A plank has finally been placed between Australia and New Zealand. Now the question on everyone's lips is... where's next?
This is a perfectly valid question (the answer to which is probably: Singapore). But that's been covered everywhere. What hasn't is how today's monumental news will affect Australia's luxury goods sector.
To better understand how the Trans Tasman bubble opening will impact Australia's luxury industry, DMARGE spoke to Sam van der Griend, Managing Director of Watches of Switzerland.
Watches of Switzerland opened its specialist Swiss watch store at Melbourne International Airport’s Luxury Precinct in November 2017. The store offers the same client experience as any Watches of Switzerland downtown boutique, "however all pricing is GST free," Mr van der Griend told DMARGE.
"We have an impressive portfolio of our partner brands including a Rolex boutique and Cartier’s only airport location in Australia."
"Whilst the travel bubble with New Zealand only started today," Mr van der Griend told us, "we are anticipating a great boost in tax-free sales at the airport. Air New Zealand and Qantas are forecasting trans Tasman travel be back at close to 100% of Pre-Covid levels by September this year."
So though there's no evidence yet of Australians booking flights just so they can browse through Duty-Free, what we are likely to see is Australians who are going on holiday to New Zealand anyway start to Duty-Free shop on their way through.
Who knows? There could even be pent up demand.
Though the recovery will not be instant (as News.com.au reported this morning, almost every store in Sydney's international airport was still closed when the first batch of passengers arrived), Mr van der Griend told DMARGE the luxury industry doesn't necessarily need it to be.
"We have been enjoying our loyal Australian customers shopping in our boutiques nationwide since international borders have been closed. I anticipate this will continue for the long term, however the luxury travel market to New Zealand and beyond is very strong, and inevitably we will have clients wanting to purchase tax-free."
"It has been very impressive to see the true depth of the luxury local Australian consumer with the current border closures. Landlocked consumers have been buying locally and in addition to our existing client base we have really enjoyed meeting new clientele that would usually shop whilst they travel to overseas, especially to Europe," Mr van der Griend added.
"I also know that these clients have enjoyed being able to start a relationship with us. Of course, international shopping always plays a part in the luxury travel experience, but for an investment like a Swiss watch we see more clients buying at our boutiques or at our tax-free airport store before they travel."
"For many years we have been investing heavily to make sure our boutiques are just as exciting and beautiful as any offering overseas as have the major international luxury brands, and Australia has a great luxury offering for the local market."
Mr van der Griend also pointed out that even though the return of Duty-Free shopping is positive, the luxury goods market is actually in a better place already than you might think: "We will see a slight economic boost with the bubble, but this won’t overshadow what we are already experiencing right now."
"In summary, we are very excited that the bubble will see renewed life at the airport and at our tax-free store. New Zealand will hopefully be followed by Singapore and as these key markets open up we will see tourists coming as well as Australians travelling and buying tax-free."
"However as we have seen the borders closed and Australians buying local rather than overseas, I am also very confident that a lot of Australians will continue to buy locally."
As for those wondering about how buying a watch in Australia (and then getting the GST back at the airport) stacks up against doing the same in New Zealand, DMARGE did some digging.
Take the Panerai Luminor eSteel ‘Verde Smeraldo’ (ref. PAM01356). One of the few watches online where one can easily compare Australia and New Zealand RRP prices, in Australia, the RRP for this watch is 12,700 AUD. Meanwhile, in New Zealand, the RRP is 13,174 AUD (per the exchange rate at the time of writing).
New Zealand’s VAT is 13%, and Australia's GST is 10%, which typically evens things out. However, once you remove the good and services tax from the equation (as happens when buying Duty-Free) it becomes $1,713 cheaper to buy this watch (compared to its RRP price) if you purchase it in a New Zealand airport.
In Australia, with your 10% GST airport tax back, it becomes $1,270 cheaper to buy this watch than it would be in an AD outside of the airport.
The upshot? You save $443 more by purchasing it in New Zealand's Duty-Free vs. buying it in Australia's Duty-Free. This dynamic is amplified, in many cases, across even more expensive goods. One only imagines the savings to be had on a $50,000 Rolex...
The problem for Australians is that if you buy a Rolex in New Zealand's Duty-Free, you have to declare it on re-entry to Australia and pay an 'import' tax. So depending on a number of factors (such as exactly how expensive the luxury item you buy is, and the exchange rate at the time of your trip) your best bet is still – probably – to stick to buying your grail watch in Australia's Duty-Free (if you are starting and ending your trip in Australia).
Your next challenge? Actually finding the watch of your dreams in Australian Duty-Free. Maybe it's time to consider that Cellini after all...
- Luxury Brands Shift Attention Closer To Home With International Travel 'Death'
- Watches Of Switzerland Opens Decadent New Perth Boutique
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The post Could The Trans Tasman Travel Bubble See Australians Planning ‘Rolex Runs’ To New Zealand? appeared first on DMARGE.