"Tax-free" goods sold in European airports are on average just 6.2 percent cheaper than equivalent goods at local retail stores, with London's Heathrow Airport offering the worst overall discounts, according to a new study by European price comparison service Kelkoo. Online retailers offer the best savings, as products sold online are on average 12 percent cheaper than those sold at brick-and-mortar retail outlets, it said.
The study, released August 16, examined the differences in prices among brick-and-mortar retail stores, "tax-free" (meaning VAT-free) shops in European airports, and online retailers across Europe. The company compared prices on 22 products in 5 key categories:
health and beauty;
luxury, fashion, and electronics;
wines and spirits;
tobacco; and
fine foods and confectionery.
The prices on products purchased from airport tax-free shops and online retailers were then benchmarked against the average recommended retail price in local brick-and-mortar stores. The company selected 10 airports that accounted for 80 percent of European passenger traffic in 2009.
The study found that goods purchased from airports are on average 6.2 percent cheaper than those at standard brick-and-mortar stores. If airport tax-free shops were passing on the full VAT exemption to the consumer, they would be offering average price reductions of 17.4 percent (based on the average standard VAT rate in Europe). The study's authors said airport retailers attribute the discrepancy to their higher overhead costs, including steep rental charges and higher staff salaries, compared with those of brick-and-mortar stores.
Heathrow offers the worst average discount (3.1 percent) compared with brick-and-mortar stores, while the Lyon-Saint Exupéry Airport offers the best average discount at 11.9 percent. The complete rankings, from best average discount to worst, are:
Lyon-Saint Exupéry, 11.9 percent;
Paris Charles de Gaulle, 11.5 percent;
Amsterdam Schiphol, 6.1 percent;
Frankfurt, 5.6 percent;
London Gatwick, 5 percent;
Barcelona El Prat, 5 percent;
Madrid-Barajas, 4.7 percent;
Rome Leonardo da Vinci-Fiumicino, 4.7 percent;
Berlin Schoenefeld, 4.6 percent; and
London Heathrow, 3.1 percent.
The study also found that prices for individual items can vary significantly across airports. A Panasonic FZ38 digital camera ranges from £267.85 at Heathrow to £137.58 in Lyon; a Dolce & Gabbana Hobo handbag costs £1,020 at Heathrow but £696.07 in Rome; Estée Lauder Advanced Night Repair skin cream is about £46 at Gatwick and Heathrow and about £90 at the Lyon and Paris airports.
Online retailers offer the best savings, with discounts ranging from 9.1 percent to 15.4 percent over local brick-and-mortar stores' prices, the study concluded. The United Kingdom and France offer the best overall savings for online shopping (at 15.4 percent and 13.7 percent respectively), while Spain and Italy offer the lowest overall savings (at 9.2 percent and 9.1 percent).
"Airports create the perfect environment for shopping, as people have time to kill, a holiday feel-good factor, and extra cash in their pockets," said Bruce Fair, managing director of Kelkoo UK. "However, they don't always create the most competitive environment for prices, and 11 years on from the end of 'duty free' there is still a perception that tax-free shopping offers the best deals."
"In reality, higher overheads, decreased competition and less choice mean that 'tax-free' shops are not always the hunting ground for bargains that people think they are," he added.
The study, released August 16, examined the differences in prices among brick-and-mortar retail stores, "tax-free" (meaning VAT-free) shops in European airports, and online retailers across Europe. The company compared prices on 22 products in 5 key categories:
health and beauty;
luxury, fashion, and electronics;
wines and spirits;
tobacco; and
fine foods and confectionery.
The prices on products purchased from airport tax-free shops and online retailers were then benchmarked against the average recommended retail price in local brick-and-mortar stores. The company selected 10 airports that accounted for 80 percent of European passenger traffic in 2009.
The study found that goods purchased from airports are on average 6.2 percent cheaper than those at standard brick-and-mortar stores. If airport tax-free shops were passing on the full VAT exemption to the consumer, they would be offering average price reductions of 17.4 percent (based on the average standard VAT rate in Europe). The study's authors said airport retailers attribute the discrepancy to their higher overhead costs, including steep rental charges and higher staff salaries, compared with those of brick-and-mortar stores.
Heathrow offers the worst average discount (3.1 percent) compared with brick-and-mortar stores, while the Lyon-Saint Exupéry Airport offers the best average discount at 11.9 percent. The complete rankings, from best average discount to worst, are:
Lyon-Saint Exupéry, 11.9 percent;
Paris Charles de Gaulle, 11.5 percent;
Amsterdam Schiphol, 6.1 percent;
Frankfurt, 5.6 percent;
London Gatwick, 5 percent;
Barcelona El Prat, 5 percent;
Madrid-Barajas, 4.7 percent;
Rome Leonardo da Vinci-Fiumicino, 4.7 percent;
Berlin Schoenefeld, 4.6 percent; and
London Heathrow, 3.1 percent.
The study also found that prices for individual items can vary significantly across airports. A Panasonic FZ38 digital camera ranges from £267.85 at Heathrow to £137.58 in Lyon; a Dolce & Gabbana Hobo handbag costs £1,020 at Heathrow but £696.07 in Rome; Estée Lauder Advanced Night Repair skin cream is about £46 at Gatwick and Heathrow and about £90 at the Lyon and Paris airports.
Online retailers offer the best savings, with discounts ranging from 9.1 percent to 15.4 percent over local brick-and-mortar stores' prices, the study concluded. The United Kingdom and France offer the best overall savings for online shopping (at 15.4 percent and 13.7 percent respectively), while Spain and Italy offer the lowest overall savings (at 9.2 percent and 9.1 percent).
"Airports create the perfect environment for shopping, as people have time to kill, a holiday feel-good factor, and extra cash in their pockets," said Bruce Fair, managing director of Kelkoo UK. "However, they don't always create the most competitive environment for prices, and 11 years on from the end of 'duty free' there is still a perception that tax-free shopping offers the best deals."
"In reality, higher overheads, decreased competition and less choice mean that 'tax-free' shops are not always the hunting ground for bargains that people think they are," he added.