The United States will remain the largest duty-free market in the Americas by 2020, driven by rising international footfall, especially from China, as well as the implementation of new laws whereby U.S. citizens are exempt from duty up to $800, and government initiatives to boost tourism, according to research from Verdict Retail.
Among the nine major American markets analyzed in Verdict Retail’s report, Duty Free Retailing in the Americas 2015-2020, namely the United States, Brazil, Canada, Mexico, Chile, Peru, Argentina, Colombia, and Venezuela, the U.S. market was worth $3.9 billion in 2015 and will expand by $1.1 billion at a compound annual growth rate (CAGR) of 5% to reach $5 billion by 2020.
“Duty-free retailing has been under-exploited by U.S. airports until recently, but having seen the success of duty-free retailing in other regions, U.S. airports operators have realized the revenue benefits of having attractive retail facilities for travelers,” says Maureen Hinton, global research director at Verdict Retail.
“Major airports, such as La Guardia, Pittsburgh International, Dallas, Denver, and Los Angeles, are investing heavily in expanding and redeveloping their sites, including retail,” she says, “while major duty-free operators, such as Dufry, Lagardère Travel Retail, and Gebr. Heinemann, expand in the region.”
The second largest market, Brazil, is some way behind the U.S. at $0.8 billion in 2015, but is also set to grow by a CAGR of 5% to reach $1 billion by 2020, Verdict Retail states. It will benefit from a greater number of international travelers following the 2016 Olympics in Rio, while high import taxes make duty-free purchasing very attractive for Brazilian travelers as well.
The report also states that, of the nine major markets, Canada will grow fastest at a CAGR of 7.6% during the forecast period, reaching $554 million by 2020.
“A weak Canadian dollar and government tourism campaigns will attract American visitors, driving duty-free sales in the country,” Hinton concludes. “Spending will receive a boost from a new law that has extended the duty-free allowance for U.S. travelers, which stands first in terms of foreign visitor arrivals.”