Duty-Free Shopping Really Can Help Save

One of the enduring mysteries for some travelers is the workings of duty-free airport stores. What sort of savings, if any, can be achieved, and with which merchandise, are the questions generally asked.

Many travelers from Southern California are more likely to shop at overseas duty-free stores, but the duty-free store at LAX can provide some worthwhile pointers as well as merchandise to be used overseas yourself or for gifts.

“Americans tend to be the least-experienced travelers in using duty-free stores,” said John Reed, president of Duty Free Shoppers, which operates the duty-free stores at airports in Los Angeles, San Francisco, Honolulu, Anchorage and other cities. “But this is primarily because of geography and the fact that we don’t have as many foreign countries nearby as people in Europe and other parts of the world do.”

Common Misconceptions

The two most common misconceptions travelers have, Reed said, are that duty-free stores don’t really save money and that the products sold are overpriced. “However, travelers do get savings ranging from 20%-50% off of what most of these products would cost in local retail outlets, including discount stores.”

As for any savings on these products if they were bought overseas, it depends on the product and country involved. “You might be able to get some products such as perfumes at better prices in the country where the merchandise is made, but this varies a great deal,” Reed said.

Regarding the overpriced tag, Reed said that only quality and luxury goods are sold. “Therefore, our items are more expensive to begin with, but we still offer bargains on what these goods would otherwise cost. We generally sell top-of-the-line merchandise, like Gucci bags, and so these products are priced accordingly.”

Part of the misconception, Reed said, may stem from travelers being unsure what duty-free really means. Duty-free doesn’t apply to the buyer, but to importers of merchandise sold in the ports/cities, airports, cruise ships or airplanes you visit or use. It means that the importers can bring in certain goods, for resale to travelers who take the items out of the country, without paying taxes and duties (or paying less tax and duty than importers selling domestically).

No Guarantee of Savings

This makes the products less costly and permits the merchants to charge travelers less. But there is no guarantee that these stores will pass their savings on to you.

“We import our goods directly, except for U.S. liquors and tobacco products, so there is no middleman’s markup or distribution cost, and then we apply our own markup,” Reed explained. “Our policy is then to price merchandise lower than what they would cost locally.

“As an example, we sell a fifth of Chivas Regal at $13, with the same bottle selling for about $17 domestically, including some discount stores,” Reed said. Moreover, Reed added, the same bottle would cost $30-$40 in Scandinavia and as much as $65 in Japan.

Another illustration provided by Reed is that a fifth of Johnny Walker Black sold for $9.50 at LAX would cost $9.50 to $20 in Europe. A carton of U.S. cigarettes, $7 at LAX, would cost $16-$25 in Europe.

As duty-free stores at airports occupy valuable space on a concessionary space, as a rule, their usually high rents are doubtless also a pricing factor.

Among Better Bargains

Liquor, tobacco products and fragrances are among the better bargains at U.S. airport duty-free stores. “You can save, in most cases, an average of 50% over prices outside the United States,” Reed said.

However, prices for such products as liquors and perfumes, among others, sold on international flights by some airlines may be less than the same items sold in airport duty-free stores. But the same brands may not be sold aloft as on the ground, and you’re likely to find more choice at stores on terra firma.

To illustrate some price differentials, Air France sells a 14 millimeter bottle of Chanel No. 5 for $32 as of this writing. The same bottle costs $38 at the LAX duty-free store. Lufthansa sells a carton of Benson & Hedges cigarettes for $10, with the same carton costing $7 at LAX.

Some airlines (Air France and SAS are two) will tell you over the phone what products they sell on their flights, and at what prices.

What you can take into a foreign country and bring back to the United States are also potential sources of confusion. “The items you can buy here at LAX and take into another country depend on that area, and we can advise travelers on pertinent regulations by nation,” Reed said.

Duty on Duty-Free Buys

You have to pay duty on your duty-free purchases made overseas when you return to the United States (once past the $400 per-person exemption). The duty-free aspect only applies to the place where you bought your items. If you bought the item at LAX and then, for one reason or another, were bringing it back, you would be subject to duty charges (if beyond the $400 exemption).

“You can’t bring back U.S. liquor bought here, but other merchandise is OK,” Reed said.

Another aspect of duty-free operations that isn’t generally known, Reed said, is that new products are often market-tested at such outlets and are available there before being introduced at local stores. “The reason for this is that foreign manufacturers can get a quick multi-country response and reading on their new products without much advertising or other promotional costs,” Reed said.

Basically, goods subject to duty are the better buys at a duty-free store. Handicrafts and other locally made merchandise, when available, are not very good buys. Such goods are locally made, so they have no duty placed on them--with no possible saving to be passed on to you.

Moreover, you can often buy these same handicrafts for less money at local markets where store rentals are less. Frequently, travelers buy such items because the airport is the last chance to pick up something, or to get rid of some remaining foreign currency.

There is also quite a variance between prices among duty-free airport stores. Don’t assume that you’re getting a low price just because of the duty-free tag. When possible, shop around.

Check It Out

You can phone the LAX store at (213) 410-2674 to find if they sell a certain product and at what price. It’s advisable, of course, to check (by brand name, model number and size) the prices of things at local discount stores if you’re thinking of buying something at LAX or overseas. There are countless stories of travelers belatedly discovering that they could have bought an item less expensively at a local discount store than abroad.

Be cautious about buying heavily discounted items such as cameras and electronic goods as many of these wares are available at lower prices at discount stores. And don’t assume that duty-free means just that. Some stores abroad have been known to use this label rather loosely.

Duty Free Shoppers also offers refunds of merchandise it sells. “With a receipt you can get a refund, but not an exchange, of an item bought at LAX at any of our other airport locations or at our offices in Geneva and Florence,” Reed said.