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The global duty-free retailing market is predicted to be valued at $94,203.7 million by 2031, surging from $33,651.8 million in 2021, at a noteworthy CAGR of 10.6%.
The duty-free retailing market share has been severely impacted by the COVID-19 pandemic owing to travel restrictions and social distancing norms imposed across several countries. A huge decline in the number of passengers in maritime and aviation traffic has led to severe economic losses to the duty-free retailing industry. According to the estimates by, the Central and Eastern European Travel Retail Association (CEETRA), the airports have lost over 88% of their passenger traffic due to the COVID-19 pandemic. Also, many duty-free retailing stores at airports, railway stations, and borders are already out of business due to severe economic losses. A severe decline in passenger traffic has hampered the duty-free retailing market size during the pandemic. Additionally, King Power Thailand, the Thailand-based leading duty-free retailing store, has anticipated a drop in revenue and sales by 50% during the pandemic.
To cope-up with the uncertainties led by the COVID-19 pandemic, the Airports Council International (ACI), has proposed several policy measures to review the travel retail and duty-free retailing market growth. Some of these measures include tax relief for the aviation sector, consideration for the waiving of airport rents or concession fees, introducing discounts or alleviating airport charges, and others. These factors are estimated to provide significant help to the travel retail business post-pandemic.
Duty-free retailing is the largest retail channel that focuses on international passenger traffic that offers exclusive products to meet the growing needs from consumers with world-class marketing. Duty-free retailing allows you to purchase any item such as perfumes, cosmetics, wines & spirits, confectionery, and others at airports, railway stations, cruise liners, and others. Due to the rise in the number of passengers, the duty-free retailing industry is estimated to grow at a faster rate.
Furthermore, as compared to other retail outlets, duty-free retailing provides an excellent opportunity for international travelers to save money. A huge number of tourists prefer to buy expensive and luxurious items that are offered at much lower prices; this aspect is projected to increase the duty-free retailing market share during the projection period.
The governments of various nations have imposed varied rules and regulations for shopping at duty-free retail stores. The lack of stores other than those found at airports or like on ships is a major factor estimated to hamper to duty-free market size. There are a few retail outlets outside of major transit hubs such as airports, railway stations, and ship ports, but they are insufficient for local buyers to readily access the merchandise. As the duty-free retailing stores are present only at specific locations, the consumer base is relatively restricted which is anticipated to hamper the duty-free retailing market trend.
The duty-free retailing market is evolving rapidly from small luxury shops to the highest-earning industries. Airports have become prominent shopping places that are equipped with luxury goods for tourists and travelers to buy luxury goods. Airport planning & infrastructure development for capacity-balanced, safe, and user-friendly airports is driving the duty-free retailing market size in recent years. For instance, International Air Transport Association (IATA), the leading trade association for the airline industry, ensures that airport development strategies are flexible and affordable to support operations and to boost the customer experience. Furthermore, duty-free retail stores offer better deals to customers based on the countries that they are traveling to and from. For instance, these stores offer high-end luxury goods, accessories, and fashion items such as handbags, and clothing that can help customers in saving their money. All these factors are anticipated to have a positive impact on the duty-free retailing market outlook during the analysis period.
The global duty-free retailing market is segmented based on product type, sales channel, and region.
Product Type:
The product type segment is further classified into perfume & cosmetics, electronics, wine & spirits, food, confectionery & catering, tobacco, luxury goods and others. Among these, the perfume & cosmetics sub-segment has accounted for the highest revenue share and it is estimated to show the fastest growth during the forecast period. Perfumes and cosmetics are largely preferred by a large number of audiences owing to their attractive scents and its ability to beautify the wearer. Duty-free retail stores are a popular choice for travelers to buy tax-free products from world-class brands namely Givenchy, Dior, Lancôme, Clarins, Clinique, and others. In fragrances, Gucci, Calvin Klein are some of the popular brands purchased at duty-free retailing stores across airports, railway stations, border, down-town & hotel shop, cruise liners, and others.
Sales Channel:
The sales channel segment is further classified into the airport, cruise liners, railway stations, border, and down-town & hotel shop. Among these, the airport sub-segment is anticipated to have a dominant market in 2021 and it is estimated to show the fastest growth during the forecast period. Airport duty-free retailing is one of the highest-revenue-generating sectors which has evolved rapidly in recent years. The duty-free retailing stores at the airports create brand awareness among travelers and influences their shopping experience with the help of typical promotion methods. Rapid changes in air travel lifestyle, rocketing passenger rates, and growing business opportunities have led to an increase in the duty-free retailing market size in recent years.
Region:
The duty-free retailing market in the Asia-Pacific region is projected to show the fastest growth. The duty-free retailing industry is rapidly expanding across Asia-Pacific countries namely China, Japan, Thailand, South Korea, and others. For instance, in April 2022, the King Power, a leading duty-free retailing company based in Thailand, stated that the company is all set to unveil its revamped duty-free store at Suvarnabhumi airport establishing its collaboration with the world’s luxury brands. Suvarnabhumi airport is the hub for global flagship stores of luxury products and it has partnered with leading fashion houses namely Gucci and Louis Vuitton. Additionally, this duty-free store will also feature other leading brands namely Hermes, Saint Laurent, Bottega Veneta, Loewe, Balenciaga, Celine, and Rimowa. The company has revamped its entire duty-free store into a hub of luxury and consumer goods such as snacks, spirits, and liquors, as well as Thai community products. All these factors are estimated to boost the duty-free retailing market demand in the Asia-Pacific region during the projection period.
Some of the leading duty-free retailing market players are
Business expansion and partnership are major initiatives taken by the industry players. For instance, Lagardere, a French travel retail firm, has opened eight luxury boutiques in Shenzhen and Shanghai Honhqio in China in November 2020. This strategic initiative is projected to intensify competition among domestic retailers across China in the coming years.
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