The duty free retailing market is witnessing transformation led by experiences and convenient shopping features. Duty free retailing allows international travelers to purchase tax and duty-free goods such as alcohol, tobacco, perfumes, and fashion accessories during international travel. These products are subject to customs duty if purchased or consumed within the destination country. The global duty free retailing industry allows passengers to enjoy substantial savings while traveling. The introduction of innovative shopping experiences through advanced digital and technology driven solutions are boosting sales.

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 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, 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.

Key Takeaways

Key players: Key players operating in the duty free retailing are focusing on expanding their global footprint by opening stores at new and existing airports. For instance, Dufry recently won the tender to operate the duty free shops at 12 Greek airports.

Growing demand: The demand for duty free shopping is growing owing to increasing international travel and purchasing power of global consumers. Tourism growth in Asia Pacific and Middle East is fueling sales in these regions.

Global expansion: Major duty free retailers are expanding their global presence through new contracts, mergers and acquisitions. For example, Lagardere Travel Retail acquired Air Miles in Poland to strengthen its position in Eastern Europe.

Market Key Trends

The use of digital and technology is one of the major trends witnessed in the duty free retailing market. Players are focusing on enhancing the shopping experience through innovative technologies. The integration of virtual and augmented reality,mobile applications, beacons, and analytics is revolutionizing the shopping journey. Self-checkout options using automated payments and kiosks allow shoppers to navigate stores with ease. These advanced solutions are boosting impulse buying and average transaction volume in turn increasing revenues.

Porter’s Analysis

Threat of new entrants: The duty free retailing market requires large investments to build airport infrastructure and operate shops at various locations. These high entry barriers deter new players from easily entering this market.

Bargaining power of buyers: Buyers have moderate bargaining power in this market. People travelling have limited brand choices within airports and seaports. However, several substitutes are available online.

Bargaining power of suppliers: Leading brands dominate the supply landscape. They leverage their product exclusivity to negotiate better terms with large duty free retailers.

Threat of new substitutes: Alternatives like airport lounges and in-flight shopping pose minimal threat currently. However, the growing e-commerce industry is becoming a strong substitute channel.

Competitive rivalry: Top players compete on the basis of brand reputation, product variety, location of stores, and promotions. Mergers and acquisitions among industry majors further intensify competition.

Geographical regions: North America holds the major share currently, supported by large international airport gateways in the US. Asia Pacific is expected to surpass North America during the forecast period due to rapid infrastructure development and rising air passenger traffic in countries like China and India.

The fastest growing region is Asia Pacific, projected to expand at over 10% CAGR between 2023-2030. This can be attributed to strong tourism growth in Asian nations, increasing discretionary incomes, and initiatives by governments to promote duty free shopping. Countries like China, India, and Southeast Asian markets are poised to drive the next phase of growth in the region.