The global airport retailing market size was valued at USD 30815 million in 2021 and is projected to reach USD 91105 million by 2030, registering a CAGR of 12.8% during the forecast period (2022-2030). Airport retailing refers to the presence of various retail services in the airport, such as jewelry, books & magazines, gifts & crafts, apparel & accessories, convenience stores, and perfumes, to give more convenience to travelers. Furthermore, airport retailing provides various items and is convenient for tourists. It has become one of the essential techniques for businesses to promote and raise brand awareness at airports. Airports with low-cost airline tickets are unable to generate significant aeronautical revenue. As a result, they turn to non-aeronautical businesses, including retail stores, restaurants, bars, and cafeterias.
Lifestyle changes, improved tourism promotion, and increased accessibility of transportation facilities are expected to assist the travel and tourism business to thrive, bolstering the growth of the airport retailing market. Technological improvements, for example, have made it easier to book hotels and transportation through online portals, boosting the market's growth. Furthermore, one of the factors driving the expansion of the airport retailing market is consumer preference for a lavish lifestyle.
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Travel & tourism includes leisure, business, medical, and others. The factors that promote the growth of the travel & tourism industry include changes in lifestyle, a rise in tourism promotion, and an increase in accessibility of transport facilities, which, in turn, are expected to boost the number of travelers at the airport, thus contributing toward the growth of the airport retailing market. Easy access to hotel & transport bookings through online portals further boosts the market growth. Continuous development in the travel & tourism industry and integration of various segments such as hospitality & infrastructure with government initiatives to attract tourists accelerate the growth of the global travel & tourism industry, which in turn supplements the development of the airport retailing market.
Improvement in economic condition and rise in disposable income are the two key factors that propel market growth. The world economy witnessed a standstill after the 2009 financial crisis in Europe and the economic crisis in China. Almost all the countries in the world were affected by this economic crisis. However, a strong recovery from the situation resulted in strong economic growth, especially in developing economies. This has increased disposable income among the middle-income groups, consequently adding to the middle-class population. In addition, the disposable income of individuals in Europe and Asia-Pacific witnessed high growth, thus driving the development of the airport retailing market.
Government rigid rules and policies toward the allowed limit of duty-free products for air traveler passengers are projected to hamper airport retail market growth. Governments of different countries implement different practices for their air travelers. The Indian Commerce and Industry Ministry has proposed reducing the number of alcohol bottles passengers can buy through a duty-free outlet when returning from an overseas trip. The number of alcohol bottles purchased from duty-free outlets is proposed to be halved. This move has triggered massive criticism.
On the contrary, the US Government allows the traveler to take up to one liter of alcohol in the country. Moreover, many countries have limitations on the permitted number of cigarettes per passenger. Liquor and tobacco products contribute to the significant market share of the airport retail industry. Thus, rigid rules and policies of government on purchasing certain products from the airport have notably hampered the sales of airport retail stores, thus limiting the market growth.
Asia-Pacific has emerged as one of the largest developing regions. Improvement in the region's economic conditions and a surge in disposable income are the key drivers of the market. Financial increase in countries of LAMEA boosts the market growth. In addition, an increase in millennials is projected to drive the development of the airport retailing market. With sports events about to take place, such as FIFA 2022 in QATAR and ICC T20 World Cup in India in 2021, the airport retailing sector is expected to prosper with an increasing number of passengers, which will prove beneficial for the growth of the airport retailing industry. Thus, the untapped countries in Asia-Pacific and LAMEA are likely to possess substantial growth prospects in the coming years.
The global airport retailing market share is segmented by product type, airport size, distribution channel, and region.
Depending on the product type, the global airport retailing market includes perfumes & cosmetics, fashion & accessories, liquor & tobacco, food & beverages, and other products. The perfumes & cosmetics segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.9% during the forecast period. An increase in disposable income subsequently results in a rise in travel and tourism, which acts as a critical driving force of the airport retailing market. Moreover, lifestyle improvement and increasingly affluent populations notably contribute to the market's growth. France is one of the largest perfume manufacturers offering scents and body mists & sprays under the leading brands such as Christian Dior, Chanel, and Estée Lauder. France is the leader in international perfume sales, with nearly 30% of the world's perfumes exported. LVMH, one of France's flagship companies, is the world's most fantastic luxury goods company, and French perfumes and cosmetics are among its most important products. Hence, the demand for perfumes & cosmetics products has increased considerably in France.
Liquor and tobacco segments are the second largest. The consumption of wines, particularly luxury wines, and spirits, has increased significantly in the past few years. The increase in the number of middle-aged consumers between 35 and 55 years prefer wine. This is anticipated to encourage liquor manufacturers to launch special duty-free and travel retail products. Furthermore, the number of travelers has been witnessed to increase significantly in recent years, which is likely to boost the sales of liquor and tobacco products at airport retail shops.
Cosmetics, fashion & accessories are the third-largest segments. Rapid urbanization and improvement in lifestyle, owing to the increased disposable income of consumers, drive the growth of the fashion accessories & apparel market. In addition, the development of the emerging economies, such as Asia-Pacific and LAMEA, is anticipated to create lucrative opportunities for the market, thereby spurring the airport retailing market.
By airport size, the global airport retailing market is segmented into large airports, medium airports, and small airports. The large airport segment was the highest contributor to the market and is estimated to grow at a CAGR of 12.7% during the forecast period. Large airports are popular holiday destinations located in the countries' capital region. These airports have many business passengers who contribute significantly to product sales through retail travel hubs. As the footfall of passengers is high at these airports, the revenue generated is correspondingly high. Thus, an increase in the number of international tourists drives the growth of this segment.
The medium airport segment is the fastest-growing segment. Expansion of the retail businesses in medium airports is majorly driven by an increase in the spending capacity of the middle-income group. The average annual income of the middle-class population has been increasing over the last few years; hence, their spending ability is rising correspondingly. In addition, the frequency of traveling abroad has risen more than ever among families, thus increasing the number of passengers through medium airports. This, in turn, has positively impacted the retail business.
Small airports are the third-largest segment. Considering the increasing number of passengers through smaller regions, market players are expanding their businesses in small airports. Thus, the surge in the number of domestic passengers is expected to offer lucrative opportunities for the growth of the airport retailing market through small airports.
By distribution channel, the global airport retailing market is segmented into direct retailers, convenience stores, specialty retailers, and departmental stores. The specialty retailer segment was the highest contributor to the market and is estimated to grow at a CAGR of 13.4% during the forecast period. Airport specialty retailers are usually liquor, perfume, or fashion and accessories stores. Not every customer exhibits brand loyalty when it comes to retail shopping at airports. For such customers, specialty retailers serve as an ideal option, as they get to choose products from a wide variety of brands. Furthermore, as many consumers seek limited edition products, they can easily acquire them in specialty retail shops, while others looking for international brands of cigars, cigarettes, perfumes, cosmetics, and watches can also benefit from their availability under one roof. All these factors together notably contribute to the growth of the market.
The direct retailer segment is the fastest-growing segment. Travelers seeking specific brands visit direct retail stores or food lovers obsessed with their favorite food outlets and look for company-operated food chains. Frequent travelers usually prefer the same brands they have liked for years, which increases the popularity of direct brand retailers. Furthermore, fashion and perfume vendors have their brand outlets in airports, gaining high traction among consumers preferring international brands. In the food & beverages sector, local food vendors have their food outlets, which attract food lovers. Hence, sales of direct retailers have been continuously increasing in the last few years.
The convenience store is the third-largest market. At airports, convenience stores cater to the needs of travelers, as small shops that offer staple food & beverages are available in these stores. The footfall of consumers is witnessed to be increasing at convenience stores, as they provide essential foods at comparatively lower prices than other stores in airports. Thus, an increase in the number of passengers in medium and small airports is driving the market for convenience stores in airport retail stores.
By region, the global airport retailing market share is segmented into North America, Europe, Asia-Pacific, and LAMEA.
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Asia-Pacific was the highest revenue contributor and is estimated to grow at a CAGR of 13.9% during the forecast period. Asia-Pacific airport retailing market is studied across China, Thailand, Japan, India, Australia, and South Korea. Asia-Pacific is growing at the fastest rate owing to improved living standards and a rise in disposable income in addition to the expansion of the tourism industry. Moreover, the development of the affordable luxury segment in tier 2 cities of Asia-Pacific boosts the market's growth. An increase in the number of new air routes and the introduction low-cost carriers (LCC) are the key factors that further promote the development of the Asia-Pacific airport retailing market. Furthermore, the surge in preference for value-added products boosts the desire to travel, increasing the demand for duty-free liquor, tobacco, fashion products, cosmetics, and perfumes.
The Europe market was the second-highest contributor to the airport retailing market. The Europe airport is projected to reach USD 15495 million by 2030 growing at a CAGR of 12% during the forecast period. UK and Russia, with more significant tourists through airlines, are the most extensive travel and tourism markets in Europe. In addition, tourists from other regions such as China and the Middle East contribute to Europe's airport retailing market. Thus, the development of the travel & tourism industry and improvement in lifestyle due to increased disposable income of consumers act as the fundamental driving forces of the market. However, enforcement of stringent regulations regarding the allowed duty-free products in airport retailing is expected to hamper the growth of the airport retailing market.
The North American airport retailing market is the third-largest. This is attributed to the rise in international air traffic from/to the US, which increases footfall at airports. Furthermore, North American airports are heavily investing in analyzing revenue per visitor by providing an upgraded shopping experience with facilities, such as boarding, lodging, catering, parking, and advertising and in addition, focusing on promotional activities such as campaigns, digital advertising, events, and press activities fuels the duty-free shopping and product visibility. Moreover, an increase in the number of luxury stores by some of the giant companies, including Louis Vuitton SA and LVMH Moët Hennessy, at airports is positively contributing to the market.