Retail in Asia

In Markets

Positive outlook for duty free and travel retail industry

The duty free and travel retail community assembled in Singapore last month for TFWA Asia Pacific & GATE ONE2ONE, the annual conference and exhibition event. Theevent was larger and better attended than at any time in its 17 year history, evidence of the growth potential of the trade in the dynamic AsiaPacific region.

The global duty free and travel retail industry – the trade in premium and prestige products to travellers at the world’s international airports, on airlines, ferries, cruiselines and ports as well as at downtown and border duty free stores – is worth some USD46 billion in sales each year.

This revenue, and other non-aeronautical revenue streams such as advertising, food & beverage and car parking, is of immense importance to airports and to airlines. It not only provides vital funds for the maintenance and development of the airport facilities, its contribution to an airport’s coffers means that airport charges can be held down for airlines and consequently passenger fares can be kept down. It is estimated that 50 percent of an international airport’s revenue is derived from duty free, travel retail and other non-aviation activity. At Paris Charles de Gaulle airport, for example, commercial activities generate 60% of total revenues for the airport.

Similarly the international ferry sector, which fulfils an obvious need to transport goods and passengers, is supported to a large extent by commercial retail turnover.

In 2011 the Asia Pacific region outperformed Europe in duty free and travel retail sales for the first time since the industry was born over 60 years ago with sales of USD16billion, up 25.5 percent on 2010, according to independent industry analyst Generation Research.

Of the USD46 billion worth of global duty free and travel retail sales, 35 percent was generated in the AsiaPacific region, 34 percent in Europe, 23 percent in the Americas, 7 percent in the Middle East and 1 percent in Africa. Asia’s share of the pot has increased steadily over the last 10 years as its economies have experienced extraordinary economic growth.