Duty-free and travel retail market on recovery path

The duty-free and travel retail market is projected to register a CAGR of greater than 7.5 per cent during the forecast period, 2021-2026, due to the growing demand for retail chains that offer luxury and premium brands of various products.

The duty-free and travel retail market was hit hard in 2020 due to the sudden fall in tourism amid the Covid-19 pandemic. The tourism sector has already felt the negative impact of the pandemic on its performance much earlier. Globally, travel restrictions and measures started as early as January 2020. Domestic and international tourists limited their travel due to fear of contracting Covid-19, which reduced the number of domestic and international customers for this retail channel.

Duty-free and travel retail is a retailing channel offering products to international travellers. It is a significant source of income and has several marketing opportunities. The rising popularity of the travel and tourism industry is one of the primary factors driving the growth of the duty-free and travel retail market. Duty-free and travel retail provides temporary spaces that offer extra time to end users after security check-in and allow them to get entertained and indulgent with the ambiance and experience of shopping for international products. . The increasing focus on digitalizing the retailing process, so that the companies can maximize their profits, may boost sales in the market. The growing demand for retail chains that offer luxury and premium brands of various products is augmenting the growth of the duty-free and travel retail market. The distribution channels offer value to passengers, enhance their experiences while travelling, and add value to economic activities. The low customer interest in shopping at airports is expected to restrain the growth of the market at these stores, owing to reasons, such as lack of promotion campaigns at these stores and high prices of products. Several companies are partnering with duty-free stores to launch their limited or exclusive products, which is driving the market growth. By product type, the wines and spirits segment is expected to gain a major share during the forecast period.

The surge in travel and tourism has increased demand in the industry for clothes, cosmetics, culinary products, and technology retail. Increasing urbanization and social changes are projected to drive the growth of the global market throughout the forecast period. Furthermore, there has been an increase in discretionary income among middle-income groups, a change in economic conditions, and technological developments support market growth by making it easier to obtain transportation and book hotels through online portals.

APAC is also expected to be the fastest growing region owing to rising consumer base in the countries including India, China, and South Korea. Furthermore, there is an increasing travel expenditure by the consumers of the regions owing to the increase in the per capita income which is poised to propel the market growth of the Duty Free and Travel Retail market forecast period 2021-2026.

The growing demand from retail chains that offer luxury and premium brands of various products is augmenting the growth of the duty-free and travel retail market. Several companies are partnering with duty-free stores to launch their limited or exclusive products are driving the market growth.

Lucrative growth opportunities make the travel retail market highly competitive. Some of the major players in the market are DFS Group, Dufry, LS travel retail, Lotte Duty Free, King Power International Group, The Shilla Duty Free, Gebr, Heinemann, China Duty Free Group (CDFG), Aer Rianta International (ARI), The Nuance Group., and many more. Travel retail is the business of catering to shoppers while they're in transit. In recent times, various retailers and brands have started using travel retail to build their brand by targeting a much-focused audience. It is one of the highest growth business channels that covers duty-free environments such as airports, cruises, airlines, and downtown locations. Significant development in the tourism & travel industry is the major factor encouraging the demand for travel retail services. In addition to this, factors such as rapid urbanization and expanding middle-class population fuel the growth of the travel retail market. Also, the growing number of low-cost carrier (LCC) airlines and increasing number of international tourists drive the market growth. Moreover, the rise in digitalization of the retailing process enables companies maximize their profits, and may further drive growth of the market. However, strict government regulations relating to airport retailing may hamper the growth of the market. Contradictorily, the growing number of millennial travellers are expected to create lucrative opportunities to further propel the market growth.