Xin Ou
Research expert covering Greater China
Duty free and travel retail industry - statistics & facts
Duty free and travel retail is a global industry which specializes in selling products to international travelers. Duty free store sales are tax-free and exempt from excise duties, on the condition that goods are only sold to travelers who will transport them out of the country. The industry is commonly seen in airports, however, duty free and travel retail is also available at border shops, onboard cruises and ferries in international waters, and onboard aircrafts during international flights. In some areas, such as non-EU Europe, Australasia, the Middle East, and Latin America, travelers have the option of purchasing duty free goods upon arrival. This trend has become a fundamental source of income for airports. Moreover, duty free and travel retail generates necessary revenues for the travel, tourism, aviation, and maritime industries.
How has the travel retail and duty free industry held up after the pandemic?
In 2020, with the coronavirus (COVID-19) pandemic, worldwide sales revenues generated from duty free and travel retail took a nosedive, declining almost by half compared to the previous year. By 2022, duty free revenues still had not returned to pre-pandemic levels. That said, the conversion rate picked up again in 2022 and was reported to reach above the level observed in 2020. In terms of revenue, the Asia-Pacific region generates the highest share of sales in the duty free industry, accounting for 33.4 billion U.S. dollars of the global market.The duty free market and retail sales of airports
Travel retail is a varied market with many global players, but the largest companies are generally based in Asia. In 2022, based on revenue, China Duty Free Group was the leading travel retailer worldwide, with revenues amounting to 7.4 billion euros. The Swiss group Dufry and the South Korean company Lotte Duty Free came in second and third place with revenues exceeding six and four billion euros, respectively. With the impact of the coronavirus (COVID-19) pandemic, duty free incomes and retail sales generated by the world's leading airports suffered significantly. In Singapore's Changi Airport, concession sales declined to 280 million Singapore dollars from the previous year's 2.6 billion U.S. dollars, for instance. Although sales have picked up again in the 2022/23 financial period, they were nowhere near pre-pandemic levels. For most of the pandemic, travelling into Singapore had remained limited to citizens and residents. London's Heathrow Airport experienced a similar downturn in its retail sales. Compared to 2019, revenue from retail concessions had declined by around 70 percent in 2020. As of 2022, retail sales of the London Heathrow began steadily rising again.
