Duty free shops sell the world’s favourite and best known brands – from high luxury to everyday treats
Duty free and travel retail is a unique retailing channel, not least because they operate exclusively in an international trading environment. The industry exists to meet the needs of traveling consumers across the globe, and it is therefore marketed as a high quality, secure retail experience that is unmatched elsewhere. Duty free and travel retail present significant sources of income for business globally, which is intrinsically linked to the health of global aviation, travel and tourism.
The channel has long been - and will continue to be - an efficient and cost effective window to the world for brands
Many of the most popular products in duty free and travel retail stores are well known brands, as having a high profile in the duty free and travel retail category has become a hallmark of many iconic brands, and a crucial way for businesses to elevate their products to international success. For instance, brands such as Johnnie Walker and Toblerone owe much of their global popularity to the DFTR channel, and are now synonymous with international travel in the eyes of consumers. And, with an increasing consumer focus on local products and brands, the channel is evolving to provide a clear platform for the promotion of local brands and products, tapping into the 'sense of place' experience many shoppers value today.
The channel also presents brands with the opportunity to introduce customers to the premium section of their catalogue - because consumers generally make a saving on price when compared with the domestic market, they often choose to convert that saving into a purchase of a more premium version of their selection.
Duty Free supports the travel industry, and brands
The sense of familiarity consumers feel towards high-quality travel retail products is not just a benefit for duty free and travel retail operators. For many airports and international travel hubs, commercial income is derived primarily from retail sales, most notably duty free and tax free sales to international travellers. For example, prior to the pandemic European airports relied on commercial (non-aeronautical) revenues for around 50% of total income, which was often reinvested in airport infrastructure and operations for the benefit of passengers. As 1.72 billion passengers were lost in 2020 (representing a decrease of -70.4% of passenger traffic), it is inevitable that airports will have to rely further on commercial income for their economic survival.
And, from a brand perspective, duty free and travel retail continues to provide a crucial revenue stream for across a variety of product categories. For many brands - especially those in perfumes and costmetics and high-end liquor - duty free and travel retail is often thought of as the 'sixth continent', and a market just as important as any other fixed geographic region. Duty free and travel retail remains, for example, one of the single largest markets for the sale of Scotch whisky. For beauty products it is often their largest sales channel.
Through its robust supply chain, the industry presents high-quality, genuine and authentic products to consumers, and will be an important driver of the recovery for international travel, tourism and aviation. To secure its continued success, it is vital that consumers retain their trust in the duty free industry.