Duty Free Retailing Market Research: Regional Outlook and Competitive Analysis
Duty Free Retailing is Evolving with Experience Seeking Travelers
The duty free retailing market is poised to witness a surge in demand by experience seeking travelers amid growing global tourism. Duty free retailing involves the sale of goods without import duties or taxes to international travelers. Common duty free products sold include fragrances, cosmetics, liquor, tobacco and confectionery. Duty free outlets provide travelers an avenue to purchase famous brands at significant markups compared to local prices. The global duty free retailing market is estimated to be valued at US$ 38.95 Bn in 2024 and is expected to exhibit a CAGR of 8.6% over the forecast period 2023 to 2030.
Key Takeaways
Key players operating in the duty free retailing market include Dufry AG, LOTTE Duty Free Company, DFS Group Limited, Gebr. Heinemann SE & Co. KG, The Shilla Duty Free, The King Power International Group, James Richardson Corporation Pty Ltd., Duty Free Americas, Inc., Flemingo International Ltd., Dubai Duty Free, and China Duty Free Group Co., Ltd. This prominent companies continue to expand their global footprint to tap growing demand.
The global tourism industry has witnessed consistent growth in recent years, driving significant demand for duty free products. Prominent airports and seaports have enhanced their duty free shopping areas attracting more consumers. Furthermore, growing international travel for business and leisure is positively impacting sales volumes.
Major international airport and seaport operators are expanding their duty free footprints globally. For instance, Dubai Duty Free has opened new outlets in Jordan and the Philippines to strengthen its presence. Similarly, China Duty Free Group is investing in duty free complexes across Chinese airports. Rising global tourism is expected to aid international expansion plans of major duty free retailers over the next decade.
Market Key Trends
The growing trend of airport retailing experience is a key trend in the duty free retail market. Major airports are focusing on transforming duty free shopping into a distinct experience zone by implementing innovative concepts. For instance, duty free outlets are promoting live entertainment and interactive digital elements to engage travelers. Furthermore, personalized service, exclusive offers and smooth payment options using technologies are being emphasized to differentiate the airport retailing experience. This trend is expected to drive higher ticket size per customer as experience seeking travelers spend more time at airport retail zones.
Porter's Analysis
Threat of new entrants: Low cost of operations and brand loyalty make it difficult for new players to enter the market. However, opportunities exist in developing economies.
Bargaining power of buyers: Buyers have moderate bargaining power due to accessibility of substitute shopping channels and product choices. Promotions and unique product offerings help retailers maintain customers.
Bargaining power of suppliers: Suppliers have low bargaining power as duty free retailers source products from a wide range of suppliers globally and alternative supplier options are available.
Threat of new substitutes: Substitute shopping channels like online retail and duty paid retail offer alternate shopping experiences. However, duty free retains advantages like heavy discounts, exclusive products and airport ambience.
Competitive rivalry: Intense competition exists among major players to gain higher airport shop space and offer wider range of luxury brands. Market consolidation is high with top players dominating developed regions.
Geographical regions with high market value
The Asia Pacific region accounted for the highest share in the global duty free retailing market in terms of value in 2023, with countries like China, Japan, South Korea and India witnessing heavy passenger traffic. Europe is another major region contributing to high duty free sales, led by heavy international transit in countries like the UK, Germany and France.
Fastest growing region
The Middle East and Africa region is projected to grow at the fastest CAGR during the forecast period of 2023-2030. This can be attributed to rising per capita spending by Gulf country nationals and tourists, expanding airports in the developing economies and increasing international travel within the region. Dubai Duty Free in UAE has been amongst the highest grossing airport retailers globally.
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