Begin typing your search...

Global duty-free retail mkt size to reach $72 bn by 2029

The pent-up demand for travel, so often alluded to during the darkest days of the pandemic, is evident in all markets

Global duty-free retail mkt size to reach $72 bn by 2029
X
  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo
  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo
  • Whatsapp
  • Telegram
  • Linkedin
  • Print
  • koo

The global duty-free retail market size was valued at $35.87 billion in 2021. The market is projected to grow to $72.23 billion by 2029, exhibiting a CAGR of 9.17 per cent during the forecast period. The global Covid-19 pandemic saw duty free retail experiencing lower-than-anticipated demand across all regions compared to pre-pandemic market exhibited a decline of 42.38 per cent in 2020 as compared to 2019.

This market generates significant revenue for airports, airlines, tourism, and other travel-related industries worldwide. Total income from duty-free and travel retailing. Duty-free goods' sales typically happen within international zones, and these goods can also be sold on ships or onboard aircraft with shoppers/travellers in transit.

According to the research, in 2021-22 lower prices in comparison with the domestic market and value for money are key drivers for travel retail purchases across all segments, whether age groups, genders or travel purposes. Good value for money is a particularly significant purchase driver for seniors at 49 per cent and millennials at 34 per cent.

Convenience is also an important purchase driver for seniors (36 per cent), Gen Z shoppers, and leisure travellers (both at 23 per cent). Another common purchase driver in travel retail in 2021-22 is loyalty to the brand, especially for seniors (30 per cent) and females (26 per cent).

The research also analyses the importance of sales staff in influencing shopper behaviour. Sales associates have a significant impact on the decision to purchase and this varies quite considerably by customer segment as well as by region. The research reveals that the impact of the interaction has increased considerably in the wake of the pandemic as travellers set to the skies again.

Recent years have witnessed considerable demand for duty-free alcohol across countries, notably in Asia. The diversifying consumer buying habits, rapidly increasing international tourist arrivals, and rising spending among the rising demand for premium liquor is creating heightened consumer interest in duty-free alcohol worldwide at a macro the alcohol category has also witnessed significant developments, most notably product launches, in recent years. At a macro level, the growing demand for retail will boost duty-free alcohol sales and other product types during the forecast period. Furthermore, the alcohol category is likely to encourage market key players to offer luxury and premium products.

In February 2021, the Airport Authority of India (AAI), an Indian governmental body that operates 125 airports, saw revenues of $135.07 million (Rs 987 crore) for the first phase of an international airport named 'Dholera' in Gujarat. According to Civil Aviation Ministry's 'Indian Aviation's Vision 2040' claims that by 2040, India will have 190-200 operational airports and three international airports, while the top 31 Indian cities will have two operating airports. The fleet of 622 airliners will more than double to 2,359 aircraft by March 2040.

Numerous airlines across countries are expanding their international networks and establishing new airports as post the Covid-19 crisis.

Duty-free markets are sensitive to exchange rates among countries. Although they operate in several countries with currencies including euros, dollars, and pound, which have specific exchange rates, they are subject to global market changes in exchange rate of a particular day. The currency exchange fluctuations in the global market may positively or negatively including retail chains that offer luxury goods, depending on the fluctuating exchange rate.

Based on type, the global market is segmented into perfumes, cosmetics, alcohol, cigarettes, and others. Internationally reputed distribution channels offer luxury perfumes worldwide. Affluent global travellers typically visit duty free retail chains that offer perfumes of internationally reputed Gucci, Giorgio Armani, Al Haramain Dazzle Intense, Belle, Signature Rose, Signature Silver, and Khulasat Al Oud. Perfume types, including Perfume or De Perfume, Eau De Perfume (EDP), Eau De Toilette (EDT), and Eau De Cologne

Based on sales channels, airports, onboard aircraft, seaports, train stations, and others constitute the market segment worldwide. The mushrooming number of domestic and international airports across countries is favouring products. Various developments within the 'airports' category highlight the increasing number of duty-free stores across airports in 2022. Flemingo, a Dubai-based global travel retail operator, and Adani Group, an Indian integrated business established a duty free shop at the Thiruvananthapuram International Airport in mid-May 2022.

As the duty-free and travel retail industry had hoped, 2022 has so far brought real signs of hope that the recovery in international travel is underway. The pent-up demand for travel, so often alluded to during the darkest days of the pandemic, is evident in all markets. But that demand is putting severe pressure on airport and airline capacity. And the reopening of some countries, notably in Asia, is only taking place at a gradual, even glacial, pace.

Vincent Fernandes
Next Story
Share it