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India Travel Retail Market - Growth, Trends, COVID 19 Impact and Forecasts (2021-2026)

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  • 150 Pages
  • October 2021
  • Region: India
  • Mordor Intelligence
  • ID: 5458869

Travel Retail is the next great frontier of the Indian Retail Sector, and as people’s incomes rise, India’s position as a business powerhouse and tourist destination will also continue to solidify, leading to the growth and prosperity of this industry.

COVID-19 has all but wiped out the travel industry in India and the passenger numbers continue to be affected in India even in 2021 owing to existing lockdowns and restrictions in the wake of the second wave of the pandemic. In 2020, less than 3 million foreign tourists visited India with a dip of around 75% when compared to 2019 due to travel restrictions imposed. The COVID-19 outbreak is impacting duty-free shopping behavior, spend, and browsing likelihood on a category level, with this being particularly the case with luxury items in India. As a result of the pandemic, shoppers have moved to online shopping in greater swathes than before, and several travel retail operators, including Delhi Duty-Free, have introduced new online retail services facilitating home delivery of travel retail exclusive and duty-absorbed products.

A combination of a large and growing population, increasing air connectivity, inbound tourism, and the growing disposable incomes and propensity to travel internationally by India’s middle class are some of the major factors fuelling the growth of India’s travel retail market.

As per a research, it is estimated that nearly 80% of the country’s duty-free shoppers are Indians which is quite unlike other markets in the region, such as Korea or Thailand, where most duty-free sales are from international travellers rather than local travellers. However, this is likely to change with the growth in international tourism in the country. While India accounts for only 4.8% of the Asia Pacific region’s total international tourist arrivals, its year-on-year growth rate has been well above the region’s average in recent years and as of 2019, India attracted nearly 17.9 million international tourists. The changes by the Indian Government to its e-visa regime are simplifying procedures, making it friendlier to international tourists and these developments will further help in the growth of India’s travel retail market.

The growth of e-commerce can be seen as part of a broader digitalisation of the travel industry In India and especially airports. This is in part due to younger profiles of travellers, growth of low-cost airlines, and airport privatisation. The Introduction of Goods and Service Tax (GST) has decreased the cost and time of logistics and interstate transport which has made the Indian retail market more lucrative for foreign investors who can invest in single brands, multi brands, wholesale/ cash and carry, e-commerce and duty free.

Key Market Trends

Airports Constitute the Major Retail Channels in India’s Travel Retail Market

Nearly 50% of an international airport's revenue is generated from duty-free and travel retail activities and in terms of sheer size and range offered, the duty-free retail areas at Indira Gandhi International Airport in Delhi, Chhatrapati Shivaji International Airport in Mumbai are nothing less than high-end malls.​ The largest duty-free area in India is currently operated by Mumbai Duty-Free at Mumbai International Airport Limited (MIAL) followed by New Delhi International Airport Limited (DIAL) which is operated by New Delhi Duty-Free Services (DDFS). The duty-free revenue per passenger for New Delhi and Mumbai was the highest in India at USD 11 and 10 per passenger for FY2019.

The future of airport retail is defined by data, omnichannel, and personalization. Online pre-purchase orders for airport pickup are more popular in the Indian market than anywhere else in the Asia Pacific region and there is a growing response by duty-free operators to the increasing flexible payment, ordering pickup, and delivery needs of customers. Delhi Duty-Free's 'Shop and Collect' plan for instance offers an extra 10% discount to those who pre-book orders at the airport on their outbound journey and pick them upon return.

Wines and Spirits Witness High Growth

Perfumes, liquor, and tobacco are the top three bestselling categories in duty-free stores in Indi however, wines and spirits remain the highest on the to-buy list. Liquor is the key category of sales at these stores with an increasing number of young Indians moving towards single malts and premium white spirits. Deluxe Scotch remains the biggest category and contributes significantly to the growth of the liquor business. Similarly, the cosmetics category is witnessing high growth as more women are now traveling abroad for both work and leisure

Apart from product variety offered at the duty-free stores, the promotional and other offers attract Indian consumers. For instance, two bottles of Johnny Walker Black Label costs around INR 4,500 at the Delhi Duty-Free, and many consumers also prefer buying cosmetics at the Delhi Duty-Free store as they are nearly 20% cheaper.

Furthermore, the duty-free shops in India at airports arrivals do more business than their peers at departure and the highest-selling category in arrivals has been liquor. This is primarily because the prices offered on liquor at the duty-free shops are extremely competitive. In fact, arrivals account for a lion’s share of the business at duty-free shops as inbound travelers like to pick up items on their way back to the city.

Competitive Landscape

The Indian travel retail market is highly competitive, with several international as well as domestic brands present in the market which include Dufry, Lotte, The Shilla, Delhi Duty-Free, and Flemigo Travel Retail. These stores are increasingly attracting buyers with their exciting range and offer however, at the same time, the shopping experience is important too, and it is something that the duty-free stores in India need to work on, especially with luxury products

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support

This product will be delivered within 2 business days.

Table of Contents

1.1 Study Deliverables
1.2 Study Assumptions
1.3 Scope of the Study
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Market Opportunities
4.5 Value Chain Analysis
4.6 Porters Five Forces Analysis
4.7 Technological Innovations in the Market
4.8 Insights on Trends in Passenger Traffic by Channels
4.9 Insights on Government Regulations and Initiatives in the Market
4.10 Impact of COVID-19 on the Market
5.1 By Product Type
5.1.1 Fashion and Accessories
5.1.2 Wine and Spirits
5.1.3 Tobacco
5.1.4 Food and Confectionary
5.1.5 Fragrances and Cosmetics
5.1.6 Others (Stationery, Electronics, Watches, Jewellery etc.)
5.2 By Distribution Channel
5.2.1 Airports
5.2.2 Airlines
5.2.3 Ferries
5.2.4 Other Distribution Channels
6.1 Market Concentration Overview
6.2 Company Profiles
6.2.1 Dufry
6.2.2 Lotte
6.2.3 The Shilla
6.2.4 Flemingo Travel Retail
6.2.5 Delhi Duty Free
6.2.6 WH Smith India
6.2.7 Travel Food Services (TFS) India
6.2.8 Cochin Duty Free
6.2.9 Hyderabad Duty Free
6.2.10 HMY
6.2.11 Relay India*

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Dufry
  • Lotte
  • The Shilla
  • Flemingo Travel Retail
  • Delhi Duty Free
  • WH Smith India
  • Travel Food Services (TFS) India
  • Cochin Duty Free
  • Hyderabad Duty Free
  • HMY
  • Relay India