The global duty free retailing sector is forecast to grow at a CAGR of 8.56% during the period 2017-2021, according to market research firm Technavio.
In its report, *Global Duty-Free Retailing Market 2017-2021, key drivers of industry growth include excise duty exemptions and a concentration on premium product offerings.
Fashion goods, accessories, hard luxury items, cosmetics and fragrances accounted for 64.3% of total revenue generated in the global market last year, indicating that premium categories continue to play a leading role in driving sales.
Meanwhile, a lesser focus on shopping at travel points is identified as a market challenge, the report continues.
“The limited vacation time for many tourists compels them to focus more on travelling rather than spending time on related activities like shopping,” a report summary reads.
“While analysing the daily footprint data of travellers in any given busy international airport, it was found that only 5%-10% of the total number of travellers tend to visit duty-free retail stores within the airport.”
Duty free and travel retail sales in Asia Pacific grew 10% in the first nine months of 2016 to maintain positive figures for the global market, according to preliminary figures from Generation Research made available on behalf of TFWA.
APAC SPEARHEADS GROWTH
This correlates with Technavio’s assessment of Asia Pacific cementing its status as the fastest growing region, bolstered by increasing airport traffic and a thriving tourism industry.
“In 2015, the number of international travellers to the region, in terms of international tourist arrivals, reached above 279 million,” notes the report summary.
“This number represented a growth of more than 5.5% compared with the previous year. Northeast Asia is the largest contributor, having close to [a] 50% contribution of the number of international travellers. In line with this, the tourism industry in APAC is also growing significantly.”
Unsurprising, South Korea, China, Hong Kong, Singapore and Thailand are key markets for growth, buoyed by rising numbers of Chinese travellers who contributed nearly 30% to global duty free market revenues in 2016.
Airports were the highest revenue generators during 2016 and are set to continue dominating sales for years to come as operators pledge more commercial space to increase their non-aeronautical revenue streams from retail.
(Source: Travel Retail Business)