Are Airport Duty-Free Shops Actually A Bargain?

By Lisa Cheng

Just as you're heading to your departure gate, something catches your attention: the heady waft of a floral perfume, pyramidal stacks of chocolate, a gleaming display of designer apparel. It's hard to turn your head away from the alluring world of duty-free shopping. And many don't—the industry made a robust $39 billion in 2010, according to the Sweden-based Generation Research—and the numbers have only grown since then. 

But among all the designer accessories, cosmetics, and top-shelf liquor at duty-free stores in airports and cruise and ferry terminals, are there actually any bargains out there?

Buying Designer Handbags at Duty-Free Shops
Luxury goods account for the bulk of duty-free purchases. Sure, sales exist, but are there true values? A quick search often uncovers the same goods selling online for less.

Keep in mind that above the $800 duty-free exemption for U.S. travelers, a flat rate of 3% is imposed on the next $1,000 of purchas—overall still lower than most state taxes, which can save you a buck (or $60) at the end of the day. Above the first $1,000 over the allowance, however, calculating duty becomes a complicated affair as variable rates apply.

In the case of a tempting Bottega Belly Veneta bag we saw at the Singapore airport (pictured), this complex formula means that the bag (originally advertised for the equivalent of US$2,153) would have actually come to $2,214.77—not exactly duty-free and definitely not a bargain when compared to online prices.

What You Should Know Before Buying Duty-Free Handbags

Some duty-free shops have websites where you can pre-order goods. Even if prices aren't online, phone numbers for duty-free outlets are usually listed on airport websites, so you can dial the store directly.

However, it's important to keep expectations in check: Often luxury brands are tightly controlled, which means that labels like Chanel and Christian Dior have similar price points regardless of where they're sold and are rarely, if ever, marked down, according to Kevin Rozario of Duty Free News International.

But at the very least, travelers purchasing duty-free at airports are spared the value-added tax (or VAT, a local sales tax that's most common in Europe), which ranges from as little as 5% up to a hefty 25%.

Buy It or Skip It: Except for fashionistas looking for one-of-a-kind finds, skip it unless the airport price would save you at least 20% off the retail rate or a competitive online price.

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Buying Watches at Duty-Free Shops
Watches are popular duty-free items with potentially big savings, especially aboard cruise ships and in the Caribbean, where the selection is more extensive and shoppers have more leisure time to browse. "The way cruise ships control onboard inventory," says Susan Bonner, an associate revenue manager at Celebrity Cruises, "they can offer savings on designer watches—up to 40%."

Indeed, we found a Tag Heuer watch on Celebrity that sold for 15% more on the local U.S. market, plus a Tissot watch for 10% more. To reassure a wary public, some lines have even instated price guarantees that will match an offshore bargain or refund a price difference (provided presentation of a published advertisement or a receipt from an authorized dealer).

What You Should Know Before Buying Duty-Free Watches: As with designer bags, always do the pre-purchase price check before buying a watch from a duty-free shop.

Think buying goods made in their country of origin is cheaper? Think again: a Victorinox Chrono Classic watch that we once spotted for US$593 in the Geneva Airport retailed at the same time for $450 at Macy's and even less at an online bargain warehouse.

A word of caution: Those rock-bottom Internet prices often come from third-party sellers who won't necessarily provide the original manufacturer's warranty. Shop at an authorized dealer, and not only will your warranty be legit, but your risk of running into counterfeits will be little to none.

Buy It or Skip It: Buy it only if the price comparison checks out -- and if you know you'll be getting the real thing.

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Buying Perfume & Cosmetics at Duty-Free Shops
After luxury goods, fragrances and cosmetics make up the second largest category of duty-free purchases—accounting for about 30% of total sales. Here, as in luxury goods, is the opportunity for companies to inspire brand loyalty from a desirable clientele, says Lois Pasternak of Travel Markets Insider.

What You Should Know Before Buying Duty-Free Perfume and Cosmetics: U.S. prices can be much cheaper.

Despite the huge discounts that duty-free retailers claim to offer—up to 40% off high street prices—we found savings for Americans underwhelming. A bottle of Chanel Allure eau de toilette spray sells for the equivalent of US$102 in Lisbon versus US$147 in Melbourne. That same item goes for US$93 in London's Heathrow—impressive compared to what you would pay in Australia, but not so much when you consider that Sephora sold it for only $90 in U.S. stores and online.

How to Uncover the Duty-Free Cosmetics Bargains: Check out U.S. airports before flying abroad and consider multipacks designed exclusively for duty-free outlets, suggests Joel Epstein, vice president at Duty-Free Americas.

For example, a 50ml jar of Clarins Vital Light might cost US$102 in Sydney but US$79 at London's Gatwick. Meanwhile, the same jar could be picked up at Miami International for $76.50.

Buy It or Skip It: Buy it if you spot a multipack that yields big savings. Otherwise, skip it.

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Buying Chocolate at Duty-Free Shops
Chocolate isn't a big-ticket item—if you're not spending big bucks, you're not going to be saving them. The difference between the price of a bar of Toblerone at duty-free shops in Amman, Brussels, and Edinburgh for example, can be less than one U.S. dollar. 

What You Should Know Before Buying Duty-Free Chocolate: Duty-free stores offer exclusive items that you won't find elsewhere.

For example, you might find chocolate-covered coffee beans in a Burj Al Arab tin, Guylin's Golden Perles d'Ocean Sea Shells, or milk chocolate strawberry tablets from Godiva. A sure way to get more chocolate for your dollar are the mini versions and multipacks; some are customized for the duty-free market.

As for scoring deals that surpass your local supermarket, it can be a hit or miss: A box of Ferraro Rocher once turned up for US$11 at Taipei Taoyun International Airport even as it sold for $5 more at a local grocery back in the U.S. Meanwhile, a $5 Lindt chocolate bar at the same airport sold for a $1.50 less than at a supermarket in the U.S.

Buy It or Skip It: Skip the big brands unless you have a sudden craving or can't pass up the souvenir packaging.

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Buying Liquor & Wine at Duty-Free Shops
In the land of duty-free goods, wine and spirits top the charts as best sellers, raking in around several billion dollars annually. Like tobacco, alcohol is heavily taxed on both a federal and state level, though the savings run up and down across the board.

What You Should Know Before Buying Duty-Free Liquor: Duty-free spirits often come specially bottled to suit customs allowances (notably in the one-liter size), so when you're shopping around beforehand, it's important to make sure that you're comparing apples to apples, since your local liquor store is allowed to sell a larger size.

Destination defines the quality of the selection. Big wine-producing countries like France, Italy, and New Zealand showcase a greater variety of their own wines; the Caribbean—Barbados and Jamaica, for instance—is known for its rums, notes food and wine writer Anthony Giglio. The Caribbean is a winner in this department, and it's where you can find a three-liter bottle of Absolut Citron for $18 or a bottle of rum for less than $8—delightfully low prices by any measure.

"It also helps to ask what's on sale (in case the sale signs aren't displayed clearly)," Giglio adds.

What You Should Know Before Buying Wine at Duty-Free Shops
Do your research so you don't end up buying a bottle of wine that's readily distributed in the U.S.

Wine—in contrast to spirits—is distributed on a smaller scale. This means that you won't necessarily find the same labels from shop to shop—along with benchmark prices to compare value. Giglio prefers to use wine-searcher.com, a subscription site that pinpoints merchants where wine is distributed (including prices). He'll take a gamble on a lesser-known label not exported to the U.S. but won't buy the widely available Veuve Cliquot that's rarely discounted.

Travelers should be aware that if they're returning to the U.S. from an international destination with one or more connecting domestic flights, any bottles of alcohol stowed in carry-on luggage (either purchased onboard or dropped off at the gate) could be confiscated because of cabin restrictions on liquids. Instead, plan to pack bottles in checked baggage after reclaiming them—and before Customs inspection.

Buy It or Skip It: Buy hard-to-find wine and spirits from the countries of their origin; buy everything else on a case-by-case basis.

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Buying Electronics & Gadgets at Duty-Free Shops
Relatively speaking, electronics aren't huge buys at duty-free stores; in fact, their share of the pie can be as low as 3.5%, according to Generation Research.

What You Should Know Before Buying Duty-Free Electronics: "It's hard to get a price lower than at big-box stores like Best Buy that operate on economies of scale," says Ed Perkins, a columnist for SmarterTravel.com. In addition, no matter where in the world you buy, prices on electronics—cameras, GPS devices, mobile phones—will be subject to fewer cost variations because they're priced globally as opposed to market to market, says Shawn DuBravac, the Consumer Electronics Association's chief economist and director of research.

Choice-wise, companies are launching products so quickly that the duty-free shops can't keep up, though some brands may have a stronger presence in certain markets. So for example, if you're a fan of Samsung, a wider range of its products will be at your fingertips when you travel to South Korea, where they're more popular.

On all purchases, make sure you have an international warranty so you won't be stuck without tech support should your device malfunction and need a repair.

Buy It or Skip It: Unless you're a techie who wants to collect gadgets that may not be readily available in the U.S., skip it. You'll likely find better prices in the U.S.—and much more convenient return policies.

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