San Diego International Airport recently debuted its first-ever duty free store, as the facility looks to bolster services catering to a growing contingent of international travelers to the region.
The 1,249-square-foot store, operated by Florida-based Duty Free Americas Inc., is located post-security in Terminal 2 East near international gates 21 and 22, selling tax-exempt items including chocolate, perfumes, liquor and tobacco.
Nyle Marmion, the airport’s concession development manager, said preparations for a duty-free store began shortly after Japan Airlines’ announcement earlier this year that it would offer direct daily service between San Diego and Tokyo, and the store opened with the start of the new flights in early December.
Marmion said the Japan flights — currently offered four times weekly and going daily starting in March — gave the airport the critical mass of international travelers it needed to support a duty-free store, adding to existing services to Mexico, Canada and the United Kingdom.
By early 2014, the airport is expected to have more offerings geared to international visitors. Marmion said discussions are in the works to bring in merchant and service components already popular at European and Asian airports, such as Be Relax Spa, a French chain concept with services including massages and pedicures.
Others under consideration or on the way would sell high-end items like wine and gourmet foods. “We’ll be bringing in several local, regional, national and international concepts,” Marmion said.
Also in the works is a common-use lounge, initially to be geared to international travelers flying via American Airlines, British Airways and Japan Airlines, which may also be made available to other first-class travelers who would pay a day-use fee.
The local airport is seeking to capture some of the benefits created by the recently rising spending power of international travelers to California. Airport officials estimate that $2.3 billion is spent annually by visitors who arrive by air in San Diego, and international travelers stay longer and spend more than their domestic counterparts.
“It’s a more lucrative market, and that’s why the airport has placed a focus on those international travelers,” said airport spokesman Steven Shultz.
San Diego International is also staking its claim in one of the globe’s fastest-growing retail sectors. According to the Tax Free World Association, a travel retail organization, $46 billion was spent globally in duty-free stores in 2011. That was up from $39 billion in 2010, reported by the International Association of Airport Duty Free Stores.
The San Diego airport store is the 13th U.S. international airport location for Duty Free Americas, which operates 115 locations nationwide including five border-adjacent stores at Otay Mesa, San Ysidro and Calexico. It also has a warehouse in San Diego.
Under a seven-year lease with the local airport authority, the company will pay the airport at least $100,000 annually or 25 percent of gross sales, whichever is higher.
$2.5M in Annual Sales Expected
Duty Free Americas CEO Simon Falic said the company estimates the store should initially employ 12 to 15 people and generate approximately $2.5 million in annual sales. The company is scouting local border sites for future new stores, and will consider expansion at the airport later if international flights continue to increase.
“We have to make sure our pricing is competitive with the discount stores and the warehouse stores,” Falic said of the current retail climate. “There are ups and downs, but our sales have generally held up pretty well for the last 10 years.”
Airport officials said the duty-free store will be followed in 2013 by two chic wine bars — Beaudevin and Bubbles Wine & Tapas Bar — originally created for European airports by HMSHost, a subsidiary of Italy’s Autogrill Group.