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Pricing study claims online retailers offer better value than tax free

EUROPE. Shopping comparison website Kelkoo has claimed that tax free goods at European airports are on average -6.2% cheaper than those in local high street stores, based on a selected basket of goods. Crucially, the study focuses on tax free shopping (free of VAT) for travellers whose journeys start and end within the EU, rather than duty free shopping (free of VAT and excise duty). According to Kelkoo's latest study, produced by the Centre for Retail Research, consumers at European airports spent over £2.5 billion last year, making savings of -6.2% (£168 million) compared to standard high street prices on the equivalent items. However, by shopping online for the same goods, consumers could have saved a further -6.1% (£156 million) – a total saving of -12% (£324 million) over high street stores, Kelkoo claimed.

A mystery shopping exercise was carried out for a representative basket of 22 products with a strong pan-European sales footprint, spanning five 'categories' (health & beauty; luxury, fashion & electrical; wines & spirits; tobacco; fine foods & confectionery), and prices were gathered from European airport tax free retail outlets and online retailers.

These prices were then benchmarked against the average RRP for the same goods in local high street stores. The ten airports selected for the purpose of the study represent a sample of European countries and accounted for 80% of European passenger traffic in 2009.

Kelkoo UK Managing Director Bruce Fair said: "Airports create the perfect environment for shopping, as people have time to kill, a holiday feel-good-factor, and extra cash in their pockets. 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 the perception that tax free shopping offers the best deals."

He went on to claim: "In reality, higher overheads, decreased competition and less choice means that tax free shops are not always the hunting ground for bargains that people think they are. In fact, airside retailers simply cannot compete with online retail for the best prices."

Wide variety of prices

The discounts on offer across European airports varied widely in the pricing survey. Heathrow offered average tax free savings of -3.1% across the basket of goods, followed by Berlin Schoenefeld at -4.6%, while Gatwick ranked fifth with below-average savings of -5%.

In contrast, Lyon St Exupéry offered the highest average tax free savings at -11.9%, closely followed by Paris Charles de Gaulle (-11.5%). UK airport retailers were the most expensive for luxury, fashion & electrical goods, claimed Kelkoo, while Spanish airport stores had the highest prices for health and beauty products, and wines & spirits were most expensive at French airports, it said.

*Averages weighted in proportion to the European breakdown of percentage sales for each of the five goods categories

Prices for individual items also varied significantly across airports in Europe. For example, an Apple iPad was priced from £556 in Rome to £579 in the UK. In contrast, Estée Lauder Advanced Night repair was £46 at Gatwick, whereas in France the same item was almost double at £90, Kelkoo found.

Using the high street prices in each country as the basis for comparison, the report revealed that European airports offer 'tax free' savings of -6.2% on average. However, taking the average standard rate of VAT in Europe, if airport 'tax free' stores were passing on a full tax rebate on the high street cost of goods to European travellers, they would instead be offering average price reductions of -17.4% across Europe, and -14.9% in the UK based on the country's current standard rate of VAT, claimed Kelkoo.

The survey did note airport retailers' arguments that this discrepancy is due to higher overheads, including steep rental charges and concession fees plus higher staff salaries, compared to those of high street stores.

The report claimed that online savings on the same basket of goods was higher than in tax free shops, ranging from -9.1% to -15.4%. The UK (-15.4%) and France (-13.7%) offer the best overall savings for online shopping over high street stores, with Spain and Italy ranking bottom, although internet goods in these countries are still on average -9% cheaper than those on the high street.