The US 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 US citizens are exempt from duty up to US$800, and government initiatives to boost tourism, according to research from Verdict Retail. Among the nine major American markets analysed in Verdict Retail’s report Duty Free Retailing in the Americas 2015-2020, namely the US, Brazil, Canada, Mexico, Chile, Peru, Argentina, Colombia, and Venezuela, the US market was worth $3.9 billion in 2015 and will expand by $1.1 billion at a Compound Annual Growth Rate (CAGR) of 5per cent to reach $5 billion by 2020.
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. Major airports such as La Guardia, Pittsburgh International, Dallas, Denver and Los Angeles are investing heavily in expanding and redeveloping their sites, including retail, 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 US at $0.8 billion in 2015, but is also set to grow by a CAGR of 5 per cent to reach US$1 billion 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 per cent during the forecast period, reaching US$554 million by 2020.
“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,” Hinton concludes.
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