Travel Retail Market Size, Share & COVID-19 Impact Analysis, By Product Type (Cosmetic & Fragrances, Wines & Spirit, Confectionery & Fine Foods, Tobacco Products, Fashion & Accessories, and Others), Sector (Duty Free and Duty Paid), Sales Channel (Airport & Airline Shops, Seaport & Cruise line Shops, Border Downtown Hotel Shops, and Others) and Regional Forecasts, 2023-2030

The global travel retail market size was valued at USD 55.74 billion in 2022 and is projected to grow from USD 60.72 billion in 2023 to USD 117.18 billion by 2030, exhibiting a CAGR of 9.85% during the forecast period.  

A growing number of millennial and middle-income traveler groups are offering immense opportunities to grow international retailing businesses. Nowadays, retail businesses keep food stations, bookshops, bars, and conference spaces decorated to maintain their shops attractive. Additionally, they maintain high-quality merchandising displays to capture travelers' attention towards buying their products. In November 2021, Bentley Leathers Inc., a Canada-based travel accessories manufacturer, launched a travel-focused retail store concept targeting airports and other travel platforms to offer a wide range of travel items, including travel bags, luggage etc. The store was initially opened in Montreal-Pierre Elliot Trudeau International Airport and aimed to expand in Canada and beyond. In this respect, key retail store innovation concepts will increase the global travel retail market share in the forthcoming years.

COVID-19 IMPACT

Rising Popularity of Anxiety-Reducing Products Boosted Market Growth Amid COVID-19

To minimize coronavirus infection spread, governments worldwide imposed lockdown and other travel restrictions, most notably in 2020. This factor has significantly lowered the number of air and marine travelers, threatening the overall travel & tourism industry. As per the data published by International Airport Transport Association (IATA), from 2009 to 2019, international travels had fallen below the yearly rate of 5.5%.

Nowadays, passengers prefer wellness-related products to maintain their health during the pandemic. This factor will offer duty free retailers newer opportunities to offer personalized products. Rising consumer demand for personal protection equipment (PPE) and products such as sanitizers, face masks, gloves, and others amid the pandemic will create newer avenues for Duty Free retailers' business growth. Furthermore, the growing popularity of anxiety-reducing items among air passengers will accelerate the industry growth amid the COVID-19 pandemic. For instance, in 2020, Essence Corp, a Miami U.S.-based retail distributor for Bath & Body Works (BBW), reported a 41% jump in its retail sales from the bath and body works.

LATEST TRENDS

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Sustainable Duty-Free Shopping Trend to Boost Market Development

Nowadays, travelers prefer buying sustainably made duty free products to avoid the environmental impacts due to the usage of non-biodegradable items. This key trend has pushed airport retailers to adopt sustainable business practices such as waste recycling & reduction, biodegradable packaging, and ethical raw material sourcing activities. This factor will create newer avenues for market growth. As per the recent study by the Tax-Free World Association (TFWA) in July 2020, 70 % of the 2,456 consumer participants worldwide were influenced by sustainability practices while purchasing a product during travel. 

In addition to the factors mentioned earlier, retailers are implementing a customer-driven approach to sell their products and services online and increase their sales revenues. For instance, In July 2021, 3Sixty Digital Ltd. partnered with Virgin Atlantic Airways Ltd. to rollout Omneveo, an Omni-Channel retail platform that helps retailers uplift their customers' online shopping experience. Through such a digital shopping portal, passengers can better shop for products as per their requirements while doing in-flight and onboard activities, positively influencing market trends.

DRIVING FACTORS

Rising Number of International Travelers to Drive Market Growth

The increasing number of domestic and international travelers will increase the product demand, driving the market growth over the forecast period. As per the report 'Indian Tourism and Hospitality Industry Analysis,' published by the Indian Brand Equity Foundation (IBEF), in 2019, there were 10.89 million foreign tourist arrivals in India, a 3.2% up over the previous year. Nowadays, retailers offer personalized loyalty programs & deals to meet changing shopping habits of air passengers. This factor helps retailers build their revenues from Duty Free products thus fueling market growth.

Besides, rising millennial populations' spending on travel and tourism will upsurge the product revenues. Besides, rising millennial populations' spending on travel and tourism will upsurge the product revenues. For instance, as per the World Travel and Tourism Council (WTTC) data in November 2021, the French travel and tourism sector has surged by 34.9 % in 2021.

Continual Provision of Duty-Free Campaigns by Retailers to Upsurge Product Demand

Nowadays, key companies launch promotional campaigns to encourage consumers to buy Duty Free products. Additionally, they continuously offer high-quality, privately labeled products and services to delight higher-income airport traveler groups. These factors will support the airport retail shops' product revenues. For instance, in November 2021, Mumbai Duty Free partnered with Flemingo and Adani Airport Holdings to unveil a fully digitalized flagship campaign, 'Mumbai Duty Free is Now Free Campaign.' India. This campaign was re-launched to make use of a new digital approach of barcode scanning for vouchers and ensure customers with safe and contactless access to products.

RESTRAINING FACTORS

High Product Pricing to Hinder Market Augmentation 

The majority of the products sold by retailers are high-quality & branded. This factor enables retailers to sell travel goods at higher prices, thereby limiting the product demand among lower disposable income level traveler groups. Additionally, limited customer awareness regarding new product launches and upgrades create a barrier in purchasing commodities, restricting the travel retail industry growth.

SEGMENTATION

By Product Type Analysis

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Cosmetic & Fragrances Segment to Hold a Dominant Share Due to Surging Demand from Females

By product type, the global market is segmented into cosmetic & fragrances, wines & spirits, confectionery & fine foods, tobacco products, fashion & accessories, and others. The cosmetics segment holds a major market share due to the growing interest of females and millennials in internationally acclaimed brands that are difficult to find in their native locations. Also, the tax-free pricing of perfumes and high fashioned apparel ensures their purchase as a gifting accessory without import prices, thus surging the segment expansion.

The retailers showcase multiple collections and brands under one roof, making it easy to purchase for travelers. The branded cosmetics and fragrances companies appeal to a broader consumer base with their customer-friendly business policies. Also, retailers offer customer-friendly policies for all kinds of products merchandised in their shops.

In the case of wines & spirits, the industry has an estimated progressive growth as travelers passionate about international liquor brands. They usually purchase luxurious Duty-Free liquor brands from wine retailers to kill waiting time in airports. Nowadays, international liquor brands such as 'Macallan (The Macallan Global Boutiques), Dalmore (Dalmore Store), etc. mainly focus on selling their products through airport shops and cruise lines to increase travelers' accessibility. Such a factor is further supporting the product revenues from the wines & spirits segment.

Fashion & accessories segment is likely to achieve substantial growth during the forecast timeline, as fashion products are notably popular among celebrities and sportspersons. Fashion retailers focus on specializing in the niche marketing approach to attract an array of customers with similarities in purchasing behavior related to sports kits, musical equipment, and beauty cosmetics.

The growing popularity of innovative e-cigarettes of different sizes and shapes will increase consumer demand for such products at airports and cruises, driving segmental revenues for tobacco products. However, airlines and maritime stores' smoking-related prohibitory rules will limit the tobacco product demand among travelers, thereby declining the tobacco products' segmental growth.

Confectionery & fine food products are among the fastest-selling categories of food products that have gained transaction among youngsters and millennials. The bright and attractive displays of cartoon characters are a great way to cater to customers at the door. The stickers and fun displays with customizable wall arts create lucrative demand from youngsters. Chocolates and other confectionery retailers try to raise their presentation and create innovative ways to enlighten the mindsets of youngsters, bringing new growth opportunities for the segment.

The others segment includes watches, jewelry, fine arts, electronic items, and gift items, which are also expected to witness noticeable demand during the forecast period. These items are purchased by travelers through unique online applications to earn rewards and points, which raises the customers' thirst to acquire more products from such deals.

By Sector Analysis

Duty Free Shopping to Gain Significant Momentum Due to VAT Benefits

By sector, the global market is segmented into duty free and duty paid. The Duty Free segment holds a major share due to its value-added tax benefits over its counterpart. Nowadays, cosmetic companies such as L'Oréal, Estee Lauder Inc., and others increasingly focus on selling their products through Duty Free shops to boost sales. Such a factor will fuel the Duty Free segmental growth. Additionally, the rising number of international travelers and their demand for Duty Free products will accelerate segmental revenues. As per the data presented by the Centre for Asia-Pacific Aviation (CAPA), in 2021, the total gross Duty Free spending at Indian airports will reach USD 1.6 million by 2021.

The duty paid sector is also likely to witness growth in demand as the duty-paid retailers are taking multi-channel strategies and customer-driven solutions to sell their products. The retailers are focused on catering to a wider consumer base by launching apps to gather online information to create a curated shopping experience based on specific interests. Through expansions and tie-ups with domestic airports, selling high-quality and high-priced products will allow the retailers to upgrade their services and establish a competitive edge in the global industry.

By Sales Channel Analysis

Rising Number of Airport & Airline Shops to Augment Segment Growth

According to sales channel, the market is arrayed into airport & airline shops, seaport & cruise line shops, border downtown hotel shops, and others.

The airport & airline shops' segment holds a major share owing to the continual provision of customer-centric cosmetic and beverage products by airport retailers. This factor results in significant revenue generation from the airport segment. Furthermore, the in-flight Wi-Fi experience offers a seamless online shopping experience to the air passengers, thereby surging the segmental revenues. According to the International Civil Aviation organization data, the number of departures internationally rose by 1.7% from 2018 and reached 38.3 million in 2019.

Recently, worldwide train transportation services witnessed a considerable surge in passenger bookings. This factor will increase the train passengers' demand for such products, thereby resulting in others' segments generating considerable product revenues. As per the statistics from Indian Railways, there is an increase of 113% in earnings from passenger segments during the second quarter of 2021 compared to the first quarter. Thus, greater passenger bookings across railway stations provide potential growth opportunities for train retail services to boost passenger traffic, favoring the global travel retail market growth.

Border downtown hotel shops are gaining neutral demand as these shops create revenue for small businesses to sustain in a competitive environment and create jobs for the locals. These retailers don't charge high taxes, and customers can access various products. However, these retail channels are key for the global market forecast as they typically witness a steady flow of shoppers yearly.

Seaports & cruise line ships have steadily witnessed footfall in retail and duty free outlets and are anticipated to grow considerably during the 2023-2030 period. The growing number of workers involved in shipping cargo through the marine routes has boosted the demand among seaport retailers. Also, the surging number of travelers following the sea routes is estimated to create opportunities for cruise line shops. As per the data from Cruise Lines International (CLIA), 28 million people traveled through the ships and cruises in 2018 and will likely cross the 30 million mark in 2019.

REGIONAL ANALYSIS

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The worldwide tourism retail sector is segregated into the North America, Europe, Asia Pacific, South America, and Middle East & Africa regions.

Asia Pacific market was valued at USD 28.32 billion in 2022. A significant number of domestic and international travelers spend on duty Free products in China, India, and South Korea, resulting in the Asia Pacific region dominating the global industry in Duty Free retail. The adoption of cheap travel tours by companies in the Asia Pacific region, including MakeMyTrip, Yatra, and others, has facilitated customer traffic rates in booking, generating new growth opportunities for the travel operators to expand their businesses. 

Nowadays, duty Free retailers establish partnerships with Asian domestic and international airports to expand their businesses in Asia. This factor will further increase the Asia Pacific region's market growth rate. For instance, in May 2019, King Power International Group signed an agreement with Suvarnabhumi Airport (Bangkok Airport) to increase its Duty Free retailing business in Thailand.

The Europe market will grow considerably due to growing travel & tourism-related infrastructural settings such as hotels & restaurants, amusement parks, etc. As per the estimated data published by the CBI Ministry of Foreign Affairs, the total European tourism comprising air, land, and sea travel out of Europe accounted for 496 million trips in 2019. Also, the region's tourism and travel trips generated 35% of the international tourism expenditure in a similar period. Additionally, the robust presence of luxury goods brands such as 'Dufry AG, Aer Rianta International, and Lagardere Group result in considerable product revenues in the region.

Increasing U.S. and Canadian spending on travel & tourism is mainly supporting the North America industry's growth. According to the statistical data presented by U.S. Travel Organisation, in 2019, U.S. domestic and international travelers' spending reached USD 1,127 million. Also, the increase in the purchasing capacity of individuals has boosted regional growth.

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Saudi Arabia and UAE's rising middle-income population groups mainly support the Middle East & Africa retail sector. Nowadays, Brazilians prefer buying high-quality apparel and cosmetic goods at domestic duty-paid shops. Such a factor will provide an increase in the product demand among Brazilians. Furthermore, the growing number of airport retailers in Brazil and Chile will increase the number of air passengers driving regional growth.

KEY INDUSTRY PLAYERS

Business Expansion through E-commerce is Key Strategy Fueling the Industry

Major key players such as Dufry AG, Shilla Duty Free shop, and others focus on capturing consumer buying behavior and offering personalized retailing goods to the customers to gain a competitive edge globally. Additionally, they continuously introduce sales promotional offers to attract buyers towards their products. For instance, in September 2020, Malaysia Airports Holdings Berhad introduced an e-commerce platform, 'shopMYaiports,' to facilitate revenue amid the disruptions caused due to the pandemic. The e-commerce platform also offers free delivery with a minimum order amount of USD 71.65 to elevate the digital purchase experience.

LIST OF KEY COMPANIES PROFILED:

• Lagardere Travel Retail (Lagardere Group) (France)


• DFS Group Ltd. (Hong Kong)


• Dufry AG (Switzerland)


• King Power International Group (Thailand)


• Aer Rianta International (Ireland)


• The Nuance Group AG (Switzerland)


• Lotte Duty Free (Lotte Hotel) (South Korea)


• Gebr. Heinemann SE & Co. KG (U.S.)


• Duty Free China Group Co. Ltd. (CDFG) (China)


• Samsung Group (South Korea)

KEY INDUSTRY DEVELOPMENTS:

• January 2023: Ritter Sport, a German chocolate bar brand, announced plans to expand its vegan product range with the launch of its Travel Retail Edition Vegan Tower 5x 100g set worldwide in March 2023. The new product is available in three ranges of non-dairy chocolate in a five-pack. The travel edition assortment flavors include Smooth Chocolate, Salted Caramel and the new Roasted Peanut.


• January 2023: Lotte Duty Free, a South Korean company, opened a store for NONFICTION, a South Korea-based beauty brand. Marking the launch, the company offered consumers free goods offline and online when purchasing NONFICTION products.


• January 2023: Lagardère Travel Retail Belgium and Atos (a French IT service and consulting company) partnered to launch an automated Duty Free point of sales at Brussels Airport. The companies launched the automated POS to offer travelers a new and unique travelling experience.


• February 2021: Hudson Group, a Dufry AG-owned retailing company, launched Amazon One, a technology-enabled store at Dallas Love Field Airport (DAL), to offer users an enhanced in-store shopping experience.


• December 2021: Servy, a hospitality platform, partnered with Inflyter, a retail tech company, to develop an e-commerce platform that provides a digital shopping experience to airport travelers.

REPORT COVERAGE

An Infographic Representation of Travel Retail Market

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The travel retail industry research report analyzes the market in-depth and highlights crucial aspects such as prominent companies, product types, sectors, sales channels, and regional areas. Besides this, the report providesmarket outlooks and insights into the latest trends and highlights significant industry developments. In addition to the aspects mentioned above, the report encompasses several factors contributing to the industry's growth over recent years.

Report Scope & Segmentation