK’s number one position to become Europe’s biggest duty-free markets with three years as the UK’s share will have dropped from 23.6% in 2019 to just 8% in 2025.

There’s been a lot of coverage of the UK’s changes to tax-free shopping rules but much of that coverage has focused on the impact on global shoppers travelling to Britain. The rule changes mean tourists visiting the UK who could previously claim back their VAT on many purchases can now only do so if they opt to ship those goods home rather than carry them home themselves. 

That was a double blow as retailers had actually hoped that post-Brexit, shoppers from the EU would be able to take advantage of tax-free shopping.

There’s been less of a focus, however, on how the rule changes will impact UK tourists as they travel, with many previously buying duty-free beauty, beach and accessories products at the airport before departing on holiday.

Now GlobalData claims the rule change will lead to such 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.

It said there will now be “zero duty-free spend on cosmetics & toiletries – previously the largest product area by far – and on food, jewellery & watches, electricals or clothing”.

Sofie Willmott, Retail Analyst at GlobalData, said: “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.”

It’s clear that retailers will need to take a hit to their margins if they want to offer more attractive prices at airports and 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,” Willmott added. 

“The removal of duty free-shopping for items such as make-up 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.”

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