Duty-free shops sell various products to overseas travelers and thus offer items free from some local and national taxes and levies. However, taxes may be imposed if the buyer reaches their destination country or the value or quantity of the products exceeds certain limits. Such retailers can be located in international airports, border towns, seaports, train stations, and even onboard planes and ships. Cigarettes, chocolates, electronics, and accessories, as well as perfumes, cosmetics, and alcohol are among the products sold in duty-free shops.
The expansion of airports is driving the Caribbean duty free retailing market. Due to rising footfall at airports, airport authorities are looking for ways to increase their revenue from non-aeronautical streams. Many airports are planning to increase their retail space, as the demand for duty-free products is increasing. For instance, according to the data of the World Bank, 21.19 million travelers were carried in and out across Chile in 2019, as compared to 19.51 million in 2018. Moreover, favorable governmental policies for the expansion of airports are propelling growth of the duty-free retail market across the Caribbean region. In May 2020, the Board of Executive Directors at the World Bank provided a fund of US$ 159 million for carrying out Caribbean Regional Air Transport Connectivity Projects across four countries including Dominica (US$ 13 million), Grenada (US$ 17 million), Haiti (US$ 84 million), and Saint Lucia (US$ 45 million). The completion of these projects is expected to enhance the air transport industry growth and attract many international tourists. This is expected to increase duty free retailing at these airports.
The increasing brand awareness among the millennial population and initiatives undertaken by governing authorities such as ACI-LAC (Airports Council International – Latin America and Caribbean) and ASUTIL (South American Association of Free Stores) for increasing the sales of locally manufactured products are expected to contribute towards the growth of the Caribbean duty-free retailing market.
Due to the rapid drop in tourism caused by the COVID-19 epidemic, the Caribbean duty free retailing market was heavily damaged in 2020. The tourism industry has already begun to feel the effects of the pandemic on its performance. Travel restrictions and precautions began in January 2020. Due to the fear of contracting the COVID-19, domestic and international visitors limited their trips, reducing the number of local and international clients for this retail channel.
Key features of the study:
“*” marked represents similar segmentation in other categories in the respective.