Duty free & travel retail market in Europe to reach USD 39.9 B by 2025

The future of the travel retail market is expected to be favorable on account of the increase in tourism and new investments in the overhauling of airports in Europe.

The market is projected to reach USD 39.9 billion by 2025 growing at a CAGR of 7.2 % over the period 2019-2025.

Definition / Scope
Market Overview
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Technology Trends
Pricing Trends
Regulatory Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

Duty-free and travel retail is an industry selling goods to international travelers, has become a hugely successful worldwide industry since the first shop opened in Shannon airport Ireland in 1947..

Sales in duty-free shops are freed from the payment of certain local or national taxes and excise duties, normally with the requirement that the goods are only sold to travelers who will take them out of the country.

Airports represent the majority of such sales globally but duty-free and travel retail is also available at border shops, onboard cruise and ferry vessels in international waters, onboard aircraft during international flights, on railway stations, and in some countries in downtown stores where proof of travel is required to purchase.

In Europe, duty-free and travel retail has become a key component of aviation and maritime financing as well as an integral part of the traveling experience. Commercial revenues are a major element of airport revenues in Europe and duty-free and travel retail revenues are usually the most important source of income.

Without duty-free and travel retail revenue, airports would not be able to provide the facilities and services they do. There would be significantly higher numbers of loss-making airports and/or higher levels of state subsidy. Overall, connectivity in Europe would diminish.

Market Overview

The European region is a dominant duty-free and travel retail market in the world. The market was valued to be a $24.7 billion market in 2018 and is estimated to grow with a CAGR of 7.2% during the forecast period of 2019-2025.

The market is supported by growth drivers such as improved consumer lifestyle toward apparel, luxury goods, premium fragrances, and cosmetics, an increase in disposable income, and rapid growth in urbanization.

The growing demand for retail chains that offer luxury and premium brands of various products is augmenting the growth of Europe’s duty-free and travel retail market.

These distribution channels provide passengers value, enhance their experience while traveling, generate value addition to economic activity, and creates employment that contributes to overall GDP across the market.

However, an increase in terrorism & crime rate and stringent government rules, especially for airport retailing hamper the market growth. On the contrary, the rise in initiatives to develop the travel & tourism industry of the region is expected to create lucrative opportunities in the near future.

Furthermore, owing to the 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 apparel and cosmetics brands, namely, H&M from Sweden and LVMH from France, which hold a substantial share in the luxury perfumes, apparel, and cosmetics sector, thus making Europe the second-largest travel retail market.

Europe’s market accounts for the major share of the travel retail sector as the region has headquarters of most of the luxury brands.

The European duty-free and travel retail market is highly competitive, with several international as well as domestic brands present in the market which include Daa Plc., Autogrill S.p.A., Flemingo International Ltd., Dufry AG, Lagardère SCA, Gebr. Heinemann SE & Co. KG, RegStaer, LVMH Group, TRE, WH Smith PL, and others.

The leading brands are opening exclusive stores for special products, promoting, and selling limited editions to increase their visibility and brand awareness in the market.

Market Risks

In Europe, duty-free and travel retail revenues have grown robustly at 7.2% on average each year. However, most recently, revenues at European airports have actually declined (down nearly 3% per passenger each year from 2010 to 2013) because of economic factors, new airline hand luggage rules, and the growing challenge from online retailing.

Stringent government regulations, particularly for airport retailing:

The stringent baggage rule for air travel passengers is projected to hamper the travel retail market. For instance, Turkish Airlines allows a handbag weighing not more than eight kgs while the luggage is limited up to 32kgs.
Moreover, Lufthansa permits its passengers to follow a baggage allowance of not more than 32–40kgs.
The restriction on baggage at airports restrains the passengers from buying products from the airport malls or stores, thereby hampering the growth of the market.

Increase in terrorism & crime rate:

The increase in terrorism and crime rate has a negative impact on travel & tourism and thus, simultaneously affects the travel retail market. Earlier, the targets of terrorists were politicians and chiefs of the defense sector; however, now the target has shifted toward international tourists and visitors.
Some of these infamous incidents include The Luxor massacre, November 1997; 9/11 at the World Trade Center; and 26/11 Mumbai attacks among several others. These incidents have severely affected the travel & tourism industry. Moreover, massacres such as 9/11 had a high impact on the travel retail market. For instance, Victorinox lost 40% of its business post 9/11 as its key product for travel retail included Swiss Knives that were banned at all airports & airlines.
Moreover, the surge in the number of crime rates, such as kidnaping, pickpocket, robbery, and others, has led to instability in tourist destinations. In 2016, France witnessed more than 25% drop in Chinese tourists, more than a 35% drop in Japanese tourists, and more than 25% drop in Korean tourists.

Adopting to the changing purchasing habits:

Changing the purchasing habits of consumers are playing a key role in the sales of the duty-free and travel retail market across Europe.
Several brands are struggling to find successful growths in retail sales as consumers are opting for online shopping. This will almost certainly have an impact on the future financing of airports and ferry routes.
Various leading vendors are providing easy home delivery options and innovative customer services that improve their satisfaction levels and contribute to the growing revenues in the duty-free and travel retail market.

Top Market Opportunities

The rapid development and urbanization will enhance the development of infrastructure and offer access to better services in the market. The building of new airports and ports will boost revenues in the duty-free and travel retail market. Some of the key growth opportunities include:

Growing Demand for Enhancing Customer Experience

Shopping has evolved from being merely a complementary tourist activity to a pertinent motivational pursuit to select a destination.
Moreover, the increase in travel and tourism has revolutionized the scope of the travel retail industry. Travel has become more feasible than it was earlier, and thus customers are getting attracted to the retail channel.
Furthermore, travel retail spaces have experienced major modifications in the recent past, which have enabled travel retail brands to offer unique shopping experiences for their customers.

Greater connectivity:

With more air links from one country to others, the overall cost to passengers and freight shippers of reaching their final destination, including the surface transport costs at either end of the flight, and the savings in time costs from a greater frequency of flights, should fall.
Connectivity gains are equivalent to a fall in air transport costs, which in turn make it cheaper to connect to new markets and to boost supply chain productivity.

Reduced cost of air travel:

This enables producers to bring products to more distant markets more cheaply than hitherto, thereby increasing competition, and allows greater economies of scale in production which serves a wider market.
Supply chains can be organised to benefit from the most efficient sources of inputs, which in turn enhances productivity.

Investment and innovation:

Greater frequency and reduced cost of air links reduces the effective distance between geographically separated sources of capital and investment opportunities.
This enables a greater intensity of inward and outward investment, resulting in more efficient investment projects raising capital more cost effectively than in less connected markets.
Inward investment is an important channel through which production efficiencies can spread rapidly from one market to another.

Market Trends

Economic development, increase in accessibility of transport facilities, rapid urbanization, and the upsurge in disposable income have increased the traveler’s capacity and affordability to purchase exclusive products. This has created a positive impact on the expansion of the duty-free and travel retail market.

Changes in lifestyle:

The changing economies of developing countries and increasing the purchasing power of customers is positively impacting market growth. During the last 15 years, the global air passenger increased by around 5% year-on-year.
According to the International Air Transport Association (IATA), the number of travelers is expected to double between 2016 and 2035.
Aviation demographics are undergoing substantial changes, with new-age groups taking center stage. Generation Y is increasingly spending more time traveling and is expected to be the key customer for travel retail.

Growth in the travel & tourism industry:

Continuous development in the travel & tourism industry and integration of various segments such as hospitality & infrastructure with government initiatives, boost the travel & tourism industry, which in turn supplements the growth of the duty-free and travel retail market.
The building of new airports and ports will boost the revenues in the European duty-free and travel retail market.

The rising number of the middle-class family:

The emerging middle class in the new markets is one of the main driving factors for increasing demand for travel retail.
Wealthy tourists from the Middle East, China, and the U.S. contribute considerably towards the growth of the European travel retail market. With the surge in middle-class median income, their expenditure trend, traveling mode, and demand for premium brands will also rise, thereby, fueling the travel retail sales.
More prominently due to an increasing number 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.
Retail benefits, a good selection of shopping malls, famous international brand stores and desire to buy products at a better price are some of the major factors considered by the middle-class customers during travel retail shopping.

Development of Retail infrastructure at terminals:

The rapid development and urbanization will augment the development of infrastructure and offer access to better amenities in the market. The building of new airports and ports will boost the revenues in the duty-free and travel retail market.
The capacity within terminals allows individual brand outlets to develop their own retail space, and for larger duty free shops to create branded areas within a larger store, both of which support higher value sales in categories such as fragrance, cosmetics and fashion and accessories.
This is illustrated by the greater average number of shops within airport terminals at airports with higher passenger numbers: smaller airports (1-5m passengers) have on average 18 stores or shops, compared to 109 for larger regional airports (25-40m passengers) and 200 for the largest category (more than 40m passengers).

Industry Challenges

Some of the challenges faced by the European duty-free and travel retail market today are:

Regulatory challenges:

The regulatory challenges faced by the sector include EU food labeling rules, where requirements for consumer product information in the language most easily understood in the country of sale will create considerable logistical difficulties for unified pan-European supply chains.
This could undermine one of the key operational efficiencies of the European duty-free and travel retail sector, resulting in lower yields for airports and potentially reduced the range of food products on sale at airports.

Competition from online retail:

Unfavorable weather conditions can also become a challenge to market success. If people cannot travel due to bad weather, they are not going to buy as many goods.
While it remains a major contributor to European airport finances and profitability, duty-free and travel retail faces a number of significant challenges as the air travel market mature and retailing continues to undergo fundamental changes arising from continuous innovation in and use of online shopping.

Market maturity:

The growth of air travel, in absolute terms and across society, has not only widened the range of demographic groups that pass through airports it has also increased the number of repeat passengers. According to ACI Europe, for airports and retailers, it is increasingly difficult to convey a sense of occasion which would otherwise encourage more discretionary spending.
This normalization of air travel means that airports now face competition not only from other airports but also from the high street and digital channels.
Passengers are increasingly willing to use their time in the airport to browse, but then to complete the transaction at their destination, or after they have returned home.

Seasonal nature of the industry:

Another factor contributing to the challenges of the market is its seasonal nature.
The operational cost of airlines is very high, and the demand is subject to significant seasonal fluctuations.
With the increasing number of airline companies, businesses are looking for alternatives that could help airlines to gain an edge in the competitive market. In order to gain an edge in the market, the airline companies are highly focused on enhancing its services for high customer satisfaction.

Technology Trends

Factors such as technological advancements, give rise to easy access to hotel & transport booking through online portals, which further boost the growth of the Europe duty-free and travel retail industry. The luxury brands have their eyes peeled for new technologies as well.

The digital generation is just one element of a wider trend which is only set to grow, airport retailing operations are increasingly competing against online sources, with passengers in some cases actually making online purchases on their mobile device, in the airport shops, after having selected their product from the airport’s range.

The airports are in some way facilitating this trend, as wider inter-airport competition has required operators to introduce free Wi-Fi at many airports across Europe. However, online retail websites combined with the very widespread use of smartphones can also assist airport retailing.

According to a recent study, digital devices (particularly smartphones) are becoming a powerful way for consumers to connect to physical stores, rather than simply bypassing them for pure online retailing, 71% of in-store shoppers say that their smartphones have become important to their in-store experience, 42% of shoppers search for information while in store, and 64% look for online recommendations.

For example, passengers can confirm that airport stores do represent value for money (by using online price comparisons), and then use time at the airport for the in-store experience.

Geo-targeting can direct passengers to specific stock in specific stores within an airport retail space. In this way, smartphones can become personal shopping assistants, helping to guide passengers to purchases at the terminals.

Pricing Trends

It is anticipated a consistency in the prices of goods in Europe’s travel retail market. While some brands continue to hike the prices on their offerings, local goods manufacturers in the region are capturing the demands for consumers in the middle-income group.

Through 2019-2025, the market in Europe will witness a steady expansion, anticipating that its contribution to global travel retail revenues will incur a considerable uptick.

During 2018, the luxury brand segment accounted for the major shares and dominated online retailers. Factors such as the increased comfort and better costs among competitors will make the price competitive during the forecast period of 2019-2025.

Regulatory Trends

Governments in many countries have laid strict rules and regulations for passengers for shopping in duty-free shops at airports. Political unrest has also hampered the growth of the duty-free and travel retail market.

Airports also face challenges within the wider aviation sector, both commercial and regulatory.

These include the potential for airline restrictions on cabin baggage and regulatory constraints on sales of certain goods. The 2013 report 50 for the European Travel Retail Confederation on the onboard carriage of duty-free and travel retail showed the extent to which baggage restrictions could harm retail sales, with uncertainty affecting even airports where restrictions were not in place.

The European Parliament Report on the future of regional airports and air services in the EU (2011/2196(INI)) called for EU policies to support the socially and economically viable development of regional air services, including measures to prevent the imposition of one bag rules by airlines from undermining regional airports’ commercial development.

The European Commission’s 2015 Aviation Strategy has drawn attention to the significant competitive disadvantage for less-connected cities, regions or countries that arise from thinly serviced airports and has highlighted the importance of enhanced connectivity to economic growth’.

Other Key Market Trends

European aviation supports value-added activities and employment in the supply chains to the sector. Overall, studies estimate that this measures around 1.0% of GDP for Europe as a whole.

Retail and other in-airport terminal services (such as car hire and food and beverage services) generated around 107,000 jobs in 2013, about 6% of the 1.7 million total direct aviation-related jobs generated at or in the vicinity of airports.

Scaling the contribution of duty-free and travel retail by its relative employment level within the aviation sector, it’s estimated the direct contribution of European airport duty-free and travel retail to 0.05% of European GDP.

In addition to the direct impact of employment and revenue generation at airports, duty-free and travel retail also stimulates activity and employment in the supply chain.

As well as sales volume, it also provides a ready-made international customer base for brands and retailers who can use this exposure to develop their export sales more rapidly than through traditional channels.

Market Size and Forecast

The European Duty-Free & Travel Retail market size was valued at US$ 24.7 billion in 2018. It is anticipated to register a CAGR of 7.2% over the forecast period to reach US$ 39.9 billion by 2025.

The growth of the market is driven by changes in lifestyle, a rise in tourism promotion, increase in accessibility of transport facilities, and others, which in turn are expected to fuel the growth of the travel retail market. Moreover, this trend is expected to hold for the years 2019 to 2025.

The Duty-Free & Travel Retail market can be segmented on the basis of product type and channel.

European Duty-Free & Travel Retail Market Segmentation Based On Products

The European Duty-Free & Travel Retail market is segmented on the basis of product type into luxury goods, wine & spirits, electronics, food & confectionery, tobacco, perfumes & cosmetics, and others.

Perfume & Cosmetics:

The perfumes & cosmetics segment has a very strong retail marketplace at airport malls, downtown hotel shops, and thus, generated the maximum revenue in 2018 and is projected to rise at a notable growth rate.
The perfumes & cosmetics category is the largest category. It commanded the share of 30 % of the total travel retail sales in the region in 2018. The market accounted for US$ 7 billion in 2018, and is expected to reach US$ 11.5 billion by 2025, growing at a CAGR of 7.14% over the forecast period of 2019-2025.

Wine & Spirit:

The wine and spirit segment is the second-largest category which is expected to grow from US$ 4.2 billion in 2018 to US$ 6.5 billion in 2025, growing at a CAGR of 5.5% over the forecast period of 2019-2025.
Wines and spirits account for 15-20% of sales in all regions. Sales of wine and spirits also declined markedly as a share of total sales (from 20% to 16%).

Electronics:

The electronics category accounted for US$ 2.1 billion in 2018 and is expected to be the second-largest segment in terms of value at US$ 3.35 billion by 2025, growing at a CAGR of 4% over the forecast period of 2019-2025.
The high-value electrical products purchased at duty-free and travel retail shops are intended for gift-giving, with special editions of products and promotions being supplied only to the travel retail sector.

Luxury Goods:

The luxury goods travel retail market category is the most rapidly growing category. The luxury goods travel retail market accounted for US$ 3.85 billion in 2018, is expected to reach US$ 6.28 billion by 2025.
The market is growing at CAGR of 9.5% due to a rise in disposable income, exposure to social media, urbanization, and preference toward investments on personal luxury goods.
The growing demand for premium perfumes and growing popularity of make-up amongst the women of all ages is propelling the growth of this segment in the global market.
The increasing number of professional working women and rise in the travel frequency are some of the other factors augmenting the demand in the market.

Food, Confectionery & Catering:

In 2018, the food, confectionery & catering retail market was US$ 2.1 billion and it is expected to grow at CAGR of 4.2 % to US$ 3.14 billion in 2023.
Food, confectionery & catering products are normally intended for consumption outside of the country in which they are purchased; therefore, the final destination of the products could be anywhere in the world.
Luxury chocolates are an important part of a confectionery offer as one of the primary reasons for traveller purchases is gifting.

Tobacco:

The revenue in the tobacco segment amounts to US2.45 Billion in 2018. It is likely to retain its dominance until 2025, expanding at a CAGR of just over 5% to reach US$ 4.4 by the forecast period.
Tobacco goods have seen the sharpest decline in the overall share of sales, falling from 23% to 13% in the period 2003 to 2018.
Although its share of total sales has declined in recent years, tobacco remains an important category of duty-free and travel retail: it generates high margins for retailers, which are then passed on to the host airport, airline or ferry line in the form of higher concession fees than for other product categories. Passengers who buy tobacco are also likely to buy products in other categories.

Others:

A travel retail presence can help a company generate brand awareness and overseas market presence. The other segment retail market accounted for US$ 3 billion in 2018, is expected to reach US$ 4.71 billion by 2025.
Many goods are produced specifically for the duty-free market only and cannot be found on the high street which is expanding at a CAGR of just over 5% during the forecast period.

European Duty Free & Travel Retail Market segmentation based on channel

Europe’s Duty-Free & Travel Retail market is segmented on the basis of the channel into airports, cruise liners, border, down-town, & hotel shops, and railway stations.

Airport:

Airport retailing is one of the biggest retailing sectors in the European travel retail market. The airport retail stores are commonly found at departures, arrivals, and airside. Europe’s airport retailing market reached US$ 11.17 Billion in 2018 and is expected to grow at a CAGR of 7.6% during the forecast period.
The growth in the market is driven by the rise in air traffic, expansion of airport infrastructure, and high customer demand for luxurious products. And by 2025, the market is targeted to reach US$ 23.6 billion.

Cruise Liner:

This segment was valued at US$ 800 million in 2018 and will reach $1.18 billion in 2025. The cruise liner retail market demand may witness gains at over 5.8% by the end of 2025.
European cruise liner retail continues to generate significant amounts of overall revenue from duty free and travel retail on board and, in a few cases, from their own shore-based shops.
While, overall, this is not a growing revenue stream within the region, it remains a valuable complement to and generates revenues from traveller’s ticket sales.

Railway Station:

The railway station retail market in Europe accounted for US$ 1.21 billion in 2018 which is expected to reach US$ 1.77 billion by 2025. The market is growing at a CAGR of 4.1% due to changes in lifestyle and a rise in tourism promotion.
As the sector has grown within Europe and also globally, this has resulted in the huge range of goods which are now stocked in railway station and other sales channels around the world being dominated by European brands.

Border, Downtown, & Hotel Shop:

The border, downtown, & hotel shop is gaining popularity in Europe and they performed well in 2018. This segment’s market size was valued at USD 8.5 billion in 2018, is expected to reach US$ 13.3 billion by 2025. It is anticipated to register a CAGR of 6.23% over the forecast period.
The border, downtown, & hotel shop retail sales contribute to growing European export markets, both in straightforward measurements of export sales in a given year, but also in introducing new products and brands to consumers in other markets.
Having established brand awareness via travel retailing, European suppliers can then gain further sales via within-country retail outlets.

Market Outlook

The European duty-free & travel retail market is forecast to register healthy growth of CAGR 7.2% reaching US$ 39.9 billion in value terms by 2025.

By channel, the airport segment accounted for the maximum market revenue in 2018 and is projected to grow at a CAGR of 7.6% during the forecast period.

Airport retailing is one of the biggest retailing sectors in the international travel retail market. The airport retail stores are commonly found at departures, arrivals, and airside.

The airport travel retail market is largely driven by a rise in air traffic, expansion of airport infrastructure, and high customer demand for luxurious products. Thus, the airport segment generated the maximum revenue in 2018 and is expected to grow at a considerable growth rate during the forecast period.

By product type, the luxury goods segment is expected to grow at the highest CAGR of 9.5% during the forecast period. The perfumes & cosmetics segment has a very strong retail marketplace at airport malls, downtown hotel shops, and thus, generated the maximum revenue in 2018 and is projected to rise at a notable growth rate.

However, the luxury goods travel retail market is anticipated to witness steady demand in the developed regions owing to the early adoption of a premium lifestyle and has huge growth potential in the emerging markets.

The market across the U.K. held the largest share in 2018, contributing more than one-fourth of the market, owing to its stronger base of luxury products and the presence of some of the biggest apparel and cosmetics brands. However, the market across Germany is expected to portray the fastest CAGR of 10.8% during the forecast period.

This is attributed to factors such as improved living standards, rise in disposable income, and development of the tourism industry. Moreover, the increase in purchasing power parity, and accessibility to luxury brands through travel retail outlets have significantly contributed toward the expansion of the travel retail channel in the region.

Technology Roadmap

Advanced technology and customer intelligence are enabling new opportunities for improving customer experiences. Implementation of customer intelligence is enabling new opportunities for airline retail. Most of the airlines are on the learning curve when it comes to retail opportunities.

With the external recruits, who have experience in retail, airlines are improving their retail performance. Big data utilization is also impacting airline retail and is optimizing customer value and experiences. With the introduction of advanced technologies and the increasing demand for enhanced customer experience are significantly driving the airline retail market.

In order to operate in a customer-centric environment, airlines are focusing on implementing intelligent retail solutions and are creating potential demand for intelligent technology infrastructure.

The intelligent technology infrastructure combines artificial intelligence (AI), machine learning (ML), sophisticated operations-research (OR) models, and customer data to provide relevant insights. The customer data enables airlines to identify, analyze, and predict consumer behavior..

Intelligent technology also empowers department to schedule synchronization, deploy schedules faster to increase revenue and reduce recommendation costs, monitor and analyze fares automatically, deliver persona-based, flight-plus-ancillary bundled offers, provide pricing recommendations that use multi-channel availability and are buffered from abrupt market changes, and provide personalized offers and services that are consistent across all channels.

It is expected that the airline retailing market will witness a considerable demand for intelligent retail solutions during the forecast period.

Distribution Chain Analysis

On the basis of distribution channel the market can be classified into airports, cruise liners, border, down-town, & hotel shops, and railway stations.

The market consists of players offering duty-free products through different conceptual stores, namely, direct retailer, department store, specialty retailer, and supermarkets. In the market, major revenue is generated through direct retailing, which includes stores, such as Lacoste, Hugo Boss, Levi’s, among others

However, the online segment is poised to record the fastest growth over the forecast period, rising at a CAGR of over 4.0%. Usage of mobile phones and other electronic devices by consumers to browse and shop online for products is increasing significantly.

In response to this transition in the nature of consumers’ buying patterns, brands are now focusing on consolidating their presence in online retail.

The region possesses some of the biggest apparel and cosmetic brands, namely LVMH from France and H&M from Sweden, which holds a significant share in the luxury apparel, perfumes, and cosmetics sector, thereby making it one of the largest travel retail markets in 2018.

Competitive Landscape

The Europe duty-free and travel retail industry is highly competitive. Major players have adopted expansion as the key strategic move to sustain in the market. For instance, in October 2018, Dufry opened a duty-free store at Norwich airport to improve passenger communication.

In March 2017, Dufry’s subsidiary “Hellenic Duty-Free Shops” and Fraport Greece signed an agreement. According to this agreement, Dufry is expected to operate for 30 years to deliver retail services at 14 Greek airports. Detailed, current and future Europe travel retail industry trends are outlined to determine the overall attractiveness of the market.

The industry has seen many mergers and acquisitions over recent years. The presence of online players operating across the globe makes this market appears highly competitive.

The Europe travel retailing market is fragmented with the presence of several airlines, and the competitive dynamics in the travel retailing market is expected to change during the forecast period.

Additionally, the presence of a large number of regional as well as global airlines intensifies the competition, which might affect the market share of companies operating in the travel retailing market.

Wealthy tourists from the Middle East, China, the U.S., and Russia continue to contribute a significant part in the market.

Competitive Factors

The companies are increasingly following strategically alliances such as acquisitions and product expansions in new locations to improve their market positions. Additionally, the major players are also focusing on strengthening their product portfolio by acquiring small and local brands.

Moreover, companies focus on introducing new technologies in order to improve in-store retail experience whilst offering a seamless shopping experience over multiple channels.

The emergence of several dedicated outlets with modern and customer interactive designs will help vendors attract a large number of consumers in the market. The players are providing pop-up stores that provide a range of personalized treatments, demonstrations, services, and gift with purchase to boost revenues in the duty-free and travel retail market.

The increasing focus on digitalizing the retailing process so that they could maximize their profit and convert more customers will boost sales in the global market.

Various leading vendors are providing easy home delivery options and innovative customer services that improve their satisfaction levels and contribute to the growing revenues in the global duty-free and travel retail market.

The benefit of attractive prices, service, convenience, recognition, and high-end product merchandising are some of the factors that will promote the evolution of the retail industry.

The major players in the global market such as Autogrill (Italy), Dufry (Switzerland), Heinemann (Germany), World Duty-Free Group (Spain), are playing an important role in the overall development of this industry.

The company has been focusing on famous tourist destinations and most accessible airports. The company has developed a strong portfolio of items, such as perfumes, and cosmetics, among others.

Dufry provides its customers with brands from more than 1,500 suppliers. The company has a global presence with its corporate structure organized into five divisions. Dufry has adopted a customer-centric approach to understand the requirements of local customers and customize its products and service offerings accordingly.

Key Market Players

The key players in the market are Autogrill S.p.A., Daa Plc., Dufry AG, Flemingo International Ltd., Gebr. Heinemann SE & Co. KG, Lagardère SCA, LVMH Group, RegStaer, TRE³, and WH Smith PLC. The domestic brands will continue to collaborate with global players to develop high-end products for consumers.

Company Profiles

Autogrill S.p.A.:

Autogrill S.p.A., an Italian multinational company, operates in various countries offering food and beverage and retail services for people on the move on key motorways, main rail and air hubs around the world.
The Company conducts the majority of its business in North America and Italy where it obtained concessions, offering a wide portfolio of brands and food and beverage products

Daa Plc.:

DAA operates in Ireland. It was founded in 1937.
DAA Public Limited Company provides airport maintenance services.
The Company offers airport management, operation and development, domestic and international airport retail management, and airport investment services.

Dufry AG:

Dufry International serves clients worldwide. It was founded in 2003.
Dufry International AG, doing business as Dufry International Ltd, provides travel retail services.
The Company markets miscellaneous consumer discretionary products at airports, cruise liners, seaports, and other touristic locations.

Gebr. Heinemann SE & Co. KG:

Gebr Heinemann serves customers worldwide. It was founded in 1903.
Gebr Heinemann of Germany operates as a trading house.
The Company provides professional solutions to the international market as a distributor, retailer, and logistic specialist.

LVMH Group:

LVMH Group operates from France. It was founded in 1971.
LVMH Moet Hennessy Louis Vuitton SE is a diversified luxury goods group. The Company produces and sells wine, cognac, perfumes, cosmetics, luggage, watches, and jewelry

WH Smith PLC:

WH Smith PLC operates from the UK. It was founded in 1971.
WH Smith PLC retails books, magazines, newspapers, and periodicals. The Group sells its products through a number of high street stores, airport and hotel concessions, and an online bookstore.
The Company’s stores in the United Kingdom trade under the WH Smith name, while their stores in Scotland operate under the John Menzies’brand.

Strategic Conclusion

European duty-free and travel retail goods market is forecasted to grow at a healthy rate during the projected period (2019-2025). The growing demand for retail chains that offer luxury and premium brands of various products is augmenting the growth of the duty-free and travel retail market.

The rising popularity of the travel and tourism industry is one of the primary factors in the market. These services enhance the experience and value for money which enables consumers to shop premium and luxury brands at a discounted price in the market.

It is important for European governments, therefore, to recognize that the continued vitality of this sector is not just beneficial for passengers’ travel experience but also underpins the provision of vital transport infrastructure across Europe.

The idea of temporary spaces that offer end-users extra time after security check-in and allows them to get entertained, excited, and indulgent with the ambiance and experience of shopping for international products.

The increasing focus on digitalizing the retailing process so that they could maximize their profit and convert more customers will boost sales in the European market.

References

http://www.etrc.org/uploaded/downloads/dfwc-report-economic-impact-of-duty-free-and-travel-retail-in-europe–march-2016.pdf
https://www.bloomberg.com/press-releases/2019-05-23/europe-travel-retail-market-to-reach-39-60-bn-by-2025-at-7-2-cagr-says-allied-market-research
https://www.businesswire.com/news/home/20180711005355/en/Duty-Free-Travel-Retail-Market—Global-Outlook
https://www.businesswire.com/news/home/20181130005146/en/Global-Travel-Retail-Market-Report-2016-2018-2026
https://www.businesswire.com/news/home/20180711005355/en/Duty-Free-Travel-Retail-Market—Global-Outlook
https://www.marketwatch.com/press-release/duty-free-and-travel-retail-market—global-outlook-and-forecast-2018-2023-2018-12-06
https://www.theinsightpartners.com/reports/europe-airline-retailing-market
https://www.prnewswire.com/news-releases/travel-retail-market-to-garner-153-7-billion-by-2025–globally-allied-market-research-300914114.html
http://www.etrc.org/uploaded/downloads/dfwc-report-economic-impact-of-duty-free-and-travel-retail-in-europe–march-2016.pdf
https://www.alliedmarketresearch.com/europe-travel-retail-market
https://www.marketsandmarkets.com/Market-Reports/airport-retailing-market-196866228.html
https://www.statista.com/statistics/1036221/travel-retail-sales-europe/
https://finance.yahoo.com/news/europes-9-3-billion-airline-123700043.html
https://www.marketwatch.com/press-release/duty-free-and-travel-retail-market—global-outlook-and-forecast-2018-2023-2018-12-06
https://onedigiclick.com/2019/10/03/duty-free-retailing-market-size-industry-growth-report-2025-dufry-lagardere-travel-retail-lotte-duty-free/
https://www.bloomberg.com/profile/company/ATGSY:US
https://www.bloomberg.com/profile/company/784381Z:ID
https://www.bloomberg.com/profile/company/0932777D:SW
https://www.bloomberg.com/profile/company/7696423Z:GR
https://www.bloomberg.com/profile/company/MC:FP
https://www.bloomberg.com/profile/company/SMWH:LN

Appendix

List of abbreviations

AI: Artificial intelligence
CAGR: Compound Annual Growth Rate
GDP: Gross domestic product
ML: Machine learning
OR: Sophisticated operations-research
US$: United States Dollar