By Scott McCartney
GRAPEVINE, Texas -- Here's a little secret about airport
shopping: You don't have to hold an international ticket anymore to
buy at many duty-free shops. And another: It actually can be a
pretty good deal.
In the age of online shopping, retailers are finding that
airports can take some of the sting out of declining mall traffic.
Travelers have time to kill and money to spend when they're captive
inside airport security. Major airports around the world, from
Singapore to Dubai, London to Beijing, have essentially become
shopping malls with gates.
And the U.S. is finally starting to catch up. Just as they have
upgraded restaurants and basic amenities like power outlets, U.S.
airports are finding they need to improve duty-free stores, which
have become a necessity for many world travelers who routinely
stock up on perfume, cosmetics, alcohol and chocolate coming home
from trips.
Airports like duty-free shops because they get a cut of the
revenue; luxury-goods makers like the chance to interact in person
with shoppers; and customers like the convenience, savings and
opportunity for capricious purchases.
Duty free began in Ireland in the 1940s as a way to stimulate
spending by waiving taxes for people who were heading out of the
country. It's grown and liberalized over the years, and definitions
and qualifications vary in different countries. But the basic
premise has become as omnipresent for travelers as neck pillows and
bottled water.
Dallas-Fort Worth International Airport opened a duty-free mall
inside its main international terminal in December. About the size
of a Walgreens or CVS Pharmacy, the area isn't labeled duty free
because that tends to drive away domestic passengers, who think
they don't qualify. In fact, U.S. shoppers can now buy everything
except cigarettes and alcohol, and in many locations it's all tax
(aka duty) free even if you aren't leaving the country, because of
agreements negotiated with state and local taxing authorities.
Mauricio Gonzalez, who lives near Mexico City, recently made his
second stop at the DFW duty-free store while on a business trip. He
bought chocolates for himself and perfume for his wife.
"The variety is good," he says. "I don't know if the prices are
good, but the convenience is."
Name-brand cosmetics and perfumes especially can be cheaper at
the airport, with special packages, quantities and, for some
brands, unique products. Other items can be hit and miss.
Among the more unique offerings: Sculptures by well-known Texas
artist James Surls, including a tabletop flower bouquet for $7,000
and a giant wall-hanging of his signature flowers for $250,000. If
you need a $2,600 cowboy belt buckle, this is the place.
Katherine Choi, who lives near Houston, stocked up on tequila
and chocolates on a recent trip to Seoul to see family. She and her
husband used the duty-free store so they wouldn't have to put the
gifts in their luggage, where they might get damaged, lost or
stolen. "It saves time because you don't have to go to a local
store," she says.
DFW says it removed some seating areas in Terminal D to make way
for the new store, a move agreed to by American Airlines, user of
the nearby gates. Taking away seats means pacing passengers are
practically forced to peruse products.
American also agreed to put long-haul international flights at
gates near the store, and the airport purposely put it right in
front of the terminal's busiest TSA screening checkpoint. It's not
like some international airports, where passengers must walk
through duty free to get to gates, but it's close.
"Were we intentional about this? Yes," says Sean Donohue, DFW's
chief executive.
The airport's previous, much-smaller duty-free store was
quaintly called "The Buckaroo." Mr. Donohue says it "didn't come
close to a store you'd see in London or Beijing." DFW didn't have a
global airport feel, yet it was trying to attract more
international flights, Mr. Donohue says. It wanted to look more
like a major international airport.
Airport customer research showed a hunger for high-end retail
catering to expense-account business travelers and vacationers
dubbed "indulgent explorers," who are willing to spend on unique
items, especially local brands. Some travelers do pick flights by
the connecting airport, Mr. Donohue says. If they know they can
stock up on items they want to buy in the U.S., they may connect in
Dallas instead of another hub.
In Asia, it's not uncommon for people to fly off on shopping
trips for a wider selection of goods and cheaper prices. That's
true in the Caribbean and Mexico, too.
"The ability to shop is very important for some travelers," says
Bernard Klepach, chief executive of DFASS Group, the Miami-based
duty-free retailer and onboard shopping company that operates the
DFW store. "Fine shopping is not for every airport, but it is
important to some."
Moët Hennessy, the Paris-based maker of Champagne and cognac,
has a boutique in the Dallas duty-free store where it does tastings
of rare editions -- a spot of cognac before boarding. The unit of
luxury-goods conglomerate LVMH sees airport retail as a chance to
educate consumers about its brand. Moët Hennessy has airport
boutiques in Paris, Taiwan, Hong Kong and Singapore. Dallas is its
first in the Americas, and more are likely.
"The proliferation which is starting in the U.S. is quite new,
and we are very happy with it and very proactive," says Laurent
Boidevezi, Moët Hennessy senior vice president in Paris.
Mr. Donohue says DFW's duty-free sales were up 47% in January --
the new store's first full month of operation -- compared with the
previous year. But the store is as much about entertainment as
revenue. "If all I wanted to do was make money, I'd have a lot of
restaurants and bars here, and convenience stores," he says.
The store has no doors; travelers just wander through. Brands
have their own areas, creating a boutique feel. There is some
seating upstairs on an open, second level designed for events such
as tastings, entertainment and parties that will lure curious
passengers.
While online retailing has curtailed some airport retail
business, companies say they are still seeing growth -- stronger
than other traditional venues like malls or Main Streets. Dufry AG,
the largest duty-free airport retailer, posted same-store revenue
growth about 8% in the first nine months of 2017 compared with the
same period in 2016. It was Dufry's strongest performance since
2011.
"You cannot smell perfume online," says Mr. Klepach, of DFASS.
"It's the theater of retail. People like going in and feeling and
touching."
Write to Scott McCartney at middleseat@wsj.com
(END) Dow Jones Newswires
March 14, 2018 09:14 ET (13:14 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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