Airports are one of
the prominent places linking travelers internationally and are often
equipped with amenities where tourists and travelers can purchase
necessary goods. During the recent years, airlines and airports are
emphasizing on increasing revenues through the sale of amenities
on-board and in airport facilities. Duty-free
retailing is regarded as alternative solution to meet
passenger’s demands. Duty-free retail is a unique selling channel
to cater the international tourists and travelers. This has emerged
as one of the important sources of income and marketing opportunity
for various businesses around the globe. Products that can be sold
duty free varies by jurisdiction and different rules are applied
based on excise duty calculations, import allowance restrictions and
other factors. The success of the duty-free retail channel is
fundamentally attributed to the rise of global tourism and aviation.
The businesses in the duty free channel operate in a universal
trading environment that meets the needs of travelling buyers,
globally.
New airport
terminals are designed with consideration for large and vibrant
retail spaces as retail contributes substantial share in the
non-aeronautical income, thus duty-free retail shops play vital role
in modern airport terminals. Self-service solutions such as kiosks
have empowered travelers with choices and control over purchases, and
thus are driving duty-free retailing worldwide. Convenience provided
by self-service solutions is resulting in more satisfied customers,
thus impacting their loyalty toward airline services that allows them
to purchase items via self-service stations. Furthermore, many
manufacturers consider this retailing channel as a cost-effective
route to advertise new products to an international audience.
Additionally, these passengers prefer buying expensive items such as
cosmetics, fragrances, wines and liquor, and fashion accessories
available at much lower prices due to exemption of excise duties at
airports.
Despite the presence
of factors driving the market, stringent government regulations
restrict the ability of manufacturers to access this important
market. Moreover, these stringent rules act as hurdles to add new
products, particularly for SMEs and local manufacturers, thus
restricting customer’s choices. Another important factor hindering
the growth of market is linguistic barrier which creates
communication gap between the seller and buyers. The duty-free retail
market is segmented on the basis of product, location and geography.
The market by product is further segmented in to beauty and personal
care, wines and spirits, tobacco, eatables, fashion accessories and
hard luxury. These duty-free retail shops are mostly found at
locations such as airports, railway stations and ports. The duty-free
retail market is anticipated to expand significantly in the Asia
Pacific region with growing tourism industry in this region. Smart
airport initiatives across the globe are also expected to aid the
growth of duty-free retailing during the coming years.
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Some of the players
operating in the duty-free retailing market include DFS Group
Limited, Dufry AG, Lotte Co., Ltd., Lagardère, Aer Rianta
International (ARI), China Duty Free Group Co., Ltd., Dubai Duty
Free, Duty Free Americas, Inc., Gebr. Heinemann SE & Co. KG, King
Power International Co., Ltd., HOTEL SHILLA CO., LTD. (The Shilla
Duty-free), and JR / GROUP.
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