How can duty-free win back shoppers?

Travel retail sales are 13% below pre-pandemic levels despite a surge in air passengers.

Global travel retail is expanding in passenger terms but struggling to convert traffic into spending, highlighting a widening gap that operators are racing to close.

Air travel reached 9.5 billion passengers in 2024, surpassing pre-pandemic levels. Yet travel retail sales totaled $74.1b, about 13% below 2019, according to a September 2025 report by consulting firm Kearney. It marked the third straight year when passenger growth outpaced retail value.

The Asia-Pacific region, still the biggest contributor to global travel retail, posted declining sales despite record passenger volumes.

The drop was driven by policy restrictions and softer spending from Mainland Chinese travelers. India stood out as an exception, with rising consumer confidence supporting retail gains.

Europe and the Middle East benefited from more diverse passenger mixes and targeted retail upgrades, whilst the Americas recorded modest growth, constrained by older store formats and fragmented operations.

Globally, average spending per passenger remains about 17% below pre-pandemic levels.

A Kearney survey of more than 3,000 travelers and interviews with over 40 senior executives found structural shifts in consumer behavior.

Shopping frequency fell four percentage points year over year. Almost 40% of passengers said they question whether duty-free still offers genuine savings.

Demand is also fragmenting across demographics and nationalities. Gen Z travelers shop less often but with higher intent, prioritising relevance, identity and exclusivity. Older travelers are more cautious, trading down or skipping purchases altogether.

Indian and Gulf travelers continue to show strong price confidence, whilst Western Europeans increasingly expect brand relevance and credible value beyond discounts.

Mid-tier offerings are under pressure, with growth concentrated at entry-level value products and premium segments.

Wider geopolitical and economic forces are adding pressure. Kearney cited shifting global alliances, trade barriers, social polarisation, fast-moving technology and climate risks as key headwinds.

About a quarter of global travel retail sales—roughly $18b—comes from corridors exposed to elevated conflict risk. In Asia-Pacific and the Middle East, 30% to 40% of passengers come from higher-risk areas.

Airspace closures, sanctions and route shifts have become more frequent. More than 70% of Gen Z travelers surveyed said political or economic issues influence their brand choices, linking retail performance more closely to global events.

Despite near-term pressures, longer-term forecasts remain positive. A February 2026 report by Mordor Intelligence Pvt. Ltd. projected that the Asia-Pacific travel retail market would grow from $36.74b in 2025 to $39.54b this year, reaching $57.06b by 2031.

The firm attributed projected growth to recovering aviation and rail networks, visa liberalisation and infrastructure upgrades. It also cited China’s visa-free initiatives and rising outbound travel from India as drivers of demand for fragrances, cosmetics and niche wines.

Airports are adjusting by redesigning terminals to extend dwell time and integrating click-and-collect platforms that connect digital browsing with in-terminal pickup.

For operators, the challenge is execution. Turning record passenger numbers into higher spending will require clearer pricing, better product selection and store formats that match changing demand, whilst managing geopolitical and operational risks.

Questions to ponder: