Travel retail, the pandemic does not stop the mega investments dedicated to tourist shopping

Travel retail, the pandemic does not stop the mega investments dedicated to tourist shopping

To design its gigantic atrium, the Weta Workshop studio was called, which created sets, costumes and special effects for the trilogy of the Lord of the Rings. From there it will be possible to access 930,000 square meters intended for offices, hotels, entertainment spaces, but above all boutiques where you can buy duty free. The cranes are still at work in Haikou, a city on the island of Hainan, China, but when it opens in about a year, the Haikou International Duty Free City will be the global capital of travel retail.

According to the World Tourism Organization, in 2020 Covid caused travel to collapse by 74%, and consequently the purchases of travelers, which in 2019, states Statista, had reached a value of 86.4 billion dollars. The impact of the pandemic has yet to be translated into figures, but it can already be said that investment in travel retail has been limited.

Whole cities dedicated to duty free are springing up in Hainan

Hainan is the most shining example: since the Beijing government decided to make it a duty free shopping paradise ten years ago, business on the island has grown steadily, and will still do so, according to UBS, by 40% in average per year until 2025. Between July 2020 (when the government extended the threshold for maximum annual purchases, tripled from 30 thousand to 100 thousand yuan, about 15 thousand euros) and April 2021, duty free sales increased by 244% to 34.7 billion RMB (about 4.5 billion euros) and 101% arrivals to five million people. The Duty Free City is a project of China Tourism Group, a government agency that manages the national duty free market, but another mega-destination for shopping is also emerging in the city, Haikou Mission Hills: the first part of the complex to be 30 thousand square meters managed by Dfs, a leading travel retail company headed by LVMH, together with Shenzhen Duty Free Group, was opened on January 31st.

Rendering del duty free shopping center Haikou Mission Hills, ad Hainan, Cina

If in 2019 Chinese luxury purchases were made only for 11% at home, according to the report Altagamma – Bain & Co. by 2025, therefore even in a post-pandemic period, they will rise to 26-28%. And according to the estimates of the consulting firm Oliver Wyman, only in the second half of 2023 the Chinese will return to travel abroad as in the pre-Covid period.

Growing and “Italian” projects also in the Middle East hub

In addition to the increasingly crucial China, there are important projects in the Middle East, one of the most reactive areas in the luxury market over the last year: at the Doha airport, in Qatar, the “Luxury Avenue” will soon make its debut, Italian name chosen for a luxury boutique area, which will host Valentino’s first airport store in the Middle East, Adidas’s debut in travel retail and a special concept of the Emporio Armani Ristorante and Caffè. In Dubai, work is underway to expand the Louis Vuitton (which shortly before the lockdown had opened its first travel store in Italy at the Fiumicino airport), Chanel and Hermès.

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