When you’re flying, you’re the airline’s customer. You aren’t the airport’s customer. The airport doesn’t even usually know who you are!
And airports actually see you as the product. Their real customers are the airlines, and they serve local politicians as well. That’s why airports like Dallas – Fort Worth and Chicago O’Hare removed moving walkways that made it easier for passengers to get from one end of a terminal to the other. They want passengers to stop into shops and buy stuff. Those convenient moving walkways just encouraged people to ride past those stores.
Both airports and frequently airlines share in the revenue generated by retail sales – not just the retail brands and concessionaires themselves. That’s why they’re encouraging you to shop.
Terminal renovations are also often funded by selling the income streams from the terminal to a private developer. Those developers then favor high-end shops – that generate perhaps fewer but higher-dollar transactions.
LAX Tom Bradley International Terminal
Who exactly, though, is going shopping at the airport for Louis Vuitton, Chanel, and Cartier? Does this even make any sense? Those stores are often empty when I pass by, yet they’re proliferating across airports around the world.
Are people really buying Gucci, Hermes, and luxury goods at the airport?
San Francisco International pic.twitter.com/QlTl0mG8LO
— Tyler | Kenji Capital (@KenjiCapital) June 22, 2024
Here are 5 reasons why people are buying Hermès, Prada, and Gucci while waiting for their flights – and why airports target this.
- Passenger demographics skew wealthy especially amongst long haul business and first class customers. You’ll often see the highest-end retailers in international terminals which serve passengers on the most expensive tickets.
- Shoppers are on vacation and doing less tracking of their spending so why not catch them when they’re in a frame of mind to bring home an expensive souvenir or gift?
- Home towns may not have these stores in a sense it’s like shuffling passengers from small cities through a major connecting hub that can support long haul widebody flights to far-flung destinations. Those small cities may not have enough customers for a Louis Vuitton store, but the small number of potential Louis Vuitton customers in each of those cities are also people more likely to travel. Airlines are bringing all of them together in one place!
- They’re jet lagged and bored and not thinking straight whether it’s about the cost of the items, the wisdom of purchasing them, or the absurdity of what Rene Girard called “mimetic desire.”
Man is the creature who does not know what to desire, and he turns to others in order to make up his mind. We desire what others desire because we imitate their desires.
- Money laundering buying expensive goods, carrying those goods out of the country, and selling them at a foreign destination for foreign cash – that may not be repatriated when the passenger returns home.
Ultimately, the allure of luxury brands at airports, driven by strategic placement and targeted marketing, ensures that even the most discerning travelers find themselves tempted to splurge while waiting for their flights – all to benefit the terminal’s residual claimants.
Also, it’s easier to buy at the airport than having to go to Global Blue or whatever to get your VAT back.
I have wandered into these high-end shops from time to time.
I was browsing some Louis Vuitton items, nothing in my price range of $60, even willing to go up to $80, but still nothing. 🙂
Interesting. I’m still not sure that I understand this except in the abstract except for the money laundering but I suppose that my tastes just aren’t ritzy enough.
Dustbin stuff being sold to fools .
Wall Street Journal recently had an article about Italian police cracking down on the luxury sub-contractors’ employment of Low-Paid Migrants manufacturing the brand name bags for $ 50. or so , and then the luxury brands selling them for hundreds . The labels say “Made in Italy” , but not full disclosure .
Isn’t the most likely answer simply that these are very visible advertisements marketing an aspirational product to a captive audience? I never actually presumed that they were profitable at the store level.
In much of the world, there’s a culture of conspicuous consumption. Buying that item in the airport, for that price, itself becomes an act reifying one’s status as a member of the wealthy sort in whatever country. It’s weird, but I’ve seen it plenty.
How is “avoiding high VAT in your home nation” not on the list? I’d say that probably makes up the majority of sales. Wealthy folks who love luxury goods, but said goods would run 2-3x more in their home country (ex: Brazil)
I get that these shops wanna make money,but for someone at the top to go about removing the moving walkways from the area due to shop owners whining cause their not making enough money in the store, was rather stupid in my view. Travellers could still stop at the shops and buy stuff if they were in any hurries to get to flights right away. I guess common sense went out the windows at these airports because someone at top wasn’t exactly thinking on all cyclinders
Money laundering with one-off purchases of luxury products at airports? That is not the main illegal relationship to these purchases. When it comes to related illegality with such purchases, the bulk of it tends to be people cheating on import and use taxes and bringing the stuff back home for less than the total cost to buy at home.
Just because someone is wealthy doesn’t mean they won’t try to cheat to save (or make) money.
mia should know that Americans do this too — even when it’s way less of a factor than the 2-3x example with Brazil.
Was just at Heathrow’s Terminal 5 and there’s a whole plaza filled with stores of these ultra luxury brands. As someone with no interest in these products, it seems silly at an airport — and there were virtually no shoppers in the stores even though the terminal was packed. But I assume somebody’s run the numbers and it “makes sense,” even if it’s useless to most travellers.
Much easier to handle tax refunds at the terminal airside — some of the stores even do their own tax refund which cuts out the 15% cut Global Blue makes. And that isn’t to mention most EU lux brands are 20-25% cheaper in the EU than asia or the US.
Also if you are a transit passenger much easier.
Prices is about the same as city center, but better selection — they have popular stuff hidden away in back.