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Shanghai duty-free store eyes more sales

By Zhou Yan (China Daily)
Updated: 2009-05-08 07:57

The newly reopened duty-free shop in Shanghai.

Shop till you drop. That's what many mainlanders do when they fly to Hong Kong or even far-flung Europe to escape from Shanghai's high price tags, and get better deals on luxury and fashion brands there.

Yet, the outbound shopping spree may wane as the city's only duty-free store in the city center re-opens today after revamping its product lines to cater to Chinese people's changing fashion tastes.

"Our product prices are on average 20 to 30 percent lower than that in the city's major shops, and almost equal to a similar store in Hong Kong," said Cheng Ping, manager of the duty-free store near Shanghai's busiest shopping street, the West Nanjing Road.

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L'Oreal Double Extension Beauty Tubes Mascara, for instance, is priced at $15.2 (around 104 yuan according to the shop's demonstrated foreign exchange rate yesterday), while about 200 meters away, the price for the same product at the personal care store Watsons is 135 yuan.

"Perfumes and cosmetics are still the mainstays. But we also sell medium-end international fashion brands, like Guess and Lacoste, rather than bigger luxury names to attract younger customers," Chen said.

The 500 sq m store looks no different from most of its foreign peers, and sells a range of imported goods like watches, feather bags, accessories and chocolates.

Foreign exchange in US dollars, Japanese Yen, Hong Kong dollars, and Euros are accepted at the shop with spot exchange rates.

"Foreign-branded home appliances like refrigerators, televisions, and washing machines were our major products 25 years back. It was also the rage for people to shop in our store, as we were the only place to sell these overseas brands," Chen said adding, "you could always see a long queue outside."

But the shop's sales started slipping sharply, after touching peak annual sales of $270 million in the mid-1990s, after the entry of more homegrown products and overseas products in the market.

"We were the first to feel the brunt of the rise of made-in-China products, ironically," Chen said.

After seeing persistent falls in sales, the shop under the State-owned China National Service Corp for Chinese Personnel Working Abroad started to fight back.

"And that's what we see today after almost half a year of decoration and reconstruction. We now have a partnership with Gebr.Heinemann, the largest duty-free retailer in Europe, as our supplier. It helps extend our product lines and saves costs, " Chen said.

"I will shop here to get cosmetics for lower prices, but the product lines seem incomplete. Probably it also needs more up-to-date collections, " said Ivana Cheng who works for an Italian design company here.