Global Travel Retail Market (by Product Type, Sale Channel, & Region): Insights and Forecast with Potential Impact of COVID-19 (2022-2027)

Travel retail is the retail market place that is mostly located in travel areas such as airports, trains, cruise lines, and so on. Purchases done on the spur of the moment while waiting for flights/trains at touchpoints, usually airports, have recently boosted the global travel retail business. Furthermore, the benefits of travel shopping include easy accessibility, convenience, a better ambiance or mood, and economy, all of which have attracted customers to these shops.

Travel retail is a business that primarily revolves around travel surroundings and requires customers to have proof of travel in order to enter the commercial area, all of which may be subject to taxes and/or tariffs, even if the buyer is departing the country. To entice clients, several stores or companies offer their items duty free. The global travel retail market is likely to reach US$75.93 billion by 2023, progressing at a CAGR of 17.37%, during the forecasted period.

Segment Covered

By Product Type: In terms of product type, the report provides the bifurcation of the travel retail market into seven segments: fragrances & cosmetics, wine & spirits, luxury goods, tobacco, food, confectionary, & catering, electronics, and other. The luxury goods segment is the fastest growing segment during the forecast period, attributable to rise in disposable income, exposure to social media, urbanization, and preference toward investments in personal luxury goods.

By Sale Channel: On the basis of sale channel, the global travel retail market has been divided into four segments: airport, border, downtown and hotel shop, railway station, and cruise liner. The airport segment held the maximum share in travel retail market, owing to increase the number of travelers, and technological advancements in airports. expected to grow at the fastest rate.

Geographic Coverage

According to the report, the global market can be divided into five major regions: Asia Pacific, Europe, North America, Middle East & Africa, and Latin America. The countries covered in North America region are the US, Canada, and Mexico, while Europe includes UK, Germany, France, Spain and Rest of Europe. Moreover, South Korea, China, and Rest of the Asia Pacific are included in the Asia Pacific region. Asia Pacific accounted for the largest share in the global travel retail market. Due to the booming travel and tourism sector as well as the increasing number of new international routes in Asia Pacific, the region has the largest travel retail market. The duty-free market in South Korea is flourishing owing to the country's position as one of the largest in the world and the rising numbers of Chinese and Japanese visitors.

Top Impacting Factors

Growth Drivers

• Dominating Gen Z and Millennial Population
• Increasing Number of Airports
• Increased Personal Luxury Goods Consumption
• Increased Traveling Offers

Challenges

• Lack of Availability of Space
• Tedious Air Travel Requirements

Trends

• Involvement of Artificial Intelligence
• Digitization Of Travel Retail
• Growing Trend of Robotics in Travel Retail
• Technological Advancements

Driver: Dominating Gen Z and Millennial Population

Historically, travel has been considered a luxury. But in the eyes of many millennials, travel has become a necessity and even a social currency. They’re also more likely to participate in leisure: extending a business trip into a holiday. They value visiting new places and are re-writing the definition of luxury to focus more on experience and social capital over an upper echelon price point. Furthermore, the generation Z are rapidly taking over and would crave even more unique experiences. They are projected to have similar shopping habits to millennials, but they have higher expectations for the quality of a product and even less patience. These tendencies can be expected to spill over into their travel preferences as well.

Challenge: Lack of Availability of Space

Most travel retail stores, counters and pop-ups operate in a restrictive space, making it difficult to balance merchandizing and positive experience. Shops do not have rubber shelves - make the range fit the space or the space fit the range (sometimes this is a necessity, particularly in beauty). Stock sent to stores that never reaches the shelves can end up impacting future strategy. Operators need to dedicate more space to this fast-growing category so it can compete with other premium dark spirited brands and offer the variety consumers are looking for in global travel retail. Many retailers deal with the problem to sell space and the products needed to be personalized would lower the profit margins of the retailers and hence affect the travel retail market.

Trend: Technological Advancements

Balancing the right amount of immersive tech in the built environment while using real-time data analytics to create better offerings for customers would pave the way for the future of airport retail. Customers expect to see more engaging, local retail experiences that would provoke to rethink what it means to spend time at the airport. These consumers are, at the least, digitally fluent, educated, socially conscious, and fiscally calculating. They’ve grown up immersed in always-on mobile devices and curated digital environments; using technology to find deals, services, and products is second nature. Travel retailers use data insights such as advance knowledge of where the customer is coming from and heading, to cater to specific needs. Staff and product displays are organized based on arrival passenger language and cultural sensitivities to ensure that the right products are clearly visible to targeted customers.

The COVID-19 Analysis

Since the COVID-19 pandemic caused a labor scarcity, decreased consumer footfall, a lack of cross-border movement, and a halt to economic activity throughout the world, demand for travel retail products fell, which ultimately had a negative effect on the market's growth worldwide. However, the post-pandemic market is anticipated to gain momentum as more people get vaccinated, there has been an increase in mobility at many travel touchpoints, such as airports and railway stations and even cruise liners.

Analysis of Key Players

The market for travel retail has typically been fragmented. In order to obtain a competitive edge internationally, well-known key companies today like Dufry AG, Shilla Duty-Free Shop, and others concentrate on analyzing consumer purchase behavior and providing tailored retailing products to the customers. Additionally, they frequently launch sales promotions to draw customers to their products. Further, key players in the travel retail market are LVMH Moët Hennessy Louis Vuitton (DFS Group), Dufry AG, Hotel Shilla Co., Ltd (The Shilla Duty Free), Lagardère Group, WH Smith PLC, Shinsegae Inc (Shinsegae Duty Free), Lotte Corporation (Lotte Duty Free), Dublin Airport Authority (Aer Rianta International Duty-Free LLC), Duty Free Americas, Inc., China International Travel Service Corporation Limited (China Duty Free Group), Gebr. Heinemann SE & Co. KG, Harding Brothers Retail Ltd (Flemingo International Limited), Everrich Duty Free Shop, Dubai Duty Free, and The King Power International Group.