The report categorizes the duty-free retailing market in Europe by product (fashion, accessories, and hard luxury, cosmetics and perfumes, wine and spirits, tobacco, and confectionery and fine foods) and by distribution channel (airports, border, downtown, and hotel shops, cruise lines, ferries, and seaports, and rail stations and others).
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Market driver: premium product offerings and exemption from excise duties
In Europe, duty-free retailing is mostly concentrated on the value sales of luxury brands of fashion goods, accessories, hard luxury items, cosmetics, fragrances, wines and other non-alcoholic beverages. Among these, fashion goods, accessories, hard luxury items, cosmetics, and fragrances accounted for more than two-thirds of the total revenue generated in the regional market in 2016. This data indicates that premium categories play an important role in determining sales in the duty-free retailing space.
According to Tamal Saha, a lead analyst at Technavio for retail goods and services research, “The exemption of excise or customs duties on duty-free products at airports, cruise lines, and international borders, lowers the prices of these otherwise expensive premium duty-free products. These products become affordable to the price-sensitive consumer segment that ultimately positively impacts the growth of the market.”
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Market trend: entry of global brands in European market
Since duty-free retailing markets of different European countries are actively being promoted as shopping destinations, an emerging category of travelers consider shopping at these spots an integral part of their travel experience. LVMH, one of the leading retailers in the market and the largest luxury brand owner, is also one of the largest investors in duty-free retailing. The revenue growth from LVMH’s duty-free business recorded a significant increase in its revenue. Hermès, one of the well-known luxury brands in France, is optimizing and expanding a network of boutiques in airports to showcase its retail design concept and service. Therefore, the entry of global brands in the regional market is expected to have a positive impact on the growth of the market during the forecast period.
Market challenge: low consumer interest in shopping at travel points
Limited time for vacations and leisure for many tourists forces them to focus on traveling rather than spending time and money on related activities such as shopping. Analysis of the daily footprint data of travelers in any given busy international airport has shown that only 5%to 10% of the total number of travelers tend to visit duty-free retail stores in an airport. In addition, for shorter journeys, most travelers in Europe do not prefer to shop onboard during their international flights.
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Key vendors in the market
- daa (Aer Rianta International)
The duty-free retailing market in Europe is moderately concentrated in nature. This offers retailers the space to explore potential growth opportunities in Europe. The markets in fast-growing European countries such as the UK, Germany, France, and Spain have a high population of millennials who are aware of duty-free retail products. This demographic frequently avails transport facilities and exhibit high interest in premium products and accessories. This consumer base presents a considerable growth opportunity for players operating in this space.
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