Duty Free Retailing in the Americas, 2015–2020; Market Dynamics, Retail Trends, and Competitive Landscape
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The Americas duty-free sales was valued at $1.6 billion in 2020 and the market is set to grow at a CAGR of more than 30% during the forecast period driven by the revival of tourism and travel relaxations. The growth is driven by airport expansion or space refurbishment; rising passenger numbers following the relaxation of lockdown regulations and the mass vaccination rollout; the growing popularity of cruises; the rollout of downtown formats; the improved quality of retail; the investment in arrivals duty-free formats and the relaxation of duty-free regulations across various countries.
A major bounce back in America’s duty-free retail will occur only in 2022, following which the rate of growth will be slower. The concept of vaccine travel is sparking optimism for retailers but passengers who must pay for PCR tests will be less inclined to spend on luxury products on arrival or departure. The Americas duty-free market will be driven by the resurgence of footfall and the expansion of retail space. Online sales will help businesses to some extent while footfall is low, but it will be less impactful once travelers return to stores post-COVID-19. Government aid and initiatives to boost the travel market will aid recovery.
Overview of Duty-Free Retailing in the Americas
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What are the market dynamics in duty-free retailing in the Americas?
The Americas is expected to register the second largest year-on-year growth in 2021 following the Asia-Pacific region. The sudden spike in 2021 after the drastic decline in 2020, owes to the relaxation of lockdown restraints across the region and mass vaccinations. However, the recurring waves of the pandemic might affect sales for all the regions, thus leading to a fall in the rate of increase in 2021. Growth in the Americas is subject to how the US deals with the situation. The situation looked positive however, the emergence of the Omicron variant raises doubts about the speed of recovery.
The drivers in the duty-free retailing in the Americas:
- Resurgence of footfall – The closing down of airports in the wake of lockdowns undertaken by governments in the Americas affected duty-free channel sales. However, with the reopening of economies along with the restart of domestic and international travel, airports have witnessed a recovery in footfall which will aid duty-free retail to register growth.
- Expansion of retail space – With the gradual increase in cross-border tourism, the expansion of major airports have been essential with more space being allocated to travel retail. Newer duty-free outlets are an integral component of the expansion to capture the latest trends and provide first-class service.
- Governments’ recovery aid – Governments in the Americas have supported the aviation industry by enacting relief measures that benefit not only the airlines but also duty-free retailers and restaurants that have been affected by the lockdown.
- In-store measures – Retail operators have prioritized various initiatives inside their stores to enhance customers’ experience in-store, reduce crowding, and accelerate the process of buying which in turn will help drive consumer demand and aid recovery.
The inhibitors in the duty-free retailing in the Americas:
- Impact of COVID-19: COVID-19 led to a suspension in travel and tourism impacted duty-free retailers in the Americas. Duty-free sales in the region have suffered a decline in 2020. The US which held a 69.2% share of duty-free retail in the Americas in 2020 incurred the highest loss of any country in the region.
- Low consumer confidence: The COVID-19 outbreak had not only led to a decline in tourism in the Americas due to the suspension of cross-border travel but also due to the lowering of consumer confidence even after lockdowns were lifted in 2020, due to the fear of contracting the virus while traveling.
- Cruises will be the most affected: The COVID-19 outbreak resulted in the cancellation of nearly all itineraries in H1 2020 and forced most operators to postpone the commencement of itineraries with many routes needing to be altered and major ports refusing ships to dock. Although few cruises have renewed operations in 2021, full recovery takes time until near normalcy resumes.
- Reduced spending on luxury goods: COVID-19 has reduced income opportunities for many people as a result of large-scale layoffs. Customers will be more cautious about indulging in luxury items as a result of the financial constraints imposed by COVID-19, which will rise only if the economy improves.
Which are the key countries in the Duty-Free Retailing in the Americas?
Argentina: Duty-free sales in Argentina recorded a negative CAGR during 2015–2019 and are further expected to register a negative CAGR during the forecast period (2019-2025). Like other American countries, Argentina also received a major blow due to COVID-19 and a ban on traveling. In 2021, it experienced an increase in the number of tourists, but the second wave propelled another lockdown and another phase of travel restrictions from several countries.
Canada: Canada’s duty-free market is set to grow at a CAGR of more than 2% during the forecast period. The country’s international tourist inflows were adversely affected due to the travel ban from countries that have been heavily impacted by COVID-19. In response to the COVID-19 pandemic in Canada, the government sealed the border to “non-essential” travel on March 21, 2020. About 72.5% of the population have received at least one dose of the COVID-19 vaccine and hence by H2 2021, a huge influx of travelers is expected in Canada, leading to a more than 50% duty-free sales growth in 2021 over 2020.
Chile: Chile’s duty-free market is expected to grow at a negligible CAGR during the forecast period. According to The International Air Transport Association, travel restrictions are “killing demand”. Chile closed its borders to international tourists till June 15, 2021 – thus impacting duty-free sales in H1 2021.
Brazil: The Brazilian duty-free market is projected to register a negative CAGR during 2019–2025. The COVID-19 pandemic-related travel restrictions have had a significant impact on both business and personal travel. Because of the changes to Brazil’s travel restriction list, businesses all around the globe have had to cancel or postpone business visits and assignments, further deteriorating duty-free sales growth.
The US: The US duty-free market is expected to register a negligible CAGR by 2025. People traveling for work during the pandemic have avoided visiting retail outlets at airports, resulting in a drop in impulse leisure goods sales. The expected rise will be driven by an increase in foreign travel following COVID-19 limitations, duty-free retailers utilizing digital technology to enhance online sales, and promotional efforts planned by these retailers.
What are the key categories in duty-free retailing in the Americas?
The key categories of duty-free retailing in the Americas include cosmetics & toiletries, drinks, food, tobacco, jewelry & watches, accessories, stationery & cards, printed media, sports equipment, toys and games, communications equipment, computer hardware and software and consumer electronics. the top three categories are cosmetics & toiletries, drinks, and food in 2020.
Duty-free retailing in Americas, key categories
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Market report scope
Market Size (Year- 2020) | $1.6 billion |
Growth | CAGR >30% between 2020-2025 |
Base Year | 2020 |
Forecast Year | 2021-2025 |
Key Categories | Cosmetics & toiletries, drinks, food, tobacco, jewelry & watches, accessories, stationery & cards, printed media, Sports equipment, toys and games, communications equipment, computer hardware and software and consumer electronics. |
Key Regions | The Americas, Asia-Pacific, Europe, Middle East & Africa |
Scope
This report provides an overview of duty-free retailing in the Americas. It provides:
- Market-related data including the overall market size, market share, market growth.
- Market size and share data of all the categories.
- Detailed country-related data for better understanding
- In-depth analysis of the competitive landscape to facilitate decision-making and build strategies.
Reasons to Buy
- Get reliable duty-free retail sales data on nine countries in the Americas for 2015 with forecasts for 2020 and identify the largest and fastest-growing markets to inform market expansion and to manage risk.
- Explore an in-depth analysis of duty-free retail sales data by country and categories to spot and target key categories in each country and use them to plan growth opportunities and develop strategies for each.
- Learn from duty-free retail trends and market drivers to customize your entry/expansion approach depending on the duty-free retail landscape.
- Make country-level comparisons to effectively target new revenue streams and align marketing strategies with the crucial trends influencing duty free-spending in the region.
- Choose partners, understand the competition, with data and analysis of major duty-free operators in the region, including market shares, trading performance, locations, latest developments, and the outlook for each.
Duty Free Americas
DFS Group
DFASS Group
Starboard Cruise Services
Gebr. Heinemann
ATU Duty Free
LS Travel retail
Paradies
Saveria
HMSHost
World Duty Free
The Nuance Group
Table of Contents
Figures
Frequently asked questions
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What was the market size of duty-free retailing in the Americas in 2020?
America’s duty-free sales in 2020 was valued at $1.6 billion.
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What is the growth rate of duty-free retailing in the Americas?
America’s duty-free sales are expected to grow at a CAGR of more than 30% between 2020-2025.
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What are the key regions in duty-free retailing in the Americas?
The key countries in the duty-free retailing in the Americas include The Americas, Asia-Pacific, Europe, Middle East & Africa.
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Which are the key categories in duty-free retailing in the Americas?
The key categories in duty-free retailing in the Americas include cosmetics & toiletries, drinks, food, tobacco, jewelry & watches, accessories, stationery & cards, printed media, sports equipment, toys and games, communications equipment, computer hardware and software, and consumer electronics.
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