The expected December green light for arrivals shopping in Russia is hoped to offer a much-needed uplift in the duty free and travel retail market in the country according to the Eurasia Association of Duty Free.

DF&TR sales in the Russian market in 2015 fell by a colossal -36.8% in statistical US dollar terms, the worst performance among the top 25 markets (source: Generation Research data).

Speaking at a dedicated Russian market workshop at Tax Free World Association’s main convention in Cannes last week, EADF Executive Director, Fatima Dzoblaeva, looked on the brighter side. She told a packed meeting room that the December implementation of a Customs Code for the Eurasian Economic Union (EEU) to allow the new arrivals channel “would ensure market growth and maintain the increase in non-aeronautical revenue for airports”.

EADF members number 15 and come from the EEU which consists of five state: the three founders Russia, Belarus and Kazakhstan, plus Armenia and Kyrgyzstan. EADF’s members represent 65% of the stores in the Russian DF&TR market, and 75% in terms of sales turnover.

“From 2017 until early 2018 the new Customs Code will be harmonised across the national legislation of each member state,” says Dzoblaeva. At the end of this month the code will be approved by ministers and signed off in December. The principle of arrivals duty free has already been agreed over a two-year period among EEU members with the product offer expected to be similar to departures, but with more local products.

Dzoblaeva adds: “We are now looking at amendments to existing Russian law because Russian goods are still not free from taxes and duties in Russian duty free and are expensive compared to the domestic market – sometimes two or three times the price.”

DISMAL OUTBOUND PICTURE AS 20M VANISH IN TWO YEARS

Figures presented by Irina Kulikova, a Manager at the Moscow office of consultancy, Bain & Company, showed that Russian outbound trips fell by -20% between 2014 and 2015 to languish at 34m from a high in 2013 of 54m. Kulikova said that the decline continued in the first half of 2016, albeit at a slower pace of -13% but that a worry is that the disposable incomes of Russians has fallen dramatically due to inflation in the country.

Unlike the dismal outbound picture, inbound tourism to Russia has been rising steadily in recent years helped by the weak rouble, with 38.8m visitors expected this year. Government programmes are also focused on developing this inbound tourism stream who will also be able to take advantage of arrivals stores.

More than 65 countries around the world currently have arrivals DF&TR shopping.