
Growing at a compound annual growth rate (CAGR) of about 8%, and expected to exceed USD 3 billion by 2030, the Indian travel retail market is on the brink of a significant transformation, driven by shifting consumer behaviours and a rapidly changing retail environment. With rising disposable incomes, an expanding tourism industry, and an increasing number of international and domestic business travellers, the market is seeing a surge in demand for unique local offerings and duty-free goods. Airports and travel hubs are becoming major retail destinations, showcasing a mix of regional specialties, global brands, fashion, and gourmet foods.
The evolving preferences of consumers, who now seek convenience, variety, and seamless shopping experiences, are further driving this growth. Enhanced customer engagement strategies like improved store designs, exclusive in-store promotions, and a focus on sustainability, are shaping the future of the travel retail sector in India, positioning it as a dynamic force in the broader retail landscape.
Airports as thriving retail hubs meeting the needs of modern travellers
Airports are emerging as dynamic retail spaces, actively seeking new and international brands to cater to passengers who are often early adopters of trends. These travellers are drawn to fresh, innovative products that match their diverse and evolving needs, making airports an attractive venue for brands seeking to make an impression. A significant factor in airport shopping is the concept of “Me Time,” as travellers, especially after clearing security, use this period to relax and indulge in retail therapy.
Frequent flyers, who spend considerable time at airports compared to shopping malls designed for families, add to the appeal of these spaces for retail businesses. Gifting products stand out as a particularly successful category, as they resonate with the desire for thoughtful, easily portable items that travellers can purchase for loved ones. Furthermore, the rising disposable incomes of travellers are driving a premiumization trend, encouraging airport retailers to expand their offerings to include high-end and luxury products. This combination of factors positions airports as a unique and thriving hub for retail innovation.
Growing demand for premium products
Indian consumers are increasingly opting for premium and luxury products. This shift is most visible in duty-free stores, where items like single malt whiskies, high-end cosmetics, and branded fashion accessories are in high demand. Rising incomes, greater international exposure, and an increasing desire for quality products are all driving this trend.
Liquor remains the top-selling category in Indian duty-free stores, with premium brands like deluxe Scotch whiskies seeing the most growth. Similarly, cosmetics and fragrances are popular among women travellers, as more Indian women travel for both leisure and business. Retailers have tapped into this demand by offering exclusive deals and promotions, making travel retail a unique opportunity for consumers to indulge in luxury at competitive prices.
The rise of duty-free shopping
Duty-free shopping remains a key feature of consumer behaviour in Indian travel retail. Unlike in many other Asian markets, where international travellers dominate, nearly 80% of Indian duty-free shoppers are domestic travellers. These consumers are attracted to the competitive prices and exclusive product offerings available in duty-free zones.
Interestingly, duty-free sales at arrivals tend to outperform those at departures, with many consumers opting to purchase items like liquor upon their return to India. This consumer behaviour underscores the importance of competitive pricing and the convenience of shopping after travel, with duty-free zones serving as essential touchpoints for luxury goods and international brands.
Expanding beyond airports
While airports are central to travel retail, consumer behaviour is shifting toward retail opportunities in other transit hubs, such as metro stations, railway terminals, and highways. As India’s infrastructure continues to develop, more consumers are engaging with retail outlets in these alternative locations, seeking convenience while on the move.
This shift presents an exciting opportunity for retailers to tap into new consumer segments. As travellers look to make quick purchases during their commutes, non-airport travel retail could see significant growth.
Personalisation in retail offerings
Today’s travellers expect personalised shopping experiences that cater to their unique preferences and needs. Personalisation, enabled by data analytics and customer profiling, is becoming a key differentiator in the travel retail space. Retailers are increasingly offering tailored recommendations, personalised discounts, and customised shopping experiences to meet the demands of modern travellers.
For instance, frequent travellers may receive exclusive offers based on their past shopping behaviour, while first-time shoppers could be presented with welcome discounts or promotional packages. Loyalty programs, data-driven marketing campaigns, and tailored product suggestions are all part of this shift toward personalised retail experiences. Travel retailers are expected to harness data and insights to deliver experiences that resonate with individual shoppers.
Shaping the future by adapting to evolving consumer preferences
The Indian travel retail market is undergoing rapid transformation, driven by evolving consumer behaviour. The integration of digital technologies, combined with a growing preference for convenience and personalisation, is redefining the shopping experience. As retailers adapt to these evolving expectations, they are not only enhancing the travel journey but also positioning the market for sustained growth in the coming years.
Post-pandemic changes, such as the adoption of contactless payments, guilt shopping and Omni Channel have become integral to the retail experience. Retailers are meeting these new expectations by introducing approach which prioritise safety, convenience, and efficiency. As these consumer preferences continue to evolve, they will drive further innovation and define the future of travel retail in India.