Travel retailers have been given the green light to operate arrivals duty free shops in Russia based on an order from the Russian government issued on 12 December 2018.

The order, which came into force on 12 January 2019 follows the implementation of a Customs Code in December 16 for the Eurasian Economic Union (EEU) to allow the new arrivals channel. This is expected to ensure market growth and increased non-aeronautical revenue for Russian airports.

The code itself, which was ultimately approved by each EEU member state, has led to unified prices and limits for all duty free trade between Armenia, Kazakhstan, Russia and Belarus, where arrivals duty free is set to be implemented at Minsk National Airport.

Arrivals duty free in Russia was first implemented at Moscow Sheremetyevo International Airport in 1994, but was forced to close under new legislation in 1997.

RUSSIAN ARRIVALS STORES IMMINENT

TRBusiness has learned that retailers intending to open airport arrivals duty free stores must follow a special Customs procedure to be included in the Federal Customs Service Register. This can take up to one month.

Confirming this significant development to TRBusiness, Fatima Dzoblaeva (left) Eurasia Association of Duty Free, Executive Director said: “All international airports in Russia are allowed to have arrivals duty free based on the government order issued on 12 December 2018. This order came into force on 12 January 2019.

“The opening of arrivals duty free shops is a complex procedure and it difficult to forecast the opening time of the first stores.”

According to Dzoblaeva, retailers are at different stage of their preparations in readiness for opening. “At present, retailers consider it premature to provide a time forecast with exact dates.

“What is absolutely clear, is that all airports with departure duty free will open arrivals duty free shops with one per airport.”

One of these locations is Ekaterinburg Koltsovo International Airport, where Gebr. Heinemann has confirmed to TRBusiness it is to open a 150sq m shop. This is likely to take place in Q1 2019 once the aforementioned Customs procedure has been finalised. Bernard Schlafstein, Director Sales, Eastern Europe and Central Asia said: “We will also open at other major Russian airports where Gebr Heinemann is already operative. These include Moscow Sheremetyevo and Moscow Domodedovo among others.

“With our arrival business we will present a comprehensive and varied range of duty free products to passengers with a general focus on liquor and tobacco and perfumes and cosmetics products.”

He added: “We see a big growth potential in the opening of arrival shops, as they represent a good source of additional revenue. That is why the airports are also very interested in this new model.”

COMMENT: ANDREW PENTOL, SENIOR EDITOR

Make no mistake about it. The introduction of arrivals duty free stores in Russia will provide a new high service standard, ensure duty free market growth and maintain non-aviation revenue growth across Russian airports.

New arrivals stores, however, mean new challenges, such as the reconstruction of arrivals zones in airports to facilitate new commercial areas.

Retailers will also have to analyse travellers’ behaviour and purchasing patterns in order to be able to capitalise in-store with optimum assortments.

Strong partnerships between retailers and airports will also be needed to raise awareness of the new outlets and ensure they hit the ground running.

The Eurasia Association of Airport Duty Free has been working on the launch of arrivals duty free in Russia for the past few years.

There were even murmurings the stores could be launched back in December 2016 following a presentation by Eurasia Association of Duty Free, Executive Director, Fatima Dzoblaeva at a dedicated Russian market workshop during the TFWA World Exhibition that year.

During the meeting, it was revealed that a Customs Code for the Eurasia Economic Union to allow the new arrivals channel would be implemented that December and harmonised across national legislation of each member state from 2017 until 2018.

With travel and tourism revenue in the Russian capital forecast to grow +6.6% to 2026 (Source: World Travel & Tourism Council), now is the perfect time to begin rolling out the new stores.

On reflection, wouldn’t it have been great if the stores could have somehow opened before the 2018 Fifa World Cup, which took place in the country from (14 June to 15 July)?

During the course of the tournament, Russia welcomed around one million football fans to matches taking place across 11 cities in the country. This was tipped to increase international tourism spend by +7% in 2018.

Flight bookings for arrival in Russia ahead of the tournament were up +50,5% to June 2018 compared to this point the previous year.

The imminent opening of arrivals duty free stores in Russia, follows the start of arrivals duty free operations in Japan in 2018. It now seems only a matter of time before Korea follows suit.

Watch this space….