why are Airports duty/tax free shops never cheaper than regular shops outside the airport?
In: Economics
For some things, like alcohol, they are.
For just about everything else, you’re a captive audience and they know people will pay it.
For one, the overhead of operating in an airport is quite high. Airports charge a premium for rent. Also, the logistics of doing business in a “secure zone” is costly. Just getting stuff delivered to the airport means everything has to be security screened.
For two, the businesses that operate there know they have a captive audience. People can’t easily just leave the airport to get stuff then come back. Also, items you would often buy from duty free, like alcohol, must be purchased once you are past the security checkpoint (there are limits on the types of things you can carry through security.)
Duty Free has become more of a marketing gimmick or just a shop brand name. Sometimes it is not even actually tax free (e.g. sales tax or VAT still added), sometimes there wasn’t even any duty to begin with, sometimes there is tax or duty saving and the shop just pockets that as profit and doesn’t pass on the saving since tourists either won’t know better or have nowhere else to go.
In places like Europe, where they have a very substantial VAT on goods sold, the Duty Free shops are often good deals. In the US we don’t have federal sales tax, so the only “duties” you a of are sin taxes like those on alcohol and cigarettes.
I remember going to Europe frequently in the early 2000’s, and the biggest thing in the Heathrow Duty Free was always gigantic box sets of Friends. It would be like Seasons 1-4 on 20 VHS cassette tapes, and would cost like $200. They loved that shit.
Because they don’t sell products in the same volume as a store outside of an airport.
Walmart can sell stuff cheaper because they buy and move such a large volume of products that they can purchase those products for a lower price.
Airports might have a high volume of traffic through them, but most people aren’t stopping in the shops to buy stuff. The longer products sit on the shelves, the more it costs for a store to offer those products. And since they don’t move large volumes of products, thru don’t get the bulk purchase discount.
Because people pay those prices, that’s all there is to it.
Like why should it be cheaper, there is no competition, you’ve got no where else to go, it’s not particularly easy to check against the prices outside, no one is going to do them for any kind of false advertising.
The bit that should really upset you is this is sooo profitable that most airport refurbs in the last couple of decades have been specifically to create space for the lil shopping mall and arrange things so you are forced through it.
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Pretty much only good for cigarettes since the taxes levied on it are outrageously high. Even booze isn’t a great deal but I’ll grab something if I’m landing in a foreign city for a few days
Because they know that you’re kind of stuck there and will just pay whatever price you have to cuz it’s not exactly like you can leave the airport to go down the street to Walmart to get a bag of chips
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