Buying perfume from an airport costs $30 more than buying it online. Photo / Grant Bradley
Buying perfume from an airport costs $30 more than buying it online. Photo / Grant Bradley
Duty-free stores are often more expensive than regular shopping, according to new research.
A study from price comparison website PriceSpy shows that the 2.9 million Kiwi travellers venturing abroad might be making a mistake in hoping to get a good price on many items.
Buying perfume duty-free at a NewZealand airport works out to cost $30 more than buying the same product online and mobile phones are more expensive bought duty-free, PriceSpy found.
PriceSpy compared the price of 54 products including electronics, fragrances, smartphones, watches and cameras from airport retailers JR / Duty-Free, Aelia and The Loop located at Auckland and Wellington International Airports.
Just nine of the 54 products were found to be cheaper bought duty free at the airport.
iPads and Fitbits were found to be cheaper bought duty-free while the latest iPhone, MacBook Pros, high-end Canon cameras, Beats by Dr Dre headphones, Samsung Galaxies and perfumes are more expensive.
PriceSpy New Zealand country manager Liisa Matinvesi-Bassett said e-commerce had trumped the savings duty-free had historically offered.
"It's a long-held belief that duty-free shopping is where the best bargains can be found. Clearly, e-commerce has put a firm stop to that," Matinvesi-Bassett said.
"With stores competing more and more on price, online sites and marketplaces tend to offer the most competitive prices."
Matinvesi-Bassett said hidden fees such as entry charges and payable GST for large purchases were often an additional cost to duty-free prices.
A Samsung Galaxy S8 Plus 64GB retailing for $1299 at JR Duty-Free comes to a total of $1442 once GST and entry charges are added, making the smartphone $640 more expensive than the advertised price of $803 if purchased online.
"For those looking to splurge out on big-ticket items at the airport, PriceSpy encourages passengers to familiarise themselves with the rules and regulations around GST and entry fees, as once these costs are applied on top of the duty free price quoted in the shops, the end price can end up considerably more," she said.
Auckland Airport retail and commercial general manager Richard Barker said liquor and cosmetics offered the best discounts at the airport.
"The biggest selling categories are spirits and cosmetics which offer the best savings – because they have no duty on them," Barker said.
"Competition for electronics has increased significantly with frequent discounting by electronic retailers along and the impact of online shopping."
He did not address questions of how duty-free shopping could work out to be more expensive that buying the same product online.
With stores competing more and more on price, online sites and marketplaces tend to offer the most competitive prices.
The concept of duty-free shopping began in Ireland in 1947, the brainchild of Dr Brendan O'Regan, an entrepreneur who convinced the Irish government to create a tax loophole.
O'Regan told the Government it would lose tax but sold the idea as a marketing tool to sell the country and local products.
Tom Byrne, general manager of Irish-owned duty-free retailer The Loop Duty Free, operating at Auckland International Airport, said savings were only part of what consumers want when shopping duty-free.
"Competitive pricing is always important but customers also want choice and exclusive product," Byrne said.
"One of the challenges for us is for travellers to understand that many of the products offered duty-free can't be purchased elsewhere."
Byrne said duty-free operators were forced to offer competitive prices and often negotiated exclusive supplier arrangements to offer more choices.
Duty free shopping started out exclusive to liquor and cigarettes. Photo / File
"We operate in a very unique trading environment, having two operators forces us to be competitive," Byrne said. "New Zealand's duty-free market may have a small footprint but is highly competitive and dynamic."
Retail consultant Chris Wilkinson said Auckland Airport has two competing duty-free operators, a rarity for an airport.
"Typically airports have only one, which lessens competition," Wilkinson said. "There's only three or four airports in the world which have got dual contestors."
Some goods would be more expensive at smaller airports such as Wellington International where there is no competition, he said.
But Wilkinson said he believed the duty-free prices offered at Auckland Airport were reasonable.
"Certain products are more expensive but when you look at something and say 'hey, this is what I want to buy', often the person will say 'if you buy this and this, it's much better value overall'," Wilkinson said.
"All you need to do is watch the aircrew after each flight making a bee-line for the duty-free store. Given their frequency in travel and multitude of destination and shopping choices, the fact crews from many airlines are some of the most frequent duty-free consumers in Auckland Airport suggests the pricing on many goods must be relatively competitive."
