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All Dixons Travel stores to close after ban on tax free shopping

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All Dixons Travel branches in UK airports are to close. The announcement was made this morning by parent company Dixons Carphone.

The closure was blamed on the ban on tax free airport shopping, which took effect on 1st January 2021. Following the end of the Brexit transition process, the Government had to choose between allowing tax free shopping when travelling to EU countries or banning it entirely. It chose the latter.

All Dixons Travel branches to close

(The Government has also banned VAT reclaim for tourists leaving the UK, much to the chagrin of London’s luxury retailers. They face losing substantial sales to foreign tourists who may now find goods cheaper elsewhere. That said, you may or may not agree that letting foreign tourists reclaim £833 of VAT on a £5,000 handbag was a great idea in the first place.)

There are currently 35 Dixons Travel shops. As well as the UK airport stores, it is present in Ireland, Norway and on two P&O cruise ships. All will close.

The chain had historically made “over £20 million per year” in profit. It shows the remarkable profitability of airport shopping despite the high rents charged by UK airports.

It remains to be seen how many other retailers now pull out of UK airports. Whilst tax free pricing did encourage sales, many travellers – especially at Heathrow – shopped purely for convenience. These sales should be secure irrespective of whether VAT is charged. Most stores operate on turnover-based rents which gives them protection against lower sales.

The Airport Operators Association said in a statement:

“Amid the devastating impacts of the Covid-19 pandemic, the UK Government’s decision to remove airside VAT-free shopping as of January 1, 2021 is making a bad situation worse. The Government should urgently review this decision and reverse course before further damage is done.

The UK is now the only country in Europe without airside tax-free shopping. Our European competitors get a Brexit benefit by being able to offer UK-bound travellers every opportunity for tax-free shopping while UK airports are left at a significant disadvantage.

The closure of Dixon Travel stores and the loss of jobs shows the first real-world consequences of the Government’s inexplicable decision. These are unlikely to be the last.

As a tentative restart of aviation draws closer, Government should be supporting revenue recovery for airports after the huge losses suffered by airports during the pandemic. Instead, the Government has left airports with one hand tied behind their back in the efforts to return to profitability.”

Comments (130)

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  • Andy S says:

    Apart from Boots I can’t remember last time I purchased any goods at an airport. I usually just go directly to the business lounge.

    • Oh! Matron! says:

      I used to get my shirts from Thomas Pink in T3 / T5. But since they were taken ver, their designs are, well…..

    • Mike says:

      The last time I bought any goods of value at an airport was when there were concurrent AMEX->Emirates and Emirates-Heathrow Rewards->Gift Voucher bonuses on.

    • Richard G says:

      I’ve used them a few times, mostly emergency last minute bits. Bit annoying that wont be an option going forward.

    • Red Flyer says:

      Made some big savings at Tiffany in T5 over the years for anniversary & birthday gifts.

      • Mark says:

        Same here. Purchased a very expensive engagement ring for a friend in T5. I collected the points he saved a four figure sum!

        Booked a 1 way avios booking to newcastle if I remember correctly. Purchased the ring and then asked to go back landside. Tiffany was always a straight 20% discount, it didn’t matter where you were travelling.

  • Phil says:

    Thanks Brexshit!

  • George K says:

    I had a stack of Heathrow Rewards vouchers to burn a few years back and bought something of no consequence from Dixons at the time. Once I flew back (within the 14-day window), I realised that I didn’t really need it so I inquired as to a refund at a local Curry’s store. Clerk gave me a cash refund, as vouchers were showing as cash on the receipt.

    RIP

  • HH says:

    There were rumours when the tax-free rule changed that high-end shops would maintain the same discount but absorb it themselves, to drive airport sales. Any personal experiences if this is the case at LHR T5?

    I’m particularly after a Cartier watch – it’s £5,400 in UK or £4,850 in Switzerland… But if they’d match the VAT-free price in T5 it comes out the clear winner at £4,500.

    • TGLoyalty says:

      I genuinely doubt the margin is there

      • Nick says:

        The margin on a £4K Cartier watch will be £2.5-3k. So yes, they could if they wanted to.

        • TGLoyalty says:

          Isn’t the Cartier store actually run by Harrods?

          I’d also be dumfounded if Harrods make £2.5k-£3k profit on a cartier piece costing £4k retail including VAT theres about £700 of VAT to pay alone!

        • KBuffett says:

          Nick, I think your knowledge on this whole subject is lacking.

          • Matarredonda says:

            Brexit the gift which keeps giving.
            So more jobs gone.
            Anybody who thinks a retailer makes a margin of £2000/2500 on a £5000 purchase is in another world. Might be the gross margin without taking account of cost of sale.

    • kitten says:

      Cartier is one of the ones that generally would give you far less than the VAT off in dutry-free. Switzerland has often been the most practical – in high street places there – when I’ve looked.

      Same as France – you can much of the time do a better deal in the high street. Duty free stores tend to be overpriced, if anything.

      • HH says:

        Appreciate the advice, noted.

      • Sarah says:

        I bought a Cartier watch in T5 and got 20% off the retail price, which was the same as the price on their website. That seemed to be their standard discount, didn’t have to negotiate for it.

    • Mark says:

      Tiffany have always just discounted 20%

    • Sarah says:

      worth giving them a call to ask.

  • IanM says:

    Never found Dixons at airports to be cheaper than high street, who tax free thing was a complete con, good riddance!

    • Andrew says:

      Indeed prices were far from being ‘tax free’. They’d typically be just below highstreet prices but still more than you could find online.

  • Rivo says:

    I thought the “ban on tax free shopping” was for electronics and clothing?

    • sigma421 says:

      It’s for everything save booze and fags duty AIUI.

    • Blenz101 says:

      There is a difference in VAT and duty payable on ‘sin products’

      • Rob says:

        It is on everything. DUTY-free is still available but duty is only paid on alchohol and tobacco. Those prices will have gone up too because the VAT now needs to be paid even though the duty is still removed.

        • Rivo says:

          But there is nothing stopping retailers from extending what they were doing for EU flights pre-brexit and leveling a discount on high street / online prices in lieu of margin?

          As @sunguy says you were getting a circa 16% discount, which I got at Prada, Hermes and Watches of Switzerland despite not leaving the EU. The only exception to this was Rolex who did not discount on the RRP unless you were flying outside the EU.

          • TGLoyalty says:

            They were offsetting the loss on EU sales with the tax refund for those going outside the EU. The savings were usually cheaper than the actual duty plus vat saving.

            As you say they can still offer some discount but I doubt it will be on the same magnitude as before and ultimately if it’s cheaper in your destination you’d rather buy it there.

            This will hit U.K. tourism far more than U.K. residents leaving LHR on holiday/business.

  • Andrew says:

    Even with the change in VAT, there must be a way to make decent money on distress or boredom purchases of electronics at Heathrow & other UK airports.

    • Rob says:

      Electronics are very low margin compared to clothing. Personally I was always nervous, even with a tax saving, of buying high value electronics in the airport and then having to take care of it over a holiday. For no cash saving I certainly wouldn’t risk it.

      • MrHandBaggageOnly says:

        I’ve purchased several high value items from Dixons over the past couple of years and used the excellent Collect on Return service, which means the items were safe, plus you pick up some bonus Heathrow Rewards points as well for using the service. You just have to remind yourself to actually make the collection, before you make a dash from the terminal! 🙂

      • mradey says:

        I saved over £1000 on a Leica lens at Dixons T3 three years ago. I think that particular discount included some ‘lets get rid of this product line’ as subsequent trips the Leica range were no longer for sale. [not an impulse buy – they had a website where you could see the prices and availability at the various terminals]

    • AndyGWP says:

      indeed…. I’d be surprised if there weren’t regularly selling an overpriced laptop charger, or set of headphones to someone who’d forgot to pack them. There mustn’t be enough in it to continue though

      • Lady London says:

        Boots should move into selling headphones, chargers and battery packs. They are pretty much consumable items anyway and the sort of “emergency I left my stuff at home” purchase also made in Boots.

        An awful lot of destinations you’d fly to, even for Business, would be a nightmare to replace any of the above easily and quickly as most other countries’ retail is not as comprehensive as the UK. Unless travelling to very few countries often you’re better paying a premium at the airport if you’ve left headphones, charger, or battery pack at home.

        • Sigma421 says:

          WH Smith at airports has definitely been moving in that direction.

        • Chrisasaurus says:

          Boots could well become the catch-all ‘things I forgot to bring or could not be bothered to bring through security’

    • LostAntipod says:

      Distress or boredom purchases was exactly how they made their money. I can recall looking at duty free for an SLR camera nearly 30 years ago and it wasn’t close to the full saving – I got it cheaper elsewhere.

  • sunguy says:

    We got our engagement and wedding rings at Tiffany T5 – for a similar diamond, it brought the UK price down to roughly the same as the US store price at the time.

    Basically it was ~16% reduction in price…..a wonderful opportunity to make LHR Rewards points, pay in GBP and from a UK based store…..would be rather rubbish if this goes completely….

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