The global duty free market is expected to expand to US$64 billion by 2020, according to research from Verdict Retail. The retail analyst’s ‘Global Duty Free Retailing 2015–2020’ report predicts that the industry will outpace historic levels to expand at an annual CAGR of 6.7% between 2015–2020.
In that period, the global duty free market will generate US$17.8 billion in sales with Asia Pacific’s share of that reaching 53%. Between 2010 and 2020, Asia Pacific will expand its share by +16%, while Europe will lose -12% from its earlier market leading share of 40% in 2010.
Global growth will mainly be driven by an increase in the number of international travellers, supported by the expansion of low cost airlines and the introduction of new air routes across the world.
Chinese duty free spending will be particularly key in Asia Pacific and European duty free markets. “Chinese now prefer new travel destinations to explore new culture and benefit from currency exchange, which became an important factor following the devaluation of Chinese Yuan,” the report states.
“Major duty free markets are relaxing visa policies, expanding downtown duty free, and modernising airports, including retail, to entice Chinese travellers who are tech-savvy and like to shop at leisure.”
South Korea will continue to be the largest duty free market in the world and will record an annual CAGR of 9.6% to reach US$10.7 billion by 2020, according to the report.
China, the second largest duty free market, will record 11.3% annual CAGR on the back of growth in offshore duty free, and India will record the highest annual CAGR of 20.7%, mainly driven by soaring arrivals duty free “as young and aspirational Indians increasingly take foreign trips”, the report says.
Perfumes & cosmetics is the largest and also the fastest growing category in the global duty free market, the report states.
The report finally notes that an increase in low cost carriers has resulted in a new type of traveller that is “aspirational and seeks luxury products at an affordable price”.
(Source: Moodie Davitt)