Asia Pacific (APAC) remains the fastest growing and largest market for duty-free retail products, accounting for 60% of global duty-free sales in 2020. It is expected to exceed prior levels COVID-19 in 2023 as normalcy returns. market and customer demand increases, notes GlobalData, a leading data and analytics company.
The APAC region recorded a decline of 70.1% in 2019-2020, behind the Americas and the Middle East and Africa region. A significant decline in sales in major Asian duty-free markets such as South Korea, Thailand, Japan and Singapore can be attributed to the overall contraction of the APAC duty-free market.
Ankita Roy, Retail Analyst at GlobalData, comments: “In 2020, the Chinese duty-free market has managed to demonstrate great resilience in the face of the pandemic and recorded the smallest year-on-year sales decline of 4 , 8% in 2019-2020 before returning to growth (66.8%) in 2021.
“This can be attributed to the resumption of tourism and duty-free initiatives in Hainan province which have succeeded in making up for lost sales elsewhere in the country. The region’s duty-free retailers can leverage the strong consumer interest and purchasing power through domestic and international travel retailing to pave the way for the recovery.
Government initiatives to help duty-free players (such as China Duty-Free) in China have seen it become the clear winner in the APAC duty-free landscape. China Duty Free survived the COVID-19 crisis with an 8.2% sales increase in 2019-2020, while other retailers saw significant sales declines during the pandemic.
Roy continues, “China remains a force to be reckoned with when it comes to dealing with travel restrictions induced by the COVID-19 pandemic and successfully pulling its duty-free market out of the near-death situation. . To underline, on the backs of travel restrictions induced by COVID-19, almost all Asian countries saw a sharp drop in their sales figures in 2020, while China remained the only country in the region to weather the crisis. in large part thanks to a favorable government. Chinese consumer revenge policies and spending.
In 2020, China overtook South Korea, the largest duty-free market in 2019, with Chinese duty-free sales valued at US $ 6,996 million in 2020 and with a forecast CAGR of 17.4% in 2019- 2025.
Roy concludes, “Macroeconomic factors in South Korea such as travel restrictions induced by COVID-19 and the recent trade war and political tensions with Japan and China have led to a decrease in tourist arrivals from these countries lately. However, South Korea has developed an innovative approach to help duty-free players and struggling airlines in the country, with the launch of destinationless flights. This will bring some relief to the South Korean duty free market. However, sales are not expected to return to pre-COVID-19 levels by 2024. Other major duty-free markets in the region such as Thailand, Japan and India will return to growth from 2022. , contributing to the recovery of worldwide tax-free sales. Sales.”
Source: global data