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 surpass pre-existing levels. COVID-19 in 2023 as the market returns to normal and customer demand accelerates, 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 drop in sales in major Asian duty-free markets such as South Korea, Thailand, Japan and Singapore can be attributed to the overall contraction in the APAC duty-free market.
Ankita Roy, Retail Analyst at GlobalData, comments: “In 2020, the Chinese duty free market managed to show 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 recovery of tourism and duty-free initiatives in Hainan Province which have successfully made up for lost sales elsewhere in the country. Duty-free retailers in the region can leverage strong consumer interest and spending power through domestic and international travel retail to pave the way for recovery.
Government initiatives to help duty-free players (like China Duty-Free) in China have made it the clear winner in the APAC duty-free landscape. China Duty Free survived the COVID-19 crisis with an 8.2% sales increase in 2019-20, while other retailers saw a significant drop in sales 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 extricating its duty-free market from near-death situation. . To highlight, following COVID-19-induced travel restrictions, almost all Asian countries saw a sharp drop in sales figures in 2020, while China remained the only country in the region to cross the crisis in large measure thanks to favorable government policies and revenge spending by Chinese consumers.
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% over the period. 2019-2025.
Roy concludes, “Macro-economic factors in South Korea such as COVID-19-induced travel restrictions and the recent trade war and political tensions with Japan and China have resulted in lower tourist arrivals from of these countries in recent years. However, South Korea had developed an innovative approach to help struggling duty free players and airlines in the country, with the launch of non-destination 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 at from 2022, contributing to the recovery of global duty-free trade. Sales.”
Source: Global Data
