by Duty free retailing refers to the unique retail outlets located within international airports and onboard ferries that enable passengers to purchase goods free of taxes and duties. The outlets sell a wide range of merchandise including luxury items like perfumes, cosmetics and alcohol at discounted prices. The global duty free retailing market is estimated to be valued at US$ 38.95 Bn in 2023 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends
International travel and tourism has been on a steady rise over the past few years. According to the World Tourism Organisation, international tourist arrivals saw a growth of 6% in 2018 to total 1.4 billion. This is predominantly being driven by rising disposable incomes as well as increasing airline connectivity globally. With growing overseas travel, duty free sales are also expected to witness significant growth. Moreover, duty free outlets are coming up with innovative retail strategies like exclusive product launches and pre-ordering facilities to attract more customers. These trends are likely to have a positive impact on the overall duty free retailing market during the forecast period.
SWOT Analysis
Strength: Duty-free retailing provides tax and price advantages for consumers. This allows retailers to offer discounted prices for products.
Weakness: Changes in international travel patterns and regulations can impact sales volumes. Strict regulations regarding tobacco and alcohol sales also act as a restraint.
Opportunity: Growth in global travel and tourism industry presents an opportunity to capitalize on impulse shopping behaviours of travelers at airports and ports. Expanding into new geographical regions can aid market expansion.
Threats: Economic slowdowns and uncertainties negatively impact international travel. Spread of new virus strains can disrupt global travel trends. Increased online shopping also poses a threat.
Key Takeaways
The global duty free retailing market is expected to witness high growth over the forecast period. Asia Pacific currently dominates the market led by strong performances in China, Japan and Singapore. The APAC region accounts for around 35-40% of the global duty free sales volume supported by robust travel spending.
Key players operating in the duty-free retailing market are Dufry AG, LOTTE Duty Free Company, DFS Group Limited, Gebr. Heinemann SE & Co. KG, The Shilla Duty Free, The King Power International Group, James Richardson Corporation Pty Ltd., Duty Free Americas, Inc., Flemingo International Ltd., Dubai Duty Free, and China Duty Free Group Co., Ltd. These players are focusing on expansion strategies across profitable airports to leverage opportunities arising from growing air passenger traffic.
Regional airport authorities are undertaking expansion projects to boost traveler spending. Modernization of existing airports and addition of new terminals is expanding retail space for duty free operators. This provides platforms for effective marketing campaigns and trial opportunities for new brands. Partnerships between global brands and duty free chains also help expand product portfolios.
