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Don't expect a bargain at duty free

By A. Pawlowski, CNN
Travelers spend billions of dollars at duty free shops around the world. Experts say educate yourself before you shop.
Travelers spend billions of dollars at duty free shops around the world. Experts say educate yourself before you shop.
STORY HIGHLIGHTS
  • Experts say if you're looking for a deal at duty free, proceed with caution
  • You can sometimes find savings on alcohol, tobacco, perfume and luxury items
  • Expert: Unless you know what the prices are at home, you have no business shopping duty free
  • You likely won't save on electronics, while a liquor purchase could be a hassle

(CNN) -- Shopping at a mall that's hidden behind metal detectors and surrounded by airplanes is already exciting. Add the possibility of saving money and fliers know: It's hard to resist the lure of duty free at the airport.

And what's not to like?

Gleaming stores filled with products like Chanel perfume, Toblerone chocolate, Johnnie Walker whiskey and Hermès silk scarves tempt international travelers with a taste of the good life and the promise of great prices.

But experts say if you're looking for a deal, proceed with caution.

"I think the expectation of a bargain is wrong," said Suzy Gershman, author of Frommer's "Born to Shop" guides. "You may get a bargain, but I wouldn't count on it."

For the most part, there aren't many savings, agreed Stephanie Abrams, host of the nationally syndicated radio show "Travel With Stephanie Abrams." She only shops duty free if she needs something, like a last-minute gift.

To figure out what, if anything, to buy, you have to understand how the process works.

The term "duty free" is alluring because it makes it sound like you're getting something for nothing, Abrams said.

But you're simply avoiding the taxes charged by the country in which you're buying the item, explained HLN money expert Clark Howard.

That doesn't necessarily mean the final price is good -- just like any other business, duty free stores are out to make a profit. So you have to come prepared and know how much you would pay elsewhere, including tax, for anything you're interested in.

Duty free rules
In most cases, you can bring back $800 worth of merchandise to the United States without having to pay any duty, including up to 1 liter of alcohol and up to 200 cigarettes.

Those limits jump if you are coming back from the U.S. Virgin Islands, American Samoa or Guam.

There are also lots of other rules and exceptions.

For full details, visit the U.S. Customs and Border Protection website.
http://www.cbp.gov

"There are times that buying duty free in an airport is a deal," Howard said.

"It can especially be true with luxury items like watches, jewelry and anything that you would consider to be precious where you know the market for that item and you know that the price is substantially cheaper buying it duty free."

Shop carefully

You can also sometimes find savings on liquor, perfume and tobacco items, said SmarterTravel.com columnist Ed Perkins.

Indeed, a quick survey of current offerings found a number of examples.

If you buy a bottle of duty free 1.7 oz Chanel No. 5 Eau de Parfum spray on board United, you'll pay $76, while the same size bottle goes for $80 plus tax at Macy's.

At World Duty Free, which has several locations at UK airports, a 1 liter bottle of Beefeater gin goes for $19.22, while Google Shopping found the same bottle in the United States at prices starting at $25.99 plus tax.

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A 1 liter bottle of Jameson Irish whiskey was $22.43 at World Duty Free, while Google Shopping prices started at $29.95 plus tax.

But you also have to be careful.

Abrams recalled buying several Toblerone chocolate bars for about $7 each at a duty free shop at London's Heathrow Airport. But when she returned home, she found the same bars for $5 apiece at a Target store, she said.

Gershman was traveling in Japan recently when she decided to look into the price of a Sony digital camera. She saw one she liked for $200 at a duty free shop at the Tokyo airport, but she ended up buying the exact same model for $159 at her local Costco.

"I certainly would not consider buying anything like electronics (in a duty free store)," Perkins said, urging travelers to come prepared.

"Unless you know what the prices are at home -- the best prices you can get -- you just have absolutely no business shopping there."

Big business

Still, travelers seem to love opening their wallets at the airport, especially now that increased security means there is lots of time to kill before international flights. As the Good Buy Roma shops at Rome's Fiumicino Airport put it in their slogan, "Because shopping in the airport is time worth spending."

Global sales from the duty free and travel retail market reached $39 billion in 2010, according to Generation Research, a Swedish company that tracks the industry.

Most of the revenue -- $23 billion -- came from airport shops, while airline sales accounted for $2.6 billion, according to the report. (Other duty-free revenue comes from off-airport stores, border stores, port shops, cruise malls and military and diplomatic sales.)

While duty-free may be most associated with alcohol and cigarettes, those two categories make up only about 16% and 7% of the market respectively, according to Generation Research.

The biggest sellers are luxury goods, at 36%, and perfumes and cosmetics, at about 30%. Gourmet food products make up less than a tenth of the market, the company found.

The hassle factor

But there's more to consider than just the price when it comes to figuring out whether duty free shopping makes sense.

A liquor purchase, for example, may offer some savings but could also cause you a huge hassle.

If you buy the bottles at an international airport terminal before your flight, you can take them on board as carry-on items. But that perk ends if you have a connecting flight in the United States.

Here, the TSA liquid rules kick in and you'll have to put the bottles in your checked luggage -- potentially exposing them to breakage or requiring you to pay a fee for a checked bag.

That's the main reason Perkins skips the airport store. He used to consider duty free shopping as his "main source of single malt scotch and some exotic liqueurs," but no longer.

"I live in an area where I can never get a direct flight international to my home airport so I wouldn't consider buying any booze coming in," Perkins said.

Something to remember the next time you're tempted to shop duty free.