UK. Dixons Carphone is to close its airport business under the Dixons Travel name, citing the ending of airside tax free shopping by the UK government as a key reason.
In a trading update today, the company said: “We do not expect passenger numbers to recover sufficiently to compensate for the removal of airside tax-free shopping by the UK Government from 1 January. This has led to the difficult decision to close the [Dixons travel] business, which historically made an annual profit contribution of over £20 million.”
The Dixons Travel network covers Aberdeen, Belfast, Birmingham, Bristol, Dublin, East Midlands, Edinburgh, Glasgow, Liverpool, London City, London Gatwick, London Heathrow, London Luton, London Stansted, Manchester, Newcastle and Southend airports. The company said it aims to find roles for its 400 staff at other group locations.
Reacting to the news, UK Travel Retail Forum Chair Francois Bourienne said: “When the Government took the decision to remove tax free shopping last year, the UK Travel Retail Forum told the Exchequer Secretary that the impact on airside retailers and airports would be profound.
“Sadly, today that impact has led to the closure of Dixon’s Carphone airport shops up and down the country, and the loss of airport jobs crucial to local economies.
“While we commend Dixon’s commitment to helping their staff find roles elsewhere, there is no escaping the clear negative consequences stemming from a completely avoidable decision by Treasury. Airports will not be able to replace this lost revenue immediately, and will now find it harder to invest in infrastructure, route development, and the recovery from COVID-19.
“UKTRF continues to urge the Government to reconsider its position to avoid causing further damage to UK businesses and UK livelihoods. It should move to reinstate airside VAT-free shopping before further damage is done.”
“A wake-up call” on tax free sales – reaction from Heathrow Airport:
The Moodie Davitt Report: What is your reaction to the news that Dixons Travel is to close at Heathrow Airport? How big a blow is this for your retail mix and for consumer choice?
Heathrow Airport Retail Director Fraser Brown: We are saddened that Dixons Travel has decided to permanently leave Heathrow, after working with the retailer for 27 years. We thank all the Dixons colleagues over the last few decades for their service to our passengers and wish them the best of luck in the future. This announcement doesn’t come as a surprise after the Government’s harmful decision to eliminate tax-free shopping and ignore the devastating impact of this uncompetitive policy. While we are disappointed, we will be working closely with our current retail partners to evolve our offer and also look at opportunities to invite new brands, so we can continue to give our passengers the brands they love.
Dixons noted in its statement that the ending of airside tax free sales was a key factor. Is this a further reason to reconsider and roll back that move?
It’s unsurprising that the removal of tax-free shopping is a key factor is Dixons Travel’s announcement. We’ve repeatedly urged Ministers to reverse this policy as they have failed to consider the evidence that tax-free shopping by international visitors pumps up to £4 billion into the UK economy annually. This should give Government a wakeup call on the repercussions the policy will have, to not only the travel and tourism industry, but also the country’s economic recovery when international travel resumes. We await the result of the Judicial Review into this.
Do you fear more retailers will follow for this reason?
We remain upbeat about travel retail at Heathrow. The limited trade we’ve had so far shows that there is still passenger demand. We are working closely with all our retailers and will continue to work constructively with them on how we jointly evolve travel retail at Heathrow to ensure it is sustainable, in spite of the Government’s Tourist Tax.
What are the financial implications for Heathrow’s retail business?
It is far too early to tell what the financial implications are as the airport has already faced (and continues to face) devastating impacts of Covid-19. Our 2020 financials show an annual loss of £2 billion with overall revenue falling 62%.
The end of tax-free airside shopping for passengers travelling to outside the EU clearly impacts demand. This requires collaboration between us and our retail partners, to evolve our offer and ensure our passengers still receive the best experience possible, in spite of this new Government-imposed reality.
What plans do you have for this category and for the space occupied by Dixons?
Coincidentally, Heathrow is out to tender for the retail concession in this category and that process will continue. We look forward to welcoming a new retailer into Heathrow in the fullness of time. From our own research, we know that Technology is a category that is of significant interest to our flying passengers and we remain confident that – alongside the right partner – we can continue to be successful with this category in the future.
