Travel Retail Market by Product Type (Perfume & Cosmetics, Electronics, Wine & Spirits, Food, Confectionery & Catering, Tobacco, Luxury Goods, and Others), Sales Channel (Airports, Cruise Liners, Railway Stations, Border, and Down-Town & Hotel Shop), and Regional Analysis (North America, Europe, Asia-Pacific, Latin America and Middle East): Global Opportunity Analysis and Industry Forecast, 2022-2031

Global Travel Retail Market Analysis

The global travel retail market size was $50,717.2 million in 2021 and is predicted to grow with a CAGR of 16.0%, by generating a revenue of $225,663.8 million by 2031.

Global Travel Retail Market Synopsis

The need for travel retail services is primarily being fueled by significant growth in the tourism and travel sectors. Additionally, the market for travel-related goods and services is rising due to factors including quick urbanization and increasing middle class customers. Additionally, the rise in Low-Cost Carrier (LCC) flights and number of visitors from abroad both contribute to the market expansion. Moreover, the market may experience significant expansion as a result of the increased digitalization of the retailing process, which enables businesses to maximize their revenues. These factors are anticipated to boost the travel retail market growth in the upcoming years.

However, the development of the potential travel retail market opportunities would be hampered by unstructured local marketplaces and stringent government rules connected to airport retailing. Furthermore, the industry is anticipated to develop as the population of millennial rises.

Retailers have recognized that travel retail offers them fantastic opportunity to promote their products, grow client loyalty, and bring in new customers in various nations. Airports are now a place where companies test their potential for success in new markets based on the nationalities and flight destinations of their clients. In order to appeal to consumers' craving for exclusive goods, several firms also provide ‘travel retail exclusives’ special products that are exclusively offered to travelers. The retail industry for travel is very different from that of typical retail. Brands have been able to take advantage of the distinctions to enter a very lucrative industry. Brands anticipate that some of their success in airports will spill over to their usual stores and maybe helpful in the opening of new, lucrative markets as travel retail is predicted to rise significantly over the next few years.

According to regional analysis, the Asia-Pacific travel retail market size accounted for $22,542.2 million in 2021 and is predicted to grow with a CAGR of 16.6% in the projected timeframe. The market expansion in the Asia Pacific area is also being fueled by the extensive availability of duty-free items on e-commerce platforms.

Travel Retail Overview

A travel retailer is a company that creates, plans, or provides travel services. It may also sell travel insurance to its customers on behalf of and under the direction of a limited lines travel insurance producer. Retail sales that take place when a customer is travelling and is subject to taxes and customs is referred to as travel retail. A retail channel known as ‘travel retail’ caters to international travelers. It has a big income potential and a variety of marketing alternatives. The worldwide aviation, travel, and tourism industries depend on duty-free and travel retail to generate significant revenues. The number of travelers from outside has caused the travel retail market sector to grow significantly in recent years.

COVID-19 Impact on Global Travel Retail Market

The COVID-19 pandemic has brought several uncertainties leading to severe economic losses as various businesses across the world were standstill. This has ultimately lowered the tourism due to international travel limitations, as well as economic slowdown across several countries. In addition, strict rules and regulations were implemented by governments of various countries for maintaining social distancing. For instance, domestic and foreign tourists had to cancel their trips due to travel guidelines. In addition, the pandemic resulted in national lockdowns in various countries resulting in restrictions on international travel, creating a negative impact on the industry. For instance, airports and retail stores which are in the airport are prone to face several financial problems, as whenever there are no travelers, it is equivalent to no source of income for these retail stores. However, the pandemic had impacted the traditional and retail sales of travel retail, which caused customers to switch to Internet sales channels to make purchases which is predicted to hamper growth of the travel retail market. However, in 2021, governments of some countries have responded to this hectic appeal for assistance across Europe by putting in place specific supportive measures, such as the German Government promising to aid the aviation industry and the Spanish Government creating an exception for Air Traffic Navigation and Management (AENA) by declaring that they were exempted from paying for contracts that were suspended; however, other governments are yet to do so or even changed their strategies.

Rising Number of International Travelers to Drive the Travel Retail Market Growth

Tourism has become one of the most important contributing factors in ‎international commerce, and represents as the major source of income for many individuals. Over the decades, tourism has experienced an exceptional growth and has become one of the fastest growing global economic sectors. For instance, according to sources, in 2018, approximately 1.4 billion international arrivals were recorded, globally. Rapidly increasing travel & tourism, worldwide, is expected to accelerate growth of travel retail market share in the forecast time period. The demand for garments, cosmetics, food, and electronics in the travel retail industry has increased as a result of the growth in travel and tourism. People are now well aware regarding benefits of duty free products owing to which they plan to purchase products such as perfumes and liquor from duty free sections in airports, cruise, and other places. Various brands have experienced some positive growth due to rise in travel and tourism rate. For instance, according to sources, in 2019, Diageo Global Travel Retail, experienced 5% growth in their revenue in 2017-2018 due to rising number of passengers and their rising interest in travel retail sector. Exclusive wines and spirits sales majorly contributed to the growth of the company. Additionally, the rise in urbanization and changes in lifestyle are significant factors anticipated to fuel the expansion of the travel retail market trend throughout the forecast years.

To know more about global travel retail market drivers, get in touch with our analysts here.

Various Socio-Economic Factors to Restrain the Market Growth

A significant hindrance to the expansion of the travel retail sector is the shifting socio-economic conditions brought on by different events such as terrorist attacks, riots, and political turmoil. The COVID-19 pandemic is also the main cause of the retail industry's downfall, since it forced cancellations of numerous travel plans owing to lockdowns and regulations against large gatherings of people. Additionally, this caused a financial crisis as number of businesses around the world had to close for several months. It is anticipated that growth of the travel retail sector will be hampered in the near future by the unpredictable local marketplaces and strict government regulations.

Growing Digitalization in the Retailing Sector to Generate Excellent Opportunities

Digitalization has significantly influenced travel retail business in the past few years. Travelers and customers have now shifted their preference towards use of mobile applications to plan their travel itinerary and complete their travel bookings. Thus, the retailers have also adopted digitalization as an evolved mode for their products sales. Several merchants and brands have started offering their premium quality products on their official sites to reach a majority of customers. Also, the companies aim at promoting their products by offering various discounts and offers to the passengers via online channel. For instance, as per an article published on August 4, 2021, Diageo Global Travel recently partnered with Delhi Duty Free to launch an exclusive digital whisky store. With this initiative, the company aims at addressing the increasing demand for e-commerce solutions in the travel retail sector market. The customers can explore Diageo’s exclusive whisky portfolio and purchase the liquor through online website and collect their order from an in-store collection service at Delhi Duty Free. Through this platform, the brand aims at strengthening its digital connectivity and create more online-to-offline purchase occasions. These factors are estimated to increase the travel retail market growth in the upcoming years.

To know more about global travel retail market opportunities, get in touch with our analysts here.

Global Travel Retail Market, by Product Type

Based on product type, the market has been divided into perfume & cosmetics, electronics, wine & spirits, food, confectionery & catering, tobacco, luxury goods and others. Among these, the perfume & cosmetics sub-segment accounted for the highest market share in 2021 and is estimated to show the fastest growth during the forecast period. The wine and spirits sub segment accounted for the second highest travel retail market share in 2021.

Global Travel Retail Market Share, by Product Type, 2021

Source: Research Dive Analysis

The perfume & cosmetics gas sub-type is anticipated to have a dominant market share and generate a revenue of $81,414.5 million by 2031, growing from $16,442.0 million in 2021. Cosmetics are made up of chemical components that are either derived from natural sources or generated synthetically. Cosmetics include grooming products and beauty products including makeup, perfume, skin cream, nail polish, and others (soap, shampoo, shaving cream, and deodorant). A liquid mixture used to produce a pleasing odor is called a perfume. It is created from synthetic aromatic molecules or flavorful essential oils extracted from plants and spices. At various travel terminals, the stores have a variety of collections and brands under one roof, making it simple for customers to purchase the goods. Branded cosmetics and perfume companies attract to a broader client base due to strong customer-centric policies. Retailers also provide customer-centric regulations such as discounts on particular goods, cashback, sale offers, and others for all goods stocked in their stores. The cosmetics sub-segment is growing exponentially due to growing interest of people and millennial in internationally acclaimed brands that are difficult to find in their native locations. Additionally, the tax-free pricing of cosmetics and perfumes can be bought as a gifting accessory without paying import costs, which is expected to drive the segment growth.

The wine & spirits sub-type is expected to significantly grow during the timeframe a revenue of $56,283.8 million by 2031, increasing from $12,144.7 million in 2021. Spirit, sometimes referred to as distilled beverage is an alcoholic beverage created by distilling a mixture created by alcoholic fermentation (process of separating component elements from a liquid mixture by utilizing process of vaporization and condensation). The growth of wine & spirit sub-segment is anticipated to be growing forward as they are more affordable at travel terminals and alcoholic beverages are among the items that people most frequently purchase from duty-free shops. The demand for spirits is being driven by rising disposable income and increased expenditure on premium beverages. High-income earners spend a lot of money on upscale drinks such as name-brand wines and spirits for themselves and to entertain guests, as a result, opportunities emerge in the spirits industry. Wine production and consumption have grown significantly over the past few years, creating a significant market for expensive wines with distinctive flavors. Wine drinking is mostly encouraged by social connections, modernization, and increasing embrace of western culture. Alcohol consumption is on the rise as it has become a status symbol in developing nations. As a result, demand for premium wine and spirits with a wide range of flavors and essences is rising at international travel terminals.

Global Travel Retail Market, by Sales Channel

Based on sales channel, the market has been divided into airports, cruise liners, railway stations, border, and down-town & hotel shop. Among these, the airports sub-segment accounted for highest revenue share in 2021.

Global Travel Retail Market Share, by Sales Channel, 2021

Source: Research Dive Analysis

The airports sub-segment is anticipated to have a dominant market share and generate a revenue of $137,236.9 million by 2031, growing from $29,450.6 million in 2021. The highest market share was held by the airport sector, which led the market. Because air travel is becoming more affordable and convenient, more people are expected to use it, which should lead to segment growth. The expansion of this segment's retail sector has also been fueled by efforts by several airports to increase profitability from non-aeronautical resources. Furthermore, due to the availability of customer-focused cosmetics and beverage products by airport retailers, the airport segment retains a significant market share. Due to this feature, the airport segment generates a substantial amount of money. Additionally, efforts by numerous airports to boost non-aeronautical resource profitability have fueled the expansion of this segment. The category of border, downtown, and hotel retailers is anticipated to experience the fastest growth over the forecasting period as these types of shops showcase the newest fashion trends.

Global Travel Retail Market, Regional Insights

The travel retail market was investigated across North America, Europe, Asia-Pacific, Latin America, and Middle East

Global Travel Retail Market Size & Forecast, by Region, 2021-2031 (USD Million)

Source: Research Dive Analysis

The Market for Travel Retail in Asia-Pacific to be the Most Dominant

The Asia-Pacific travel retail market accounted $22,542.2 million in 2021 and is projected to grow with a CAGR of 16.6%. The Asia-Pacific Travel Retail Association (APTRA) is a not-for-profit organization serving the interests of multiple stakeholders in the duty free & travel retail industry across the region. The APTRA looks after airports, brands, retailers, food & beverage operators, airlines, and travel retail industry associates. Duty-free sales, often known as travel retail, involves commercialization of products related to several product categories like purchasing of products at shops present at airports, cruise, and ferries where no tax is levied on the purchased products. This sales channel includes sales of goods that have not had taxation or excise applied to their sale price. The demand for Asia-Pacific travel retail market is anticipated to be driven due to increasing popularity for travel and tourism as well as rising millennial demographic. The travel retail market demand in Asia-Pacific is primarily fueled by the travel and tourism sector, as many foreign investors travel to places such as Malaysia and Hong Kong to shop tax-free. The airport has developed into a successful retail area. Airport shopping has developed into a retail outlet for firms to advertise and increase consumer knowledge of their goods. Airports are extending their offerings to non-aeronautical sectors such as retail, dining, and cafeterias. Outpacing aviation revenue streams, airport retail and commercial services—including food and beverage—represent a critical business area that generates up to 60% of the airport owners' essential commercial income. It is the largest direct contributor to the development of top-notch national gateways, the region's global hubs, and investments in the aviation infrastructure of the Asia-Pacific.

Competitive Scenario in the Global Travel Retail Market

Investment and agreement are common strategies followed by major market players.

For instance, in June 2021, Hyundai DF boosts Incheon's premium presence. Under the direction of Hyundai Department Store Duty Free Shop (HDDFS), more than nine prestigious luxury boutiques are scheduled to open at Incheon International Airport Terminal.

Source: Research Dive Analysis

Some of the leading travel retail market players are Aer Rianta International, China Tourism Group Duty Free Corporation Limited, DUFRY GROUP, Duty Free Americas, Inc, Gebr. Heinemann SE & Co. KG, King Power International., Lotte hotel, Lagardère sca (lagardère travel retail), LVMH Group, and THE SHILLA DUTY FREE.