Duty-free, travel retail market expected to log CAGR of 7.5%

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 brand 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 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 are driving the market growth. By product type, the wines and spirits segment is expected to gain a major share during the forecast period.

According to IMARC Group's latest report, titled "Asia Pacific Duty-Free Retailing Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2021-2026," the Asia Pacific duty-free retailing market exhibited moderate growth during 2015-2020. Looking forward, the market is expected to recover from 2021 and to grow at a CAGR of 7.3 per cent during (2021-2026).

We are regularly tracking the direct effect of Covid-19 on the market, along with the indirect influence of associated industries. These observations will be integrated into the report.

Duty-free shops are the retail outlets where products are exempted from national taxes and duties to provide a unique sales channel to international travellers and tourists. These outlets are generally located at international airports, seaports, border shops, international train stations, and onboard aircraft. Duty-free retailing comprises a vast product range, including perfumes, cosmetics, alcohol, confectionaries, electronics, and fashion accessories

The expanding travel and tourism industry in the Asia Pacific region, along with the increasing number of international routes is primarily driving the duty-free retailing market. Moreover, growing urbanization and the proliferation of low-cost carrier (LCC) airlines further elevate the duty-free goods sales in the region. Additionally, the high presence of duty-free goods related to country-specific culture and heritage also attracts international tourists. A global property consultancy, Knight Frank Research latest report states that India's airport retail segment is expected to grow to $9.3 billion by 2030 from its estimated market size of $1.6 billion in 2019. Duty free retail market size in India is estimated to be $ 0.7 billion and is set to grow to $2.4 billion by 2030. Indira Gandhi International Airport, New Delhi ranks first in the list of duty free revenue per passenger at $10-11 followed by Chhatrapati Shivaji Maharaj International Airport, Mumbai at $9-10 and Kempegowda International