The global travel retail market in 2021 stood at US$55.12 billion, and is likely to reach US$144.07 billion by 2027. Travel retail is the retail market place mainly in the travel areas like airport, railways, cruise liners, and so on. Impulse purchases made while waiting for flights/railways at touchpoints, mostly airports, have recently fueled the worldwide travel retail market. Furthermore, the advantages of travel retail include simple accessibility, convenience, a better ambience or atmosphere, and economics, which have drawn customers to these retailers.
Travel retail is the business mainly revolving around travel environments wherein the customers are required to have a proof of travel to access the commercial area, all of, which may be subject to taxes and/or duties, even if the buyer is leaving the country. Some of the shops or brands provide their products as a duty free to attract the buyers. These platforms are frequently used by businesses to launch their premium products. The global travel retail market is projected to grow at a CAGR of 17.37% during the forecast period of 2022-2027.
Market Segmentation Analysis:
- By Product Type: The market report has segmented the global travel retail market into seven segments on the basis of product type: fragrances & cosmetics, wine & spirits, luxury goods, tobacco, food, confectionary, & catering, electronics, and other. The luxury goods segment is the fastest growing segment with a CAGR of around 22% during the forecast period, attributable to rise in disposable income, exposure to social media, urbanization, and preference toward investments in personal luxury goods.
- By Sale Channel: Based on the sale channel, the global travel retail market has been divided into four segments: airport, border, downtown and hotel shop, railway station, and cruise liner. The airport segment held more than 51% of the share in travel retail market in 2021, owing to increase the number of travelers, and technological advancements in airports.
- By Region: According to this report, the global market can be divided into five major regions: Asia Pacific (South Korea, China, and Rest of the Asia Pacific), Europe (UK, Germany, France, Spain and Rest of Europe), North America (the US, Canada, and Mexico), Middle East & Africa, and Latin America. Asia Pacific accounted for the largest share of more than 40% in the global travel retail market in 2021. Due to the booming travel and tourism sector as well as the increasing number of new international routes in Asia Pacific, the region has the largest travel retail market. The duty-free market in South Korea is flourishing owing to the country's position as one of the largest in the world and the rising numbers of Chinese and Japanese visitors.
Global Travel Retail Market Dynamics:
- Growth Drivers: The bulk of shoppers in travel retail fall into the middle-aged bracket, owing to Millennials and Gen Z's love for travel. For many millennials, travel has become a necessity, while GenZ population have higher expectations for the quality of a product and even less patience. These tendencies can be expected to spill over into their travel preferences as well. Further, the market is expected to grow owing to rapid urbanization, increasing middle class populace, growing number of airports, rising personal luxury goods consumption, increased traveling offers, etc. in recent years.
- Challenges: Most travel retail stores operate in a restrictive space, making it difficult to balance merchandizing and positive experience. Many retailers deal with the problem to sell space and the products needed to be personalized would lower the profit margins of the travel retailers. In the years to come, the need for travel retail is projected to decline due to the lack of availability of space, posing a challenge to the market as a whole. Additionally, other factors like tedious air travel requirements, etc. are other challenges to the market.
- Market Trends: Today's travelers envision receiving responses throughout their whole journey that are speedier and more pertinent to their immediate needs. Robots are made specifically to communicate with people. The robots can read and comprehend human emotions, enabling him to gather insightful data for travel retailers. These advances through robotics are expected to propel the market growth in the forecasted period. More trends in the market are believed to grow the travel retail market during the forecasted period, which may include involvement of artificial intelligence, digitization of travel retail, advancement of Augmented Reality (AR), Virtual Reality (VR), and Mixed Reality (MR) technology, technological advancements, passenger control tower, personalized pricing and assortment tool, etc.
Impact Analysis of COVID-19 and Way Forward:
Since the COVID-19 pandemic caused a labor scarcity, decreased consumer footfall, a lack of cross-border movement, and a halt to economic activity throughout the world, demand for travel retail products fell, which ultimately had a negative effect on the market's growth worldwide. However, the post-pandemic market is anticipated to gain momentum as more people get vaccinated, there has been an increase in mobility at many travel touchpoints, such as airports and railway stations and even cruise liners.
Competitive Landscape and Recent Developments:
The market for travel retail has typically been fragmented. In order to obtain a competitive edge internationally, well-known key companies today like Dufry AG, Shilla Duty-Free Shop, and others concentrate on analyzing consumer purchase behavior and providing tailored retailing products to the customers. Additionally, they frequently launch sales promotions to draw customers to their products.
Further, key players in the travel retail market are:
- Dufry AG
- Hotel Shilla Co., Ltd (The Shilla Duty Free)
- Lagardère Group
- LVMH Moët Hennessy Louis Vuitton (DFS Group)
- WH Smith PLC
- Shinsegae Inc (Shinsegae Duty Free)
- Lotte Corporation (Lotte Duty Free)
- China International Travel Service Corporation Limited (China Duty Free Group)
- Gebr. Heinemann SE & Co. KG
- Harding Brothers Retail Ltd (Flemingo International Limited)
- Dublin Airport Authority (Aer Rianta International Duty-Free LLC)
- Duty Free Americas, Inc.
- Dubai Duty Free
- The King Power International Group
- Everrich Duty Free Shop
Due to the travel and tourism sector's potential for growth, there is intense competition in the market. To enhance their market share, the most of these companies are using both inorganic and organic growth strategies. To give potential customers a hassle-free purchasing experience, major vendors in the travel retail market, including Dufry AG, Delhi Duty Free, and Dubai Duty Free, have launched their own online stores. To entice more customers, many online retailers provide a variety of promotions, including discounts.
Additionally, the internet shops offer other services. For instance, the duty-free store at Delhi Airport now offers a click-and-collect option that enables foreign customers to buy goods online and pick them up from the location on the day of their flight. Further, many beauty companies have been observed collaborating and even gone for partnership with travel retailers, which benefits both the travel retailer as well as the beauty companies to place their premium products at an exclusive store. For example, DFS Group and L’Oréal Travel Retail have announced ambitious plans to accelerate the growth of their beauty business in Hainan and Macau SAR, in 2021.
Table of Contents
1. Executive Summary
Executive Summary
The global travel retail market has increased significantly during the years 2017-2019 and then the market declined in the year 2020 tremendously, and then rise progressively in the next four years i.e. 2021-2025. The travel retail market is expected to increase due to dominating gen Z and millennial population, increasing in global urbanization, rising middle class population, increased personal luxury goods consumption, increasing number of airports, increased traveling offers, growing alternatives to pass waiting time, etc. Yet the market faces some challenges such as disruption in tourism industry, economic slowdown, lack of availability of space, tedious air travel requirements, etc.
Travel retail is the retail market place mainly in the travel areas like airport, airlines, ferries and so on. The products intended to sell at such platforms may or may not be subject to tax and duties, on purchasing, even though the person is leaving the country. The concept of travel retail dates back to 1947 when ‘duty free’ shops were introduced as a marketing strategy.
The travel retail market can be segmented on the basis of product type (Fragrances and Cosmetics, Wine & Spirits, Fashion & Accessories and Others); and by channel (Non-airport DFS, Airport, Airlines and Ferries)
Companies Mentioned
- Dufry AG
- Hotel Shilla Co., Ltd (The Shilla Duty Free)
- Lagardère Group
- LVMH Moët Hennessy Louis Vuitton (DFS Group)
- WH Smith PLC
- Shinsegae Inc (Shinsegae Duty Free)
- Lotte Corporation (Lotte Duty Free)
- China International Travel Service Corporation Limited (China Duty Free Group)
- Gebr. Heinemann SE & Co. KG
- Harding Brothers Retail Ltd (Flemingo International Limited)
- Dublin Airport Authority (Aer Rianta International Duty-Free LLC)
- Duty Free Americas, Inc.
- Dubai Duty Free
- The King Power International Group
- Everrich Duty Free Shop
Methodology
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Table Information
| Report Attribute | Details |
|---|---|
| No. of Pages | 192 |
| Published | October 2022 |
| Forecast Period | 2021 - 2025 |
| Estimated Market Value ( USD | $ 55.12 Billion |
| Forecasted Market Value ( USD | $ 114.88 Billion |
| Compound Annual Growth Rate | 20.2% |
| Regions Covered | Global |
| No. of Companies Mentioned | 15 |
