Travel Retail Market Overview and Definition

The global travel retail market was valued at USD 61.06 billion in 2023 and is projected to grow from USD 65.31 billion in 2024 to USD 148.05 billion by 2032, exhibiting a CAGR of 10.34% during the forecast period.

Travel retail refers to the sale of goods and services to travelers in locations primarily associated with travel hubs, such as airports, seaports, train stations, and border crossings. It operates within duty-free and duty-paid environments, offering tax-free or reduced-tax products to domestic and international travelers. The sector encompasses various products, including cosmetics, fragrances, alcohol, tobacco, fashion, and confectionery.

MARKET DYNAMICS

Market Drivers

Rapid Evolving Travel & Tourism Industry to Favor Market Expansion

The rapidly growing travel and tourism industry worldwide fuels market growth. For instance, according to the World Travel & Tourism Council (WTTC), in 2023, the Travel and tourism sector contributed 9.1% to the global gross domestic product (GDP), an increase of 23.2% from 2022. Moreover, increasing public and private sector investments in developing travel and tourism infrastructure will propel market growth further. The rise in foreign direct investment (FDI) globally has boosted tourism infrastructure and generated employment opportunities.

Rising Number of Travelers Across Countries to Fuel Market Growth

Increasing global air passenger traffic, driven by affordable flights, growing middle-class populations, and rising disposable incomes, is boosting the demand for travel retail. Moreover, airports, in particular, have become key retail hubs, providing travelers with exclusive shopping experiences. Furthermore, the rising number of international tourist arrivals worldwide owing to the rising popularity of international destinations and the presence of a diverse range of tourism offerings, including historical landmarks, luxury hotels & resorts, adventure tourism, and eco-tourism propels the market growth.

Market Restraint

High Product Pricing Coupled with Strict Baggage Rules to Restrain Market Growth

 The rise in strict baggage rules across all the countries is restraining the market growth. For instance, Air India has restricted the weight of the hand luggage carried by the passengers. Free allowances for hand luggage are limited to 8kg for Air India and 7 kg for its budget Air India Express inclusive of duty-free items. Turkish Airlines does not allow handbags of more than 8 kg while luggage is limited up to 32 kg. Lufthansa permits its passengers to carry baggage allowances of not more than 32-40kgs. Moreover, limited passenger dwell time refers to the time passengers spend within airport terminals between arrival and departure. This dwell time is crucial for several businesses within the travel retail market, including duty-free stores, restaurants, duty-paid stores, and lounges.

Market Opportunity

Growing Number of Airport Construction to Offer Growth Opportunities

Airports are one of the most essential economic development factors for cities, countries, and regions. They provide services to moving passengers, airlines, and transporting cargo which directly contributes to the growth of the economy. Governments across countries are launching new airports and expanding current airports with enhanced shopping experiences for passengers, offering lucrative growth opportunities for companies. For instance, in September 2024, Oman's Civil Aviation Authority (CAA), a government agency, announced to building of three airports across its prominent tourist destinations, including Masirah Island, Suhar, and Al Jabal Al Akhdar.

TRAVEL RETAIL MARKET TREND

Growing Trend of Sustainability to Fuel Market Growth

The increasing environmental awareness among individuals and companies increasing focus on sustainable practices as part of their corporate social responsibility (CSR) fuels the demand for eco-friendly products. Travelers are increasingly aware of the environmental impact of their purchases, leading to a rising demand for sustainable and eco-friendly products in travel retail stores. Moreover, airports and travel hubs are embracing sustainable practices in their retail environments by adopting energy-efficient lighting, reducing single-use plastics, and promoting recycling programs.

Asia Pacific Travel Retail Market Size (USD Billion), 2019-2032

IMPACT OF COVID-19

The sudden outbreak of COVID-19 badly affected the global economy. COVID-19 was a public health emergency that transformed lives and businesses and significantly changed the retail sector. Moreover, the market experienced significant financial downturns due to the unexpected halt in global travel. Airport retailers faced plummeting sales owing to the majority of flights being grounded and international travel restrictions enforced by governments across countries. According to the Airports Council International (ACI), a global association of airports, global passenger traffic declined from 9.2 billion passengers in 2019 to 3.6 billion passengers in 2020, with a decline of over 61%.

SEGMENTATION ANALYSIS

By Type Analysis

The market is categorized into cosmetic & fragrances, wines & spirit, confectionery & fine foods, tobacco products, fashion & accessories, and others, based on type. The cosmetics & fragrances market dominated the market in 2023 owing to wide product availability and rising disposable income across countries. Moreover, rising beauty-consciousness among individuals coupled with increasing popularity of friendly and ethically produced cosmetics fuels the segment’s growth. Several prominent market players are focusing on new launches and stores to diversify their portfolios and strengthen their presence. For instance, in October 2024, SK-II, a Japan-based skincare brand, launched its first travel retail flagship store at the Sanya International Duty-Free Shopping Complex in Hainan. According to the company, the store also features a golden LXP Experience, displaying SK-II’s most luxurious and crafted skincare series.

The wines & spirits segment is expected to grow significantly throughout the forecast period owing to the rising availability of travel-exclusive products. Wines and spirits are gaining significant popularity as gifts, particularly among business travelers and tourists. Moreover, lower pricing of wines and spirits in travel retail due to the absence of taxes & duties that are typically imposed in domestic markets and the expansion of duty-free retail spaces is expected to propel the segment’s growth in the coming years.

By Sector Analysis

The market is bifurcated into duty-free and duty-paid, based on sector. The duty-free segment dominated the market in 2023. Duty-free stores offer tax-exempt pricing, allowing travelers to purchase luxury items, alcohol, tobacco, perfumes, and cosmetics at reduced prices. Moreover, alcohol and tobacco products are often subject to high taxes in most countries. Duty-free stores offer substantial discounts on these items, making them highly attractive to travelers who want to stock up on their favorite brands while saving on taxes. Furthermore, duty-free stores often run seasonal promotions, discounts, and special offers, adding to the attractiveness of their already tax-free products, and boosting product demand among budget-conscious consumers.

The duty-paid segment is expected to grow steadily throughout the forecast period owing to the availability of a diverse range of products, including alcohol, tobacco, beauty products, electronics, apparel, and food at duty-paid stores with attractive price offers. Moreover, rising consumer disposable income and improving economic conditions are also significant factors driving the segment’s growth. Furthermore, airport operators worldwide are expanding or modernizing their terminals, providing opportunities for duty-paid travel retail stores. In addition, the rising number of international travelers drives the demand for duty-paid retail stores in airports, seaports, and border points.

By Sales Channel Analysis

The market is categorized into airport & airline shops, seaport & cruise line shops, border downtown hotel shops, railway stations, and others, based on distribution channel. The airport & airline shops owing to wide product availability and rising number of travelers worldwide. Moreover, various prominent players are focusing on launching new stores across airports. For instance, in June 2022, Gebr., Heinemann SE & Co. KG, a German company operating a chain of duty-free shops, earned the license (tender) to operate four travel retail and duty-free shops at Düsseldorf Airport. According to the company, the stores will provide an array of product categories such as tobacco, watches & jewelry, perfume & cosmetics, confectionery, and liquor. 

The seaport & cruise line shop segment is expected to grow considerably in the coming years due to the increasing number of passengers traveling from cruises as it provides an opportunity to visit multiple destinations and offers a variety of onboard activities. This factor further provides revenue generation opportunities to seaport and cruise line shop owners and enhances segmental growth. According to the Cruise Lines International Association (CLIA), the total number of ocean-going cruise passengers increased from 20.40 million in 2022 to 31.70 million in 2023.

TRAVEL RETAIL MARKET REGIONAL OUTLOOK

The market is studied across North America, Europe, Asia Pacific, South America, and the Middle East & Africa.  

Asia Pacific region dominated the market in 2023 owing to rising tourism in various countries including Hong Kong, Japan, Thailand, India, Australia, and Vietnam boosting the number of domestic & international tourists. For instance, according to the Hong Kong Tourism Board (HKTB), a government agency, there were visitor arrivals of 34 million in 2023. Moreover, duty-free stores are a major attraction for travelers, especially among budget-conscious travelers seeking tax exemptions and exclusive products. The popularity of duty-free shopping has grown significantly, with retailers offering competitive prices, limited-edition products, and a wide range of premium brands.

Europe region is expected to grow significantly throughout the forecast period. Europe remains one of the most popular tourist destinations worldwide, with various countries, including France, Switzerland, Spain, Croatia, and Italy attracting millions of international visitors annually. The continuous increase in tourism is a significant driver for the travel retail market, particularly in airports and tourist hubs. For instance, according to the United Nations World Tourism Organization (UNWTO), a government agency, there were 700.4 million international tourist arrivals to Europe in 2023.

Competitive Landscape

KEY INDUSTRIES PLAYERS

The competitive landscape of the global travel retail market offers insights into various prominent competitors. This includes an overview of each company, their financial performance, revenue generation, market potential, investments in research & development, new initiatives, SWOT analysis, product & brand portfolios, product launches, and mergers & acquisitions. The analysis provided focuses specifically on the companies' engagement within the travel retail market.

List of Key Companies Profiled in the Report

• AVOLTA AG (Switzerland)
• Lagardère Travel Retail (France)
• Lotte Duty Free (South Korea)
• Heinemann Duty Free [Gebr. Heinemann] (Germany)
• China Duty-Free Group [CDFG] (China)
• The Shilla Duty-Free Shop (South Korea)
• DFS Group (Hong Kong)
• Shinsegae Duty-Free (South Korea)
• Shiseido Travel Retail (Singapore)
• King Power International (Thailand)

KEY INDUSTRIES DEVELOPMENT:

August 2024: Shila Duty-Free, a South Korea-based travel retail company, launched its new 316 sq.m. cosmetics brand flagship store at Incheon International Airport. South Korea. According to the company, the new store will feature six brands: Chanel, Dior, Estée Lauder, Lancôme, SK-II, and Sulwhasoo.

September 2024: DFS Group, a Hong Kong-based travel retailer, launched SirDavis, the U.S.-based whisky brand, at DFS duty-free shops in select U.S. airports, including John F. Kennedy International Airport (JFK), Los Angeles International Airport (LAX), and San Francisco International Airport.

March 2023: China Duty-Free Group (CDFG) partnered with Lancôme Travel Retail Asia Pacific to launch the Lancôme Blooming Rose campaign at CDF Haikou International Duty-Free Shopping Complex. The pop-up is themed Together We Bloom into Happiness and invites travelers to try out its best-sellers.

October 2022: Dufry, a Swiss-based travel retailer, launched its new global shop-in-shop concept, Mind, Body & Soul, at QAIA (Queen Alia International Airport Jordan, to cater to growing consumer interest in purchasing healthier and more sustainable products. According to the company, the new store will offer nutritious products for health-conscious customers alongside sustainable products for a better environment.

August 2021: Emirates RED duty-free launched a pre-order duty-free service to consumers from the airline’s Emirates RED duty-free catalogue. The consumers can purchase duty-free retail items before they fly, and Emirates crew deliver their pre-ordered duty-free items directly to their seats.

REPORT SCOPE & SEGMENTATION

Report Coverage 

The travel retail market report offers a comprehensive analysis, focusing on key elements such as leading players, regional and market segmentation, types, sectors, sales channels, and competitive dynamics. The report also delves into emerging market trends and sheds light on major developments within the industry. Furthermore, it explores various factors that have driven market growth in recent years, providing valuable insights into the overall market landscape.