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Travel aversion bites

DUTY free stores have lost up to 50 per cent of their business as a result of the global aversion to travel following September’s terrorist attacks in the US.

Travellers and tourists make up the bulk of duty free stores’ business, although tax-paid goods also are available.

Hardest hit by the downturn in travel is the Downtown Duty Free store at the Perth International Airport, where all customers are travellers.

Nuance Global Traders owns the store and Asia-Pacific business development and corporate relations director Christian Strang said the ramifications of September 11 had been huge.

“I think it is fair to say that business has been affected, especially at the airport,” Mr Strang said.

“I would say our business at the airport has dropped by between 20 and 50 per cent, which is fairly significant.”

Metropolitan duty free stores also have reported a drop in the number of travelling customers but many operators say the decrease had been minimal and offset by an increase in the number of people buying tax-paid goods.

“There has been a small effect on our business, a slight decrease in customer numbers ... obviously there are not as many people travelling,” Compass and Gateway Duty Free director Tom Thomas said.

“We sell tax-paid purchases, so while our travelling customers are down a bit, we have picked up in our tax-paid sales ... non-travellers are finding our tax-paid prices are less expensive than other retailers, so we must still be competitive.”

City International Duty Free manager Chris Andrew agreed that tax-paid purchases had increased.

“Tax-paid purchases were not such common knowledge previously, but now people realise they can buy something off us and use it straight away, and this has really helped retail sales,” Mr Andrew said.

The effects of September 11 are likely to continue to affect duty free retailers for some time, according to Retail Traders Association manager Brian Reynolds.

Mr Reynolds pointed to a recent survey by the Australian Retailers Association in which 72 per cent of Perth respondents indicated they would be reducing overseas travel.

“The survey would suggest there is a long-term problem for duty free shops.

Seventy two per cent of Perth respondents indicated they were going to significantly decrease overseas travel, which means potential outward travellers will be limited,” Mr Reynolds said.

“In terms of inbound travellers, it is already widely recognised that there will be problems.”

However, Mr Strang believed business would pick up in the new year.

“We do have some information that would indicate travel bookings are starting to pick up after December and onwards,” he said.

“I think everyone has got to be positive about it and realise that there were tragic events in New York, and they were significant, but that it is still safe for people to travel.

“We see duty free businesses as part of the tourism industry, and that industry is fairly resilient.”

Mr Strang said Australia was in a good position to promote itself as a safe destination for tourists.

“Other things that the (Federal) Government can do are, instead of focusing on domestic travel, make sure there is a balance between domestic and international,” he said.

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