Global travel retail market: Strategies and forecasts
The global travel retail market was at US$ 63.59 billion in 2017 growing with a CAGR of 8.1% during the forecast period from 2018 to 2026.
The global travel retail market was at US$ 63.59 billion in 2017 growing with a CAGR of 8.1% during the forecast period from 2018 to 2026. According to United Nations’ World Tourism Organization (UNWTO), there has been tremendous growth in international tourist arrivals, from only 277 million in 1980 to over 1 billion in 2017. Significant development of the travel & tourism sector, along with medical tourism, raised the demand for travel retail services. Especially in the Asia Pacific region, the introduction of democratic airlines for traveling and budget airlines have contributed to the growing number of travelers.
According to statistics from Airports Council International, the region witnessed significant increase in the travelers in 2017 as compared to 2016; increase in the traveler’s growth rate was substantially higher than world average.
The emerging middle class in the new markets is one of the main driving factors for increasing demand for travel retail and is a major factor resulting in the increasing number of travelers in developing countries. As travel becomes more accessible, consumers have shown a great desire for it demonstrated by the filling of airline seats.
More prominently, due to the increasing numbers of the middle class population, China is the largest source of outbound tourists. In 2016, China followed by Russia represented approximately 29% of total tax-free spending worldwide. Retail benefits, a good selection of shopping malls, famous international brand stores, and a desire to buy products at a better price are some of the major factors considered by the middle class customers during travel retail shopping.
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In 2017, Asia Pacific dominated the travel retail market in terms of value. China, India, and Japan are the prime markets for travel retail in Asia Pacific, accounting for a significant share of total regional revenue. Asia Pacific is growing at the fastest rate owing to improving standard of living, rise in disposable income, and development of the tourism industry.
Furthermore, owing to a stronger base of luxury brands, Europe is one of the prominent travel retail markets across the globe. The region holds headquarters of some of the biggest apparels and cosmetics brands, namely, H&M from Sweden and LVMH from France, which hold a substantial share in the luxury, perfumes, apparels, and cosmetics sectors, thus making Europe the second largest travel retail market. Europe’s market accounts for a major share of the travel retail sector as the region has headquarters for most of the luxury brands. Wealthy tourists from the Middle East, China, and the U.S. contribute considerably towards the growth of the European travel retail market.
Aer Rianta International (ARI), China Duty Free Group (CDFG), DFASS Group, DFS Group, Dufry AG, Gebr. Heinemann SE & Co. KG, King Power International Group, Lotte Group, Lagardère Group, The Naunace Group, and The Shilla Duty Free, among others, are some of the prominent players in the global travel retail market.