Report Overview

The rising disposable income, thriving tourism industry, shifting consumer preferences, and convenience are expected to drive the India Travel Retail Market during the forecast period between 2024 and 2030.

India Travel Retail Market – Industry Trends & Forecast Report, 2030

The India Travel Retail Market size was estimated at USD 1.89 billion in 2023. During the forecast period between 2024 and 2030, the India Travel Retail Market size is projected to grow at a CAGR of 7.89% reaching a value of USD 3.03 billion by 2030. A prominent driver of the market is the increasing number of domestic and international travelers. Travel retail involves the sale of various goods and services in locations like airports, cruise ships, and border crossings, offering duty-free shopping opportunities. Also, rising incomes in India enable more spending on travel retail, while improved air connectivity enhances travel convenience. Notably, India's growing reputation as a tourist destination attracts more international visitors, boosting the market further. Changing consumer preferences towards unique and high-quality products also drive increased purchases from travel retail outlets.

Travel Retail – Overview

Travel retail refers to the sale of goods and services to travelers in transit locations such as airports, cruise ships, border crossings, and international train stations. These outlets typically offer a variety of products, including cosmetics, perfumes, alcohol, tobacco, luxury items, electronics, and souvenirs. One notable aspect of travel retail is the provision of duty-free shopping, allowing travelers to purchase items without paying certain local taxes or duties, thereby often offering them at lower prices compared to retail stores elsewhere.

India Travel Retail Market

Growth Drivers

Expanding Tourism Industry

India's burgeoning tourism industry is significantly shaping the country's travel retail market, witnessing a surge in demand for goods and services from outlets like duty-free shops, airport boutiques, and hotel stores. This rise in demand is driving market expansion, prompting the establishment of new retail spaces and the expansion of existing ones. Tourists' evolving preferences and spending habits are influencing the products available in these stores. India's thriving tourism sector is a key force propelling growth and transformation in the travel retail market. In response to the increasing popularity of coastal tourism, a leading online travel agency in India has launched the 'Beaches of India' campaign, promoting the nation's coastal attractions as desirable tourist destinations.

Shifting Consumer Preferences

Consumer preferences in India's travel retail sector are undergoing a notable shift. With evolving lifestyles and increased exposure to global trends, travelers now seek unique and high-quality products. This inclination towards exclusive offerings is reshaping the assortment of goods available in duty-free shops, airport boutiques, and hotel stores. As consumers prioritize experiences and value authenticity, there's a growing demand for products that reflect their individuality and cater to their discerning tastes. This shift underscores the importance for retailers to adapt their offerings to align with changing consumer desires, thereby enhancing their competitiveness in the market.

Rising Disposable Income

The surge in disposable incomes, constituting close to 60% of the GDP, propels the growth of India Travel Retail Market. As consumers become more affluent and well-traveled, there's a notable shift towards discretionary spending, especially on leisure and business travel. This reflects the dynamic and upwardly mobile nature of modern India, signaling immense potential for the travel retail sector. Additionally, a study by Oxford Economics forecasts New Delhi and Mumbai to emerge as the world's largest consumer cities for middle-income households by 2030, further affirming India's rising economic stature and its promising outlook for retail growth.

Challenges

Fluctuations in Economic Growth

The COVID-19 pandemic has brought about significant economic fluctuations in India Travel Retail Market. With a sharp decline in passenger numbers and a shift towards online shopping, duty-free spending behavior has been profoundly affected. These fluctuations pose challenges to travel retail operators, requiring them to adapt to evolving market conditions to maintain profitability.

High Operating Costs

Operating duty-free retail spaces in airports entails substantial costs. Despite generating significant revenue, these spaces require extensive maintenance and operational expenses. To address these high operating costs, duty-free operators are increasingly exploring innovative strategies, such as online pre-purchase orders to optimize efficiency and profitability.

Impact of Escalating Geopolitical Tensions on India Travel Retail Market

Geopolitical tensions can have a multifaceted impact on the India Travel Retail Market. Uncertainty and security concerns deter international travelers, impacting duty-free sales at airports and other travel retail outlets. Reduced tourist influx affects revenue streams and disrupts supply chains, leading to decreased consumer confidence and spending. Additionally, fluctuations in currency exchange rates and trade restrictions further exacerbate the situation, hindering market growth. To mitigate these challenges, stakeholders must closely monitor geopolitical developments, implement robust security measures, and diversify market strategies to adapt to changing dynamics and sustain resilience in the face of geopolitical uncertainties.

India Travel Retail Market

Segmental Coverage

 India Travel Retail Market – By Product Type

By product type, the India Travel Retail Market is divided into Wine & Spirit, Fashion & Accessories, and Perfume & Cosmetics segments. The wine & spirit segment holds the highest share in the India Travel Retail Market by product type. It can be attributed to various factors. India's rising middle-class income, along with the relaxation of pandemic restrictions, has led to a surge in consumption and a preference for premium goods. This trend extends to beverages, with increased demand for brown spirits, sparkling wine, whiskey, and agave-based spirits. Duty-free stores, offering a wide array of products and enticing promotional deals, are particularly attractive to Indian consumers. Notably, duty-free shops upon arrival at airports outpace those upon departure, with alcohol leading sales, possibly due to competitive pricing. Overall, arrivals significantly contribute to duty-free sales as travelers often make purchases upon returning to cities.

India Travel Retail Market – By Channel

Based on channel, the India Travel Retail Market is bifurcated into Down Town & Hotel Shops and Airports segments. The airports segment holds a higher share in the India Travel Retail Market by channel. Rising disposable incomes have led to increased airport traffic, with passenger numbers expected to grow significantly. Airports serve as prime retail spaces, benefiting from captive audiences with considerable spending capacity during wait times. Government initiatives like privatization and schemes to improve regional connectivity further boost the retail potential of airports. Consequently, airports have emerged as dominant players in the travel retail market channel, surpassing other channels in terms of market share.

India Travel Retail Market – By Region

Geographically, the India Travel Retail Market is divided into North India, South India, East India, and West India regions.

Competitive Landscape

Major players operating in India Travel Retail Market include Dufry, Delhi Duty Free Services Pvt Ltd, Lotte Duty Free, The Shilla Duty Free, Flemingo Travel Retail, Travel Food Services (TFS) India, Cochin Duty Free, Hyderabad Duty Free, HMY, and Relay India. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In March 2024 - The 2024 APTRA India Conference was held in New Delhi. The conference explored India's growing influence on global retail. With expanding consumer horizons, the Indian market offered opportunities for new brands like Diageo's Tequila Don Julio 1942 and beauty brand NARS.

• In October 2023 - Kreol Travel Retail was appointed as the distributor for Skross in India, aiming to expand the Swiss company's presence in one of the world's fastest-growing travel destinations. Skross specializes in travel adapters and accessories.

Scope of the Report

By Product Type

• Wine & Spirit

• Fashion & Accessories

• Perfume & Cosmetics

By Channel

• Down Town & Hotel Shops

• Airports

By Region

• North India

• South India

• East India

• West India