Travel Retail Market

Market Overview

Travel Retail Market will Predicted to Grow at a 8.5% CAGR During Forecast Period

Travel retail refers to sales made in travel environments where customers require proof of travel to access the commercial area and are subject to taxes and duties. Duty-free and travel retail generates vital revenues for national aviation, travel, and tourism industries across the globe. The first duty-free and travel retail was launched in Shannon airport, Ireland, in 1947. Travel retail has been witnessing significant growth in the last few years due to the number of international travelers. As per the Duty-Free World Council, duty-free and travel retail generated sales of USD 68.6 billion in 2017.  

By the study of the various region including Americas, Europe, Asia Pacific, Middle East, and Africa. We have found that the Asia Pacific region is dominating the market. However, a western region such as Europe and North America is growing at a moderate pace. For instance, In Europe, travel retail has become a key component of aviation and maritime financing as well as an integral part of the traveling experience. In 2016, the revenue generated from travel retail was around USD 16 billion in Europe, of which over USD 10 billion (67%) was generated at airports, and USD 2 billion at maritime (11%).

Segmental Analysis

The fashion and accessories, fragrances and cosmetics, and wines and spirits accounted for about 67% of the shares in 2017. The debouching trends of beauty and grooming drive the fashion and accessories and fragrances and cosmetics products segments.

The airport segment accounts for more than one-third of the market shares. This is because nowadays most of the people use to travel by airways rather than ships and roadways. The aviation industry is booming which in turn increases the sales of the travel retail market. In the Americas among major channels such as Aviation, maritime, and land, the major revenue generated was through the aviation channel. In North America, the revenue generated in the travel retail market through aviation was USD 1.9 billion, and through land USD 1.6 billion in 2017. Similarly, Latin America & the Caribbean have generated revenue of around USD 4.8 billion through aviation channel, most of this revenue was generated within airport terminals.

Cruise line segment is also an important segment for the travel retail market. The trade of goods in bulk is majorly done by ships and waterways. In addition, the growing trend of cruising in Asians is expected to impact the market positively. Cruising is a relatively new travel experience for Asians but is growing in popularity. In comparison to more established cruise markets, Asians prefer cruises of shorter duration (e.g., 4 to 5 days) and to travel in larger party sizes that include extended family and multiple generations. Which increased the sales of travel retail and duty-free market? In North America, the sales of travel retail through maritime and cruise line in 2017 was USD 0.3 billion.

Impact of covid-19

The aviation industry is severely hit by the coronavirus due to the lockdown imposed across the globe, which has decelerated the sales of the aviation Industry. As of now, only 10 million seats are in service to facilitate essential travel, compared with 44.2 million in April 2019.

The airport and the aviation industry have witnessed a collapse of around 77% in the first week of April 2020. Currently, only essential services are provided by the aviation industry, further hampering the market growth.

Regional Analysis

South Korea: World’s Largest Travel Retail Market

As per the study commissioned by Duty-Free World Council (DFWC) and the Asia Pacific Travel Retail Association (APTRA), Asia-Pacific’s travel retail market is projected to grow with a CAGR of 8.7% during the forecast period. In 2017, the region's travel retail sales accounted for around USD 36.2 billion. Airports and airlines accounted for nearly USD 21.2 billion in travel retail sales, of which around three-fourth occurred in the sub-region of East Asia. Land and maritime duty free and travel retail sales amounted to approximately USD 15 billion. 79% of all duty-free and travel retail sales in the region occurred in East Asian countries such as South Korea, China, and Japan.  In addition, duty free and travel retail spending in the Asia Pacific region accounted for an estimated 140,900 direct jobs and USD 7.6 billion in direct GDP. Moreover, according to the DFWC, the Asia Pacific region is the dominating region in the travel retail market, accounts for more than 45% in the global travel retail market.

India, China, Japan, and South Korea are the frontrunners of the regional market. South Korea is emerging as the world’s largest travel retail market accounting for around USD 12 billion in sales, followed by China and Japan. The regional’s market generates a significant amount of revenue through the fashion and accessories, fragrances and cosmetics, and wines and spirits segments. 

Latin America is also a significant market for travel retail. According to a report published by Duty-Free World Council, in 2016, USD 9 billion was generated from duty-free and travel retail in Latin America and the Caribbean. In Latin America and the Caribbean, travel retail sales through aviation channel was generated around USD 4.8 billion, through maritime USD 3.1 billion, and through the land, it was USD 1.1 billion in 2016. Travel retail spending in Latin America and the Caribbean directly accounts for more than 50,000 jobs.

Recent Developments

• In September 2018, Dufry AG signed a strategic agreement with Perth Airport Pty. Ltd to launch two duty-free stores at the entrance and exit of the International terminal in Australia
• In 2016, Butlers launched a new chocolate café outlet in Dubai airport. The company plans to develop travel retail sales through new outlets and the introduction of new products

Travel Retail Market Segmentation

By Product

• Fashion and accessories
• Perfume and cosmetics
• Electronics
• Food
• Confectionery products
• Bakery products
• Catering
• Luxury goods
• Watches
• Jewellery
• Wine & spirits

By Channel

• Airports
• Cruise line
• Border, down town, and hotel shops
• Railway stations

By Region

North America

• The U.S.
• Canada
• Mexico

Europe

• Germany
• France
• The U.K.
• Italy
• Spain
• Netherlands
• Russia
• The Rest of Europe

Asia-Pacific

• China
• Japan
• India
• South Korea
• Australia
• Indonesia
• Malaysia
• Singapore
• Vietnam
• The Rest of Europe

Central and South America and the Caribbean

• Brazil
• Argentina
• Colombia
• The Rest of Central South America and the Caribbean

The Middle East

• Saudi Arabia
• The UAE
• Oman
• Bahrain
• The Rest of the Middle East

Africa

• Nigeria
• South Africa
• Ghana
• Tanzania
• The Rest of Africa