Market Overview
The global travel retail market size was valued at USD 58.8 billion in 2022. It is projected to reach USD 122.5 billion by 2031, growing with a CAGR of 8.5% during the forecast period (2023–2031).
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. Increased travel and tourism have increased the demand for garments, cosmetics, food products, and electronic goods in the travel retail business. In addition, an increase in urbanization and a shift in consumer lifestyles are predicted to be major development drivers for the market over the forecast period. In addition, a rise in the disposable income of middle-income groups and an improvement in economic conditions are significant market growth drivers. 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 witnessed significant growth in the last few years due to the number of international travelers. The Asia Pacific region is dominating the market. However, western region such as Europe and North America is growing at a moderate pace. In Europe, travel retail has become a key component of aviation and maritime financing and an integral part of the traveling experience.
Regional Analysis
Tourism is the primary driver of the travel retail business in Asia-Pacific, as several foreign investors visit Hong Kong and Malaysia for tax-free shopping. Diverse market participants are eager to increase their market position by establishing themselves in Asian marketplaces. Mitsui Outlet Park KLIA, a premium outlet mall, was inaugurated near the international airport in Kuala Lumpur. Mitsui Outlet Park KLIA is home to several luxury brand stores, including Bally, Guess, and Boss by Hugo Boss. In addition, Dior Homme, Jimmy Choo, Tiffany & Co, Roger Vivier, MCM, Roos, and Alexander Wang have opened boutiques in Thailand. China is one of the largest importers of cosmetics and clothing. This contributes to the expansion of the Asia-Pacific market. India, China, Japan, and South Korea are the frontrunners in 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.
Europe is projected to demonstrate tremendous growth in the future years. The rising infrastructural development for travel and tourism is likely to enhance the market growth in Europe. Moreover, the high presence of sumptuous cosmetics and other prominent duty-free brands is projected to boost the region’s market expansion. The European region is home to the headquarters of some of the major luxury and fashion brands in travel retail, like LVHM and H&M. The shift in consumer lifestyles is anticipated to drive the expansion of the European travel retail market, which will be fueled by a rise in travel & tourism due to an increase in disposable income and rapid urbanization. Continual growth in the travel and tourist business, as well as the infrastructure of the hospitality sector and advances in online booking, will contribute to the growth of the travel retail industry in Europe. Due to its stronger basis of luxury products and the presence of some major clothes and cosmetics companies, the United Kingdom market held the highest proportion, contributing more than one-fourth of the market. Nevertheless, the market in Germany is anticipated to exhibit the highest CAGR throughout the forecast period.
North America is expected to witness substantial growth over the forecast period. The rise in the travel and tourism industry has raised the demand for garments, cosmetics, food products, and electronic goods, as well as the rise in urbanization, lifestyle changes, and disposable income growth among North Americans. In the coming years in North America, the increase in the number of millennials, the growing emphasis on the digitalization of the retailing process, and the rise in demand for retail chains offering luxury and premium brands of a variety of products are anticipated to support the growth of the market. The travel and tourism sector is one of the fastest-growing industries in North America. Infrastructure growth in the travel-retail business, such as greater retail experiences, including stores, restaurants, bars, and other forms of retail, has been driven by increased passenger traffic. Rich tourists from other nations continue to play a key role in the North American economy. However, the rise of terrorism and criminality, as well as stringent government controls, notably for airport shopping, impede industry growth. On the other hand, greater attempts to expand the region's travel and tourist industry are projected to create lucrative opportunities soon.
Latin America is also a significant market for travel retail. Travel retail spending in Latin America and the Caribbean directly accounts for more than 50,000 jobs. People's living standards are rising due to increasing disposable earnings, an improvement in lifestyle, and an expansion of corporate culture. A rise in the dispersion of business entities in emerging nations has popularised the carrying expensive products mentality among consumers. This habit of owning premium goods has become a status symbol among consumers. The rise in the travel and tourism industry has raised the demand for garments, cosmetics, food products, and electronic goods, the urbanization and lifestyle shifts of Latin Americans, and the increase in their disposable income. The millennial population is rising in Latin American nations such as Brazil, Argentina, and Colombia. Consequently, the increasing focus on the digitalization of the retailing process and the rise in demand for retail chains that offer luxury and premium brands of various products are anticipated to moderate the expansion of the market in Latin America in the future. Due to the increasing demand for duty-free products across countries, the duty-free retail spaces at Dubai International Airport and Abu Dhabi International Airport also contribute significantly to travel retail. The Middle Eastern region's beneficial geography, which connects it to all four corners of the globe, is also assisting the market in increasing its revenue by attracting more shoppers.
Segmental Analysis
Segmental Analysis
The market is segmented by product and channel.
The market is segmented by product into perfumes & cosmetics, wine & spirits, cigarettes, electronics, luxury goods, food & confectionary, and catering & others.
Due to the early adoption of a premium lifestyle, the luxury goods market category is expected to rise steadily in developed nations, where it is expected to see strong growth potential. Rise in disposable income, exposure to social media, urbanization, and preference toward investments in personal luxury goods are some of the reasons that further fuel the market expansion.
The market is segmented by distribution channel into airports, cruise ships, train stations, and border, downtown, and hotel shops.
The airport segment accounts for more than one-third of the market shares. This is because nowadays, most people use to travel by airway rather than ships and roadways. The aviation industry is booming, which in turn increases the sales of the market. As air travel becomes more accessible and affordable, more people are expected to make use of it, which is anticipated to contribute to the sector's expansion. Several airports' endeavors to increase the profitability of non-aeronautical resources have also contributed to the expansion of this market category. In the Americas, among major channels such as Aviation, maritime, and land, the major revenue generated was through the aviation channel.
The cruise line segment is also an important segment of the market. The trade of goods in bulk is majorly made 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 it 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.
Top Key Players
Dufry AG
Shilla Duty-Free DFS Group
Heinemann
Lagardere Travel Retail
Lotte Duty-Free
Retrail GmbH.
Others
