APAC’s duty-free retail market to recover in 2023: report
China’s market remained resilient in the past years as tourism recovered.
The duty-free retail market in the Asia-Pacific, the largest market for duty-free retail products, is expected to cross pre-pandemic levels in 2023 as normalcy returns to the market and customer demand picks up, according to a report from GlobalData.
The region and its nations’ duty-free retail sales plummeted 70.1% from 2019 to 2020, trailing behind the Americas and the Middle Eastern & African region, which GlobalData attributed to the overall contraction of the APAC duty-free market.
The region nonetheless remained the fastest growing and the largest market for duty-free retail products accounting for 60% of the global duty-free sales in 2020.
The market in China remained resilient towards the pandemic, registering the smallest YoY sales drop of 4.8% during 2019-20 before it returned to growth at 66.8% in 2021, mainly elevated by recovering tourism and duty-free initiatives at Hainan province, GlobalData’s retail analyst Ankita Roy said.
“Duty-free retailers in the region can leverage the strong interest and purchasing power of consumers through both domestic and international travel retail to set the path to recovery,” Roy said.
The government initiatives to help duty-free players in China also enabled it to become the winner in the APAC duty-free landscape. For instance, China Duty Free survived the pandemic with 8.2% sales increase during 2019-2020, whilst sales for other retailers dropped.
Roy noted that the government support, as well as the revenge spending of customers, helped China to remain the only country in the region to weather the crisis, while Asian countries registered a steep drop in their sales figures in 2020.
China remains a force to reckon with when it comes to dealing with COVID-19 pandemic induced travel restrictions and successfully steering its duty-free market out of the near-death situation,” Roy said.
This has allowed the country to overtake South Korea in 2020. South Korea’s travel restrictions and tensions with Japan and China have resulted in fewer tourist arrivals from these nations in the recent past, Roy said.
“However, South Korea had produced an innovative approach to aid struggling duty-free players and airlines in the country, with the launch of non-destination flights. This will provide some relief to the South Korean duty-free market,” she added.
Other leading duty-free markets in the region such as Thailand, Japan and India are expected to return to growth from 2022, contributing to the recovery of global duty-free sales.