The outlook for world duty-free looks rosy, as pent-up demand and the recent reopening of China are powering tourism recovery, despite the headwinds caused by the cost-of-living crisis. Duty-free players are diversifying their source markets, expanding their global footprints, embracing omnichannel, as well as delivering immersive retail experiences. Sustainability strategies are increasingly being adopted to ensure that decarbonisation takes place across the supply chain.
This report comes in PPT.
Global sales of duty-free are forecast to reach USD117 billion at constant 2022 prices in 2023. The success of global duty-free sales is intrinsically linked to tourism flows, and travel is back and powering forward, as even regions slow off the mark, like Asia Pacific, are moving into full recovery, with the removal of travel restrictions and the recent reopening of China, which bodes well for duty-free.
A true omnichannel duty-free shopping experience must be created through integration and innovation, where each channel is used to support and supplement the other. This will provide a truly consistent, seamless experience for consumers.
Duty-free sales in Europe have been led by luxury goods sales to long-haul visitors, as duty-free sales within the EU bloc have generally not been available. However, post-Brexit, the UK has opened up as a key source market located closer to home, providing an opportunity for duty-free shopping, an opportunity not taken by the UK, which ended VAT-reclaim sales in 2021.
China is a key source market in Asia Pacific; however, as the Chinese government plans to use duty-free as a vehicle to boost domestic consumption, Hainan will not be the only duty-free destination in the country going forward. Diversifying the customer base, such as by attracting domestic consumption and alternative source markets in the region, will be key.
The outlook for duty-free players is rosy; however, a sharper focus on operational efficiencies for sustainability, creating immersive retail experiences that blend the virtual and real world, and meeting consumers where they are, such as in the online channel, will be critical for future success.
Travel encompasses several categories including tourism flows, lodging, travel modes, in-destination spending and booking.
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