The US will remain the largest duty free market in the Americas until 2020, and will grow by nearly 30% in the period, according to new research from Verdict Retail.
The report said that the US market will grow to $5bn by 2020, from $3.9bn in 2015, helped by rising international footfall (especially from China), implementation of new laws whereby US citizens are exempt from duty up to US$800, and government initiatives to boost tourism.
Maureen Hinton, Global Research Director at Verdict Retail, says: “Duty free retailing has been under-exploited by US airports until recently, but having seen the success of duty free retailing in other regions, US airports operators have realised the revenue benefits of having attractive retail facilities for travellers.”
The report – Duty Free Retailing in the Americas 2015-2020 – analysed nine major markets in the Americas. It found that the second largest market, Brazil, is some way behind the US at $800m in 2015, but is also set to grow by a CAGR of 5% to reach $1bn by 2020. It will benefit from a greater number of international travellers following the Rio 2016 Olympics, while high import taxes make duty free purchasing very attractive for Brazilian travellers as well.
Verdict Retail’s report also states that, of the nine major markets, Canada will grow fastest at a CAGR of 7.6% during the forecast period, reaching US$554m by 2020. Hinton concluded: “A weak Canadian dollar and government tourism campaigns will attract American visitors, driving duty free sales in the country. Spending will receive a boost from a new law that has extended the duty free allowance for US travellers, which stands first in terms of foreign visitor arrivals”.