It’s a vicious cycle.

As consumers tighten their belts, cutting back on everyday essentials, retailers suffer. As more shops succumb to these pressures, shoppers face fewer options. Affordable stores then exit the market, leaving customers unable to shop around for better deals.

“The majority of the public continues to feel they are paying higher prices than usual for groceries, electricity, and holiday gifts. About half are changing their shopping behaviors – seeking out deals and cutting back on large or non-essential purchases,” according to a December 2025 AP-NORC Center for Public Affairs Research survey. 

Two-thirds also describe the national economy as “poor.”

No one is bulletproof. Retailers are closing stores abruptly and filing for Chapter 11 bankruptcies. Not even duty-free shops are immune.

Though duty-free shops were created to let international travelers buy goods without local taxes, not everything is cheaper than online alternatives, according to market research company DJS research. A 2024 study by travel retail agency M1nd-set also found shoppers increasingly prioritize experiential value over price in duty-free stores.

In the most recent news, a popular luxury duty-free retailer was forced to exit one state. 

Popular duty-free shop chain DFS is shutting down all three Hawaii locations.

huntergol hp/Shutterstock.com

63-year-old retailer DFS closes all stores in Hawaii

Popular duty-free shop chain DFS confirmed the closure of all three of its stores in Hawaii. The retailer was previously known as Duty Free Shoppers, and it had a presence in the Aloha State for 63 years, reported Hawaii News Now. 

The retailers had a vast portfolio of more than 750 brands, offering international travelers an option to shop without paying local import duties and taxes. Customers reportedly appreciated the variety of products. 

“I thought it was great,” shopper Khydeeja Alam of California told Hawaii News Now after visiting the Waikiki store. “They have a lot of different options from different brands, so it was good to see.”

DFS confirmed that the Waikiki store is set to close on January 28, while the Honolulu airport location will close in late March, and the last store in Hawaii, at the Kahului airport, will close in late August, when its 10-year lease expires.

“After 63 remarkable years in Hawaii, DFS has made the difficult decision to exit the market,” DFS stated, according to Hawaii News Now. 

“Hawaii has played a significant role in DFS’ history since we opened our Honolulu airport store in 1962 – the first duty free shop in the US, establishing DFS as a leader in travel retail. Our downtown store in the heart of Waikiki has also been our home in Hawaii for decades, and we extend our best wishes for the next evolution of growth realized in Waikiki in the coming years.” 

The retailer further thanked its employees in Hawaii, many of whom had long tenures, returning during the post-pandemic reopening. 

DFS closing stores due to international travel decline 

DFS’ decision to close all its stores in a hot tourist hub is directly related to the drop in international travel. 

Prior to the pandemic outbreak, in 2019, DFS went through restructuring, laying off 165 people, because of a lower number of Asian travelers. 

“The biggest international market were the Japanese, and they just didn’t come back,” Jerry Agrusa, a professor with the University of Hawaii School of Travel Industry Management, told Hawaii News Now. “Those that did come back are just not spending as much because the value of the yen is just too weak.”

While DFS reduced its store at the Waikiki Galleria, it still covers 50,000 square feet of retail space. 

According to Mufi Hannemann, president and CEO of the Hawaii Lodging and Tourism Association, DFS has been struggling for a while, so the landlords who have leased the space shouldn’t be caught by surprise. 

“Tourism numbers are down and that’s the last thing we want to see again, especially if it’s affecting Maui, a county that we’re trying to rebound as quickly as possible, given what happened with the wildfires,” said Hannemann.

In the first seven months of 2025, there were 374,873 visitors from Japan, down 56.9% compared to the 868,821 visitors in the first seven months of 2019, according to the State of Hawaii’s Department of Business, Economic Development, and Tourism. 

Consumers favor shopping experience over value

In addition to fewer Asian tourists and the drop in yen value, the M1nd-set study further revealed that the perception of value in travel retail is undergoing a significant transformation. 

“While competitive pricing is still relevant, it is no longer the primary determinant of consumer choice. Instead, the focus is shifting towards creating memorable, immersive shopping experiences that engage customers on an emotional level,” said Anna Marchesini, head of business development at M1nd-set.

Further, the number of consumers who place importance on price value as a reason to visit duty-free shops has fallen 9% between 2019 and 2024. 

A report from Coresight Research provides a similar conclusion for mall retailers, suggesting that landlords should bring in experiential tenants that can’t be replaced by Amazon. 

“Compared to lower-tier mall operators, top-tier mall operators have the financial resources to continually reinvest in and renovate malls to inspire consumers and meet evolving demand for experiences.” 

DFS offers over 750 brands, including luxury favorites

Top Beauty & Fragrance Brands:

  • Guerlain
  • Jo Malone London
  • Burberry
  • Charlotte Tilbury
  • Clarins
  • Clinique
  • Estée Lauder
  • Kiehl’s
  • La Mer
  • Lancôme
  • L’Occitane
  • Sol de Janeiro
  • Sulwhasoo

Fashion, Accessories, Spirits & Other Notables:

  • Gucci
  • Prada
  • Louis Vuitton
  • Hermès
  • Balenciaga
  • Fendi
  • Chanel
  • Versace
  • Hennessy
  • Moët & Chandon
  • Davidoff
    Source: DFS

DFS’s Hawaii exit also impacts local economy 

While DFS has not stated how many employees would lose their jobs, it is projected to be in the hundreds. 

DFS was a key retailer for Hawaii, supporting local jobs and generating revenue for the state’s economy, highlighted Dave Erdman, interim president and CEO of Retail Merchants of Hawaii. 

“They will be missed in our market and especially as a key retailer operator at our airports for our international visitors, as well as driving revenue for our Honolulu and Maui airports,” Erdman said.

In its announcement, DFS thanked partners and committed to supporting employees during the transition.

Related: 127-year-old restaurant that invented legendary cocktail close