Duty-free and travel retail, sometimes referred to as retail, is a sales channel where products are offered to customers free of taxes and levies. It is anticipated that the market will set the standard by providing environmentally friendly ways to lower carbon emissions and increase energy efficiency.
Duty-Free and Travel Retail (DFTR) is an exclusive retail channel that serves tourists by providing a large selection of goods at duty-free costs. In addition to online sales channels, DFTR comprises retail locations in border towns, airports, cruise ships, and airplanes.
The global duty-free and travel retail market size was valued at USD 40 billion in 2021, and it is anticipated to reach an expected value of USD 277 billion by 2030 at a CAGR of 24% throughout the forecast period (2022-2030).
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Here are some of the latest trends in the Duty-Free and Travel Retail (DFTR) market:
The coronavirus (COVID-19) pandemic in 2020 caused a sharp decline in duty-free and travel retail sales revenues globally, with a nearly 50% drop from the year before. Duty-free sales were still not back to their pre-pandemic levels by 2022. Nevertheless, in 2022 the conversion rate increased once again and was said to surpass the 2020 level. With 33.4 billion US dollars of global sales, the Asia-Pacific region leads the world in revenue generation within the duty-free industry.
The retail travel industry is diverse and has numerous international players, but the biggest businesses are often headquartered in Asia. With revenues of 7.4 billion euros in 2022, China Duty-Free Group ranked as the world's largest travel retailer. Second and third position went to the Swiss corporation Dufry and the South Korean company Lotte Duty Free, whose combined revenues surpassed six and four billion euros, respectively. The coronavirus (COVID-19) pandemic has a major negative influence on duty-free revenues and retail sales produced by the top airports in the globe.
Singapore's Changi Airport fell to 280 million Singapore dollars from 2.6 billion U.S. dollars the year before. Even while sales increased during the 2022–2023 fiscal year, they were still far below pre-pandemic levels. Only citizens and residents were allowed entry into Singapore for the most of the outbreak. The retail sales at London's Heathrow Airport declined similarly. The amount of money made from retail concessions in 2020 was about 70% less than in 2019. Retail sales at London Heathrow started to rise gradually again in 2022.
Personalization: Targeted marketing, product recommendations, loyalty programs, and other personalized purchasing experiences are provided by DFTR retailers.
Contactless shopping: Mobile payments, self-service kiosks, and internet commerce have all seen an increase in popularity as a result of the COVID-19 epidemic.
Sustainability is a key priority for DFTR retailers. This includes promoting eco-friendly items, reducing the use of single-use plastics, and implementing green initiatives.
Localization: To meet the evolving needs of tourists in various locations as well as local customs and tastes, DFTR shops are modifying their product lines and marketing approaches.
Online sales: Due to the COVID-19 epidemic, consumers are making more purchases from online merchants than from conventional stores. To draw in internet customers, DFTR businesses are creating websites and running promotions.
Technology integration: DFTR merchants are using artificial intelligence, virtual reality, and augmented reality to enhance the shopping experience.
Partnerships: In order to launch distinctive or limited-edition products and to provide special offers and discounts, DFTR merchants are partnering with brands.
Restrictions on travel: The COVID-19 pandemic has resulted in less foreign travel opportunities and travel restrictions, which has affected the DFTR industry. But once travel restrictions are removed, it is anticipated that the market would rebound.
Virtual reality (VR) and augmented reality (AR) experiences: DFTR stores are utilizing VR and AR technology to improve the in-store shopping experience by offering immersive brand experiences, virtual try-ons, and product demonstrations.
Social Media Marketing: Influencer marketing, social media advertising, and user-generated content are just a few of the ways that DFTR shops are using social media platforms to connect and interact with travelers.
Loyalty Programs: To draw and keep consumers, DFTR businesses provide loyalty programs that include prizes, savings, and special access to events.
Data-Driven Marketing: DFTR stores are personalizing their marketing and enhancing the shopping experience by utilizing data analytics and consumer insights to focus product recommendations and promotions.
Experiencing Retail: Pop-up stores, experiencing activations, and customized services are just a few of the immersive and interactive shopping experiences that DFTR retailers are producing.
Artificial Intelligence (AI) Integration: Chatbots, virtual assistants, and predictive analytics are just a few of the AI technologies that DFTR merchants are utilizing to enhance the in-store experience.
Top Key players in Duty-Free and Travel Retail Market
Dufry
Lagardère Travel Retail
Lotte Duty-Free
LVMH
Aer Rianta International
China Duty-Free Group
Dubai Duty-Free
Duty-Free Americas
Heinemann
JR/Group (James Richardson)
King Power
The Shilla Duty-Free
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Conclusion:
Duty-Free and Travel Retail (DFTR) is a distinct retail channel that provides travelers with a large selection of goods at duty-free prices in a number of locations, including border towns, airports, cruise ships, and online marketplaces. The COVID-19 pandemic caused major difficulties, but the DFTR business has persevered and is expected to develop significantly in the years to come. The emphasis on sustainability, individualized shopping experiences, technology integration, and the rebound in tourism after the pandemic are some of the major aspects propelling this expansion. Leading companies in the DFTR industry include Dufry, Lagardère Travel Retail, Lotte Duty Free, and others. The industry is constantly developing to accommodate the varying demands and tastes of tourists from around the globe.
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