Travel Retail Market Size Was Valued at USD 6802.40 Million in 2023, and is Projected to Reach USD 17018.26 Million by 2032, Growing at a CAGR of 10.34% From 2024-2032.
Dublin, Dec. 09, 2024 (GLOBE NEWSWIRE) — Travel retail involves selling products in duty-free areas such as airports, cruise terminals, and transit hubs, with a focus on customers who are traveling internationally. When bought for export, these items are not subject to taxes, providing a one-of-a-kind and attractive shopping opportunity.
Introspective Market Research has unveiled its latest market study, titled “Travel Retail Market,” providing a comprehensive outlook on the future of this premium delicacy. According to the report, the global Travel Retail Market was valued at USD 6802.40 million in 2023 and is poised for significant expansion, with projections indicating a climb to USD 17018.26 million by 2032. This anticipated growth represents an impressive CAGR of 10.34% from 2024 to 2032.
Travel retail is essential for generating significant revenue for the aviation, tourism, and maritime industries and is crucial for non-aeronautical income. Retail in airports is crucial, playing a major role in generating substantial income for airports. Travel retail plays a crucial role in the growth and development of airports, with an expected annual increase of 5% in the number of over 1 billion international travelers passing through them. Contemporary airport layouts now focus on creating large, interactive retail areas to improve traveler satisfaction and increase profits.
The main product categories in travel retail are fragrances and cosmetics (30% of sales), wines and spirits (17%), and accessories (15%), showing the range and attraction of duty-free shopping. This industry thrives on the consumer’s craving for lavishness and uniqueness, making it a crucial part of the travel experience. By merging online and physical store platforms, travel retail provides a fluid shopping experience, involving travelers throughout their trip. From looking online before leaving to buying in the terminal, this omnichannel strategy enhances interaction and increases revenue. In the end, the strategic significance of travel retail in improving traveler satisfaction and creating economic value highlights its importance within the larger travel industry.
The worldwide aviation industry is experiencing a strong comeback in 2024, as travel interest reaches levels seen before the pandemic, driving expansion in the travel retail sector. As per the World Economic Forum, the travel and tourism industry has recovered completely, making a substantial contribution to the global GDP, comparable to the levels seen before 2020. The Mastercard Economics Institute’s findings indicate a resurgence in consumer spending focused on travel and experiences, with more money being allocated to international trips.
Regional recovery is different, with Hong Kong and Macau airports at 55% of 2019 passenger levels, Singapore’s Changi Airport at 86%, and Malaysia’s airports at 78%. The increase in passenger traffic is leading airports to enlarge duty-free spaces in order to accommodate the growing number of international travelers. The 2024 ACI World Annual Airport Traffic Report predicts a 10% increase in worldwide passenger traffic, reaching 9.5 billion by the end of the year. By the middle of 2024, the number of passengers had exceeded levels seen before the pandemic, with a 17% increase in international traffic compared to the year prior.
The increase in passenger numbers is fueling the expansion of travel retail, with airports taking advantage of the greater visitor numbers and increased spending. Increasing the size of retail areas and offering a variety of products are important strategies to meet the diverse needs of travelers. Due to improved infrastructure and a rise in global travel, the travel retail industry is set to experience substantial growth as air travel continues to recover.
How Can Travel Retailers Overcome the Challenge of Increasing Digital Competition?
The growth of online competition is a major obstacle for the travel retail sector. With the growing number of consumers turning to online shopping, traditional brick-and-mortar travel retailers are under significant pressure to stay pertinent. Travelers are able to shop conveniently and at competitive prices from anywhere and at any time with the help of digital marketplaces and e-commerce platforms. This change has resulted in a decrease in the number of customers visiting physical travel retail stores in airports, cruise terminals, and border crossings.
Online travel retailers can use advanced algorithms and data analytics to provide customized shopping experiences, focused promotions, and flexible pricing options. Digital capabilities frequently surpass traditional offerings in physical travel retail locations. Furthermore, DTC brands and platforms are skipping traditional retail channels, causing a decline in market share for conventional travel retailers. In the digital world, travelers can easily compare prices and reviews, which results in increased price awareness and fewer impulse buys, important factors in travel retail sales.
In order to address these difficulties, conventional travel sellers are putting resources into omnichannel tactics, incorporating digital touchpoints to improve the in-person shopping experience. This comprises of mobile applications, click-and-collect services, and digital kiosks within the store. Nevertheless, the significant amount of capital required for these projects presents an additional obstacle, particularly for smaller companies.
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What Opportunities Does the Rising Demand for Luxury and Exclusive Products Present in the Travel Retail Industry?
The travel retail industry is quickly changing due to an increase in the desire for luxury and exclusive items as travel restrictions are lifted. Airports and retailers are taking advantage of this trend to appeal to wealthy shoppers looking for high-end products. By 2023, there was a significant increase in luxury retail sales to €1.51 trillion ($1.59 trillion), showing a remarkable growth of 11-13% from the year before. Millennials and Gen Z are the main catalysts behind this growth, currently representing 85% of the total increase in global luxury sales. It is predicted that by 2030, Gen Z will take over the luxury market, accounting for 85% of total sales and revolutionizing it with their focus on sustainability, hybrid shopping, and top-tier items.
As per a study from Lagardère Travel Retail, brands and airports are responding to these changing dynamics by adopting sustainable practices, developing mixed retail models, and improving consumer experiences with data-sharing programs. The research, which includes 58 airports and 150 brands in 27 countries, highlights the industry’s dedication to change. This partnership seeks to create a livelier, enduring, and interconnected travel retail environment, in accordance with changing consumer demands.
The sector plans to take advantage of increasing interest, especially from environmentally conscious younger travelers, by offering distinctive and high-end luxury items. Travel retailers can succeed in a tough market by combining innovation and sustainability to provide specialized experiences that appeal to the next generation of luxury shoppers.
Key Manufacturers Market key players and organizations within a specific industry or market that significantly influence its dynamics. Identifying these key players is essential for understanding competitive positioning, market trends, and strategic opportunities.
LVMH Moët Hennessy Louis Vuitton (France)
Dufry AG (Avolta) (Switzerland)
Lagardère Travel Retail (France)
King Power Corporation (Thailand)
Aer Rianta International (Ireland)
Lotte Duty Free (South Korea)
Gebr. Heinemann SE & Co. KG (Germany)
CTG Duty Free (China Tourism Group) (China)
DFS Group Ltd. (Hong Kong)
The Estée Lauder Companies (USA)
Avolta AG (Switzerland)
Duty Free Americas, Inc. (USA)
Weitnauer Group (Switzerland)
Hudson Group (USA)
Otis McAllister & Co. (USA)
International Shoppes (USA)
3Sixty Duty Free (USA)
London Supply Group (Argentina)
Harding Retail (United Kingdom)
The Shilla Duty Free (South Korea)
Dubai Duty Free (UAE)
Cancun Duty Free (Mexico)
Starboard Cruise Services (USA)
Global Sea Chandler (UAE)
Ship Chandler & Duty-Free Shopper, LLC (USA), and Other Active Players
In November 2024, Altavia Group has acquired Singapore-based ielo design agency, enhancing its presence in Southeast Asia and expanding its travel retail division. ielo design will integrate with Altavia Travel Retail, a platform offering strategy consulting, creative design, and implementation services to airport management, retail, F&B operators, and GTR brands. This acquisition strengthens Altavia’s Southeast Asia footprint with a new Singapore hub.
In November 2024, E23 Retail and DRP have announced a strategic partnership aimed at transforming data-driven strategies in the travel retail industry. This collaboration combines E23 Retail’s AI-powered campaign optimization with DRP’s expertise in SKU-specific pricing data and retail intelligence, offering enhanced audience measurement, sales forecasting, and campaign execution for duty-free operators and brands. The partnership is set to drive efficiency, precision, and ROI in travel retail, supporting post-pandemic recovery and growth through innovative data solutions.
In September 2024, Paul Smith, Britain’s renowned independent design brand, has appointed Newmark’s Travel Retail team to lead its expansion in the travel retail market. The partnership aims to introduce Paul Smith’s iconic “classic with a twist” style to new audiences through airport duty-free and cruise retail outlets.
In April 2024, Amber Beverage Group (ABG) and Distribution Spirits Company (DISC) have expanded their strategic partnership to exclusively distribute ABG’s products in the Americas Duty Free Channel. This move builds on their successful Caribbean collaboration, aiming to bring premium brands like KAH Tequila, Rooster Rojo Tequila, The Irishman Whiskey, Writers’ Tears Whiskey, and Moskovskaya Vodka to discerning travelers.
The Beauty & Personal Care sector will be the leading segment in the worldwide travel retail market in the upcoming period. Sales of fragrances and cosmetics make up a substantial 30% portion, fueled by the increasing popularity of niche fragrances. In 2023, there was a 42% rise in sales from specialty perfumes at Istanbul Airport, making up 20% of the fragrance market. This increase shows a rising demand from travelers for distinct, premium items.
There is also promising growth in the skincare sector. Despite skincare sections being visited by only 8% of passengers in duty-free shops, 39% of these visitors end up buying something, spending an average of $95. Skincare consumers frequently engage in buying products from different categories, with 33% purchasing perfumes, 18% selecting chocolates and confectionery, and 16% buying makeup. This pattern indicates that consumers purchasing skincare products may also be interested in exploring different product categories, thereby boosting total sales.
After Beauty & Personal Care, wines and spirits hold a market share of 17%. Duty-free shoppers are attracted to these products which include high-quality alcohol options, with watches and jewelry comprising 15% of the market. These accessories are designed for travelers seeking high-end luxury items and gifts. The diverse appeal of travel retail is highlighted by the mix of niche fragrances, high-value skincare, premium alcohol, and luxury accessories, with beauty and personal care products playing a key role in influencing shopper behavior and market trends.
By Location:
The airport sector is expected to lead the global travel retail market due to the rise in international passenger traffic and the considerable purchasing ability of travelers. In 2023, airports dominated most of the market share with global passenger traffic reaching 8.7 billion, a 31% rise from 2022 and returning to 95% of pre-pandemic levels in 2019. The main driver of this expansion is a 42% increase in international passenger numbers, which surpassed the growth of domestic traffic.
It is estimated that by the year 2024, the total number of passengers worldwide will increase to 9.7 billion, with approximately 4 billion of those being international travelers. The increase is projected to result in substantial revenues in airport retail, as duty-free and luxury shopping remain popular among customers, especially in large hub airports. Other travel retail sites like trains, duty-free stores at borders, and cruise ships are seeing slower growth because they have fewer passengers and fewer retail options available. Moreover, airplane activities, which are an important measurement of retail customer traffic, are expected to increase from 98.2 million in 2023 to 106.7 million in 2024. This rise emphasizes the significant expansion in airports and showcases their importance in the travel retail sector. The dominance of airports in the travel retail segment will be sustained by high passenger turnover and the continued demand for premium products, further establishing them as the primary destination for travel shopping.
The Asia-Pacific region is poised to dominate the global travel retail market, driven by a surge in tourism, a growing middle class, and rising disposable incomes. Projected to reach $108 billion by 2029, the region is expected to grow at an annual rate of 8.1%. Key contributors to this growth are China and India, supported by significant infrastructure investments and evolving consumer spending patterns.
China’s travel retail market is set to reach $86 billion by 2025, driven by domestic tourism policies and high demand in destinations like Hainan Island, where duty-free sales hit $10 billion in 2023. India’s market, valued at $2.03 billion, is forecasted to grow at a remarkable 21.59% CAGR, reaching $5.4 billion by 2029. Indian airports, such as those in Mumbai and Delhi, play a critical role in this growth. Mumbai’s passenger volume has already exceeded pre-pandemic levels by 10%, reflecting the resilience of the market.
By 2030, Asia is expected to account for over 50 million international departures from India alone. Airbus projects that passenger flows in Asia will grow two to three times faster than in Europe and North America, reinforcing the region’s dominant position in global travel retail. The influx of passengers provides a strong customer base, ensuring Asia-Pacific’s leadership in the sector for years to come.
Comprehensive Offerings:
Historical Market Size and Competitive Analysis (2017–2023): Detailed assessment of market size and competitive landscape over the past years.
Historical Pricing Trends and Regional Price Curve (2017–2023): Analysis of historical pricing data and price trends across different regions.
Market Size, Share, and Forecast by Segment (2024–2032): Projections and detailed insights into market size, share, and future growth by segment.
Market Dynamics: In-depth analysis of growth drivers, restraints, opportunities, and key trends, with a focus on regional variations.
Market Trend Analysis: Evaluation of emerging trends that are shaping the market landscape.
Import and Export Analysis: Examination of trade patterns and their impact on market dynamics.
Market Segmentation: Comprehensive analysis of market segments and sub-segments, with a regional breakdown.
Competitive Landscape: Strategic profiles of key players across regions, including competitive benchmarking.
PESTLE Analysis: Evaluation of the market through Political, Economic, Social, Technological, Legal, and Environmental factors.
PORTER’s Five Forces Analysis: Assessment of competitive forces influencing the market.
Industry Value Chain Analysis: Examination of the value chain to identify key stages and contributors.
Legal and Regulatory Environment by Region: Analysis of the legal landscape and its implications for business operations.
Strategic Opportunities and SWOT Analysis: Identification of lucrative business opportunities, coupled with a SWOT analysis.
Conclusion and Strategic Recommendations: Final insights and actionable recommendations for stakeholders.
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