Duty Free Retail Market Size, Share & Industry Analysis, By Type (Perfumes, Cosmetics, Alcohol, Cigarettes, and Others), By Sales Channel (Airports, Onboard Aircraft, Seaports, Train Stations, and Others), and Regional Forecast, 2024-2032

The global duty free retail market size was valued at USD 42.65 billion in 2023 and is projected to grow from USD 46.67 billion in 2024 to USD 78.78 billion by 2032, exhibiting a CAGR of 6.76% during the forecast period. Asia Pacific dominated the duty free retail market with a market share of 51.4% in 2023.

Duty free stores sell cosmetics, perfumes, alcohol, and other products to travelers across airports, seaports, and railway stations. These goods are also sold on ships and onboard aircraft with shoppers/travelers in transit. Moreover, stores offer duty free goods that are free from certain taxes or duties. As a result, they provide products at lower costs than regular shops and are highly preferred for purchasing high-end items. The increasing number of duty free retail stores and travelers across countries globally favoring the global duty free retail market growth.

The COVID-19 pandemic negatively influenced global market share, notably in 2020. A significant decline in travelers due to lockdown and travel restrictions across countries, notably in 2020, reduced product sales through duty free stores. Furthermore, several airlines reduced their capacities, which impeded aeronautical and non-aeronautical revenues. For instance, according to Airports Council International (ACI), a Canada-based international platform for representing airport standards and industry practices, total airport sales dropped by 35% to USD 14 billion in the first quarter of 2020 and by 90% to USD 39 billion in the second quarter of 2020.

Duty Free Retail Market Trends

Increasing Demand for Duty Free Alcohol to Fuel Market Growth

Recently, there has been a significant demand for alcohol across nations, especially in Asia. The increasing demand is attributable to diversifying buying habits of consumers, rapidly rising international tourist arrivals, and increasing spending among the middle-class population/travelers. Furthermore, the increased premium liquor demand is growing the consumer interest in duty free alcohol at the macro level globally.

The rising demand for duty free alcohol has encouraged prominent industry participants to launch online stores to accelerate sales. For instance, in July 2023, Lotte Duty-Free, a Korea-based travel retailer, introduced its online alcohol platform, providing over 700 products from over 100 brands. The online store offers a large assortment of alcohol, including brandy, wine, Cognac, and whisky. It also provides limited edition products such as Glenfiddich Yozakura whisky (29-Year-Old).  

Duty Free Retail Market Growth Factors

Growing International Tourism Presents Lucrative Opportunities for Industry Players

The proliferation of international tourism and the number of travelers across nations generate lucrative business opportunities for duty free retail industry participants. For instance, according to Eurostat, a Luxembourg-based government statistical agency, the European Union tourism industry witnessed significant growth in 2023, with around 1,193 million overnight stays in tourist accommodations in the first six months of the year. This marks an approximate 11 million increase compared to 2019 (1182 million). In addition, the introduction of new international airports triggers tourism. For instance,

According to the Global Aviation Summit 2019, the Civil Aviation Ministry’s ‘Indian Aviation’s Vision 2040’, by 2040, India will have 190-200 operational airports. Delhi and Mumbai will each have three international airports, while the top 31 Indian cities will have two operating airports. The fleet of 622 airliners traversing India in 2018 is expected to double to 2,359 aircraft by March 2040.

Increasing Number of New Air Routes across Asian Countries to Encourage New Players' Entry 

Numerous airlines across countries are expanding their international networks, which is likely to encourage the entry of new players, notably across Asia, in the foreseeable future. For instance, in December 2023, Air India Express, an airline based in Gurugram, India, commenced operations from Surat International Airport's new international terminal to expand its international routes and connect Dubai (UAE), Dammam (Saudi Arabia), and Surat (India). In addition, in November 2023, IndiGo, an airline based in Gurugram, India, announced plans to expand its network and start flights to Medina (Saudi Arabia) and Bali (Indonesia).

RESTRAINING FACTORS

Travel Retail Businesses Navigate Volatile Currency Markets, Impacting Luxury Goods Sales and Global Market Growth

Travel retail markets are sensitive to exchange rates among nations. However, these retail markets operate in many countries and often deal in numerous currencies, such as dollars, pounds, and euros, each having specific exchange rates subject to market changes. These currencies are exchanged at the prevailing exchange rate on a specific day. Fluctuations in currency exchange may have a negative or positive impact on travel retail businesses, such as retail chains offering luxury goods that depend on fluctuating exchange rates. Additionally, exchange rates can fluctuate due to various factors, including economic and political conditions, which may impede global market growth. For instance, in September 2023, the Sterling (U.K currency) declined by 3.75% against the USD.

Duty Free Retail Market Segmentation Analysis

By Type Analysis

Luxury Perfume Brands Offering Premium/Luxury Products to Drive Perfume Segment Growth

Based on type, the market is segmented into perfumes, cosmetics, alcohol, cigarettes, and others.

The perfumes segment is expected to hold the dominant global duty free retail market share during the forecast period. Prominent luxury perfume brands, including Gucci, Prada, Giorgio Armani, and Signature Rose, emphasize offering products through duty free retail stores across countries. These stores also prioritize providing a wide variety of product types/perfumes, such as Eau De Perfume (EDP), Eau De Cologne (EDC), and Eau De Toilette (EDT) contributing to the segmental growth.

The rising popularity of premium beauty is fueling the product demand in the cosmetics space. The cosmetics segment is growing steadily, notably due to increasing product launches across airports worldwide. Moreover, many key brands emphasize accelerating sales by providing products through duty free retail stores. For instance, in December 2023, Rituals Cosmetics, a Netherlands-based beauty brand, unveiled its new 30sqm premium boutique at CDF (China Duty-Free) Sanya International Duty Free City, China. Furthermore, luxury cosmetic brands, including L'Oréal Paris, Estée Lauder, Clinique, Chanel Beauty, Tom Ford, Clé de Peau, Armani Beauty, and Guerlain, dominate the cosmetics segment. Despite the popularity of premium/luxury cosmetics, prominent players offer various mass-market products to stay competitive.

By Sales Channel Analysis

Rising Number of Duty Free Shops at Airports Globally to Boost Airports Segment Growth

Based on sales channels, the market is divided into airports, onboard aircraft, seaports, train stations, and others.

The airports segment dominates the market. The rising number of international and domestic airports across countries is favoring product sales through airports. Furthermore, launching new duty-free stores across airports globally favors segmental growth. For instance, in November 2023, Lagardère Travel Retail unveiled its Aelia Duty-Free store at London City Airport’s departure lounge.

The seaports segment is also a major sales channel for product sales globally, notably across Asian markets. This segment is forecast to witness rapid growth over the forecast period. As with airports, seaports also facilitate brands of various products to gain visibility across international markets. Recent seaport segment developments exhibit lucrative business opportunities for prospective industry participants. For instance, in May 2023, Hambantota International Port, based in Hambantota, Sri Lanka, introduced its duty free complex, including two duty-free stores on the port’s site.

REGIONAL INSIGHTS

Geographically, the market is studied across North America, Asia Pacific, Europe, South America, and the Middle East & Africa.

Asia Pacific dominated the global market in 2023. Recent developments across Asian countries could provide potential opportunities for established and prospective duty free retail stores to launch a broad spectrum of innovative products. For instance, China’s fourteenth five-year plan, developed to strengthen the country’s economy within the 2021 and 2025 period, comprises 140 airport projects, including expansion, renovation, and construction. At a macro level, the rapidly evolving tourism sector will propel China's duty free and travel retailing market throughout the forecast timeframe. 

Europe is expected to witness significant growth during the forecast period. Increasing tourist expenditure on luxury goods is a key driver favoring the regional market growth. Moreover, rapidly increasing tourism across European countries such as France, Italy, Spain, the U.K., Netherlands, and Greece is expected to fuel the number of travelers and contribute to the region’s market expansion.

Led by the U.S., the North American duty free retail market is principally driven by an influx of tourists paired with significantly high U.S. travel spending. According to the International Trade Administration, a Washington, D.C., U.S.-based government agency, international travelers' arrival in the country was 5.36 million in May 2023, a 26% rise from May 2022. Canada is one of the key contributors to the North American market. For instance, as per the Canada Border Services Agency (CBSA), duty free retail stores operate in approximately 53 locations across Canada, including international airports and land border locations.

Product sales across the South American and the Middle East & African markets will likely witness an upward curve over the forecast timeframe owing to rising consumer demand for premium/luxury perfumes. Furthermore, Dubai is one of the most popular tourist destinations worldwide. The country also houses some of the world’s biggest duty free retail shops, increasing the region’s market share. In addition, the South American market has benefitted from growing tourism across countries, including Brazil and Argentina.

List of Key Companies in Duty Free Retail Market

Key Players Launch Online Stores and Collaborate with Key Brands to Stay Competitive Driving Market Expansion

Key players have been adopting various competitive strategies, including new product launches and collaborations, assisting in staying abreast of the intensifying competition. In this respect, recent industry developments summarize the need for brands to employ strategies to overcome competitive rivalry. For instance, in November 2023, Shinsegae Duty-Free, a South Korea-based travel retailer, partnered with Chanel, a French luxury fashion brand, to launch a travel retail podium at Terminal 2, Incheon International Airport.

While luxury and premium brands target affluent travelers in Western countries, mid-market and smaller brands focus on expanding across Asian countries to stay competitive and increase their market shares. Moreover, key market players such as King Power International Group, Lotte Duty-Free, and Shilla Duty-Free emphasize offering products through online stores to meet the evolving needs of travelers.

List of Key Companies Profiled:

• Avolta (Dufry AG) (Switzerland)


• DFS Group (China)


• Gebr. Heinemann SE & Co. KG (Germany)


• Lagardère Group (France)


• Dubai Duty Free (UAE)


• China Duty Free Group (China)


• Lotte Duty Free (South Korea)


• The Shilla Duty Free (South Korea)


• Shinsegae Duty Free Inc. (South Korea)


• King Power International Group (Thailand)

KEY INDUSTRY DEVELOPMENTS:

• December 2023: Innokin, a China-based vape brand, collaborated with Bahrain Duty-Free, a Middle East-based retailer. The partnership will see the launch of the brand’s INNOBAR products across the retailers' premium stores.


• August 2023: Mumbai Duty-Free, an India-based retailer, unveiled its shopping carnival, an event incorporating exclusive offers and prizes. The event ran until September 30^th at Chhatrapati Shivaji Maharaj International Airport, Mumbai, India.


• May 2023: AirAsia shop, an online duty-free platform, collaborated with Dufry AG, a Switzerland-based travel retailer, to provide over 1,000 products across airports and expand its offerings for customers. Travelers can also choose the online platform’s inflight delivery option and get products delivered on their flight.


• May 2023: L’OCCITANE Group, a French cosmetic brand, collaborated with Dufry AG, a Switzerland-based travel retailer, for the duty-free launch of Sol de Janeiro, a U.S.-based beauty brand. A launch campaign was also introduced at London airports (Gatwick and Heathrow), Spain airports, Manchester & Stansted airports and other airports across the U.S. and Europe.


• January 2023: Foreo, a Sweden-based connected beauty brand, launched a new store in Manila, Philippines, by collaborating with Duty-Free Philippines. The new store (Luxe Duty-Free) contributed to Duty-Free Philippines' expansion strategies within the country.

REPORT COVERAGE

The global market report for duty free retail provides a detailed analysis of the market and focuses on key aspects such as leading companies, type analysis and sales channels. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

Report Scope & Segmentation