Home » Travel retail at 117 billion in 2030. Customers dissatisfied with the duty free offer

Travel retail at 117 billion in 2030. Customers dissatisfied with the duty free offer

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Travel retail at 117 billion in 2030. Customers dissatisfied with the duty free offer

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If the women’s fashion week alone brought 100 thousand visitors with an impact of 70 million euros for the city of Milan – at least these were the pre-event estimates – the golden week linked to the Chinese New Year in the first weeks of February recorded an increase of spending by Chinese tourists in Europe by 37% compared to 2023, with peaks in some countries including Italy (+49%, according to Ant International).

Travel retail sales are growing driven by tourist flows

The return of tourist flows to Europe – or, more generally, the fact that we have returned to travel – is also pushing the travel channel which, according to estimates by Atri-Italian travel retail association, after having reached 73.4 billion of dollars in 2023 (+24.4%), in 2030 it should reach 117 billion, with a CAGR of 9.85 percent. Thanks to the driving force of luxury sales, therefore, travel retail will grow more in the coming years than it did between 2009 and 2019 when, according to the Tax Free World Association (TFWA) sales rose by 9% per year, with fashion and accessories (+9.2%) and beauty and perfumes (13.4%) above average.

Confirmations of the dynamism of this channel for the high-end fashion sector come from analysts: Bain&Co, in the annual Monitor created for Altagamma, estimates travel retail will grow by 20-30% in 2022 and sees a strong increase until 2030. Carole Madjo, head of European Luxury Goods Research for Barclays, identifies the driver of the growth of the luxury sector in the Chinese and in particular those who travel. I think that as a result of this, sales at airports will go much better, the Chinese will travel more and more to Europe, but they will also continue to go to neighboring countries such as Japan, due to the advantageous exchange rate.”

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Europe and Asia among the key markets

Europe and Asia Pacific remain the main markets where travel retail sales are concentrated. This is confirmed by research by Kearney carried out in July 2023 on Tfwa data: after the inevitable setback of the pandemic, the channel began to grow again in 2022 (when the total revenues of the channel stood at 74% compared to 2019) thanks to the two key markets already mentioned, which are recovering. In detail, Asia Pacific went from a market share of 46.4% in 2019 to 33.4% in 2022 and Europe is at 16.7% against 21% in 2019. «Asia Pacifico will return to full capacity in 2025 – explains Marina Catino, partner of Kearney, head of Strategic Operations and Beauty for Italy and one of the authors of the survey – but certainly the Chinese citizens who have returned to traveling after Covid represent a stimulus important to the recovery of the market.”

The issues: inconvenient duty free and poor offer

The issues, however, are different and Kearney’s study, conducted on around 3 thousand people, highlights some critical dynamics: «After a very initial phase of revenge buying – comments Catino -, in 2022 travelers’ spending in duty free decreased by 11% compared to 2019, thanks to the weight of inflation but also a series of geopolitical dynamics and tensions that have modified travel flows”. In this context, Catino continues, “it becomes essential to keep up with customer requests and expectations both in terms of offer and experiences”.

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