Duty free retailing refers to the sale of goods without paying any import taxes. Products available at duty free shops include perfumes, cosmetics, tobacco & liquor. These outlets are mainly located at international airports, sea ports and borders. The growth in international travel and tourism has been a key driver of growth for this market. Internationally, people get attracted to duty-free shops due to availability of original branded products at discounted prices. This enables consumers to buy premium goods at lower costs. 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:
One of the key trends witnessed in the global duty free retailing market has been the growth in experiential retailing. Customers now expect an enjoyable shopping experience beyond simple transactions. Players in this market are focusing on offering engaging experiences to customers through unique product displays, interactive digital signage and personalized customer services. They are transforming dull travel retail spaces into vibrant shopping destinations. Moreover, E-commerce is emerging as an important sales channel in this market. Several duty free retailers have established online platforms to cater to customers beyond physical store locations. This allows customers to pre-book products online which can be collected from airport stores during transit. Such developments are positively impacting the overall growth of the duty free retailing market.
Threat of new entrants: The duty free retailing market requires large investments in infrastructure and distribution networks. Established brands have strong foothold and regulations governing this industry pose barriers to entry.
Bargaining power of buyers: Buyers have significant bargaining power due to availability of varied options. However, uniqueness of products available duty free attract customers.
Bargaining power of suppliers: A few major suppliers exist for different product categories in this industry. Suppliers rely on duty free retailers for large volumes and have moderate bargaining power.
Threat of new substitutes: Alternate shopping channels offer similar seamless shopping experiences without duty or tax. However, uniqueness of travel retail experiences and product assortment attract customer interest.
Competitive rivalry: Major players compete on basis of brand, product range, pricing and customer experience. Consolidation trends exist to gain scale and counter competition.
The global duty free retailing market is expected to witness high growth over the forecast period. Duty free shops located in airports are major revenue generators while growth in sea ports, land borders and downtown stores also contributes. Asia Pacific dominates duty free retailing led by China, South Korea and Japan. High passenger volumes, tourism growth and expanding retail infrastructure drives the region.
Regional analysis: Europe is another prominent region in this market led by strong performances from UK and Russia. Presence of major travel hubs and strong spending power of travelers supports growth. The air traffic in Middle East and Africa has been increasing in recent years propelling regional duty free sales across key destinations.
Key players: 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. Dufry AG is one of the largest global players and maintains leadership. Asian players like LOTTE expanding their footprint globally. Companies focus on enhancing digital and in-store experiences to appeal customers.