Impacts of Brexit on Travel Retail and how the industry will continue to change

Since the UK Government announced the end to VAT refunds (Tax Free shopping) for overseas visitors post Brexit, those who understood the impact of this decision jumped into action. The ‘it affects me’ campaign that flooded our industry press and social media channels, demonstrated the breadth of the issue, as we started to hear reports of the vast projected job loses across a number of sectors, including aviation, leisure, hospitality, and of course retail. As an agency working in the aviation, travel retail, domestic retail, hospitality, and events industries, we knew this decision would have a big impact, not least as we look to recover from the grip of a global pandemic.

But as it seems the government decision is unwavering, it’s time to look at the positives, plan for the future and begin to adapt. Very much as travel retail did back in the 90’s when duty free sales were abolished within the European Union. Oh yes! if it weren’t for the changes to VAT Free exports, we would, without question, be raising a glass and giving a cheer to the return of duty-free, as of January 1st, 2021, allowing passengers travelling to the EU to take advantage of duty-free purchases of alcohol and tobacco. Not since 1995 have we been able to pick up substantial price offers when boarding the plane to Spain. The glory days are back- or are they?

The challenge at present, is that with reduced passenger numbers of approximately 80-90%, measuring the impact of the new pricing is challenging, but with substantial offers on fantastic brands, it’s easy to feel positive about the opportunity for the spirits brands as we see travel return.

Litre bottles from £10.50, triple packs of 1 litre whiskeys for £67, these are just some of the incredible prices that travellers can expect to see. The merchandising shouting the up to 50% off from the average High Street message is now ever present in these stores, ready for the influx of passengers, with prices that will be hard for any High Street retailer to replicate.

With that, I can only imagine greater footfall as passengers understand the simple price message and are enticed into the stores. Whilst we wait to see what offers the beauty, confectionary and luxury brands can provide following the Tax Free changes, what we do know, is that it takes a trip to a large city centre department store or shopping centre to find the range of brands available in travel retail, not to mention the draw of the travel retail exclusives.

I personally believe that airport shopping will rise again post COVID, it will bounce back, it is the exciting first stage of any traveller’s journey, that buzz will never be eliminated.

Is there more that can be done to combat the losses the Industry has witnessed over the last year? Yes, simply two words Arrivals Shops. If we are encouraging travellers to shop before their journey, why not after the journey? It has been put to the UK Chancellor to allow Arrival’s duty-free shops into Airports. This would be relatively easy to implement, space permitting, and research shows that there could be a potential increase in spend by 20-30%! People would make the most of these allowances; 18 litres of still wine, 4 litres of spirits and any other goods (including Beauty) £390! Surely this is a no brainer?

What I do know, is that our Blackjack Team will continue to play an integral role in travel retail, imparting their knowledge and sharing brand stories. Helping our customers to make buying decisions. With no doubt these next few months will be challenging as we continue to navigate safely out of the pandemic, travellers may be reticent and uncertain for a few reasons, but our team will be on hand to safely advise and support customers. The changes to duty free shopping can be viewed in different ways, personally, this is ‘the new norm’, we reflect, we embrace the change, we adapt, and we find our feet again!