The duty free retailing market refers to the sales of tax and duty-free goods to international travelers. It allows travelers to purchase items like clothing, perfumes, alcohol, tobacco goods and others without paying certain local taxes and duties. The booming travel and tourism industry has significantly boosted sales of duty-free products at international airports and seaports across the globe. 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:
Growth in international air travel and tourism has been a major factor driving the duty free retailing market in recent years. The number of international tourist arrivals has increased steadily over the past decade, growing by over 50% between 2010 and 2019 according to the United Nations World Tourism Organization (UNWTO). This growth in tourism has translated to higher passenger footfalls at international airports and seaports, fueling sales of tax-free goods. The trend is expected to continue with international tourist arrivals projected to reach 1.8 billion by 2030, providing lucrative opportunities for duty free retailers worldwide.
SWOT Analysis
- Strength: Duty free retailing offers lower prices compared to regular retail stores, which attracts more customers. It also delivers exclusive and unique products not easily available elsewhere.
- Weakness: Duty free retailers have limited control over geopolitical and economic conditions of regions which can impact tourism and travel. Strict regulations related to duty exemption limits also affect sales.
- Opportunity: Growth in global air passenger traffic and rise in international tourism provides new opportunities. Development of duty paid shops and stores within airports also expands business prospects.
- Threats: Risks from global economic uncertainties, political instability, epidemics and natural calamities impact travel and tourism sector negatively. Increased online shopping is also a threat as it provides budget-friendly options to travelers.
Key Takeaways
The global duty free retailing market is expected to witness high growth over the forecast period of 2023 to 2030 supported by revival of global tourism and travel industry post COVID-19 pandemic.
Regional analysis: Asia Pacific dominates the global duty free retailing market currently, contributing over 35% share. Countries like China, Thailand, Japan and Singapore have emerged as major regional hubs for travel and tourism and provide large customer base for duty free shopping. Europe holds the second largest market share and growth in Eastern European countries is projected to be fastest during forecast period.
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. The duty free retailing industry is quite concentrated with top players accounting for over 60% share. Brands are focusing on expanding product portfolio, improving customer experience through advanced digital technologies and strengthening presence across high traffic airports.
