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Five potential indicators for the future of travel retail Listen with ReadSpeaker

Five potential indicators for the future of travel retail

“Experiences are more important than possessions.” This has become a mantra of Asia’s tourism industry as it seeks to understand how travel behaviors may evolve post-pandemic.

The underlying precept is that travelers may want to escape to nature, to experience freedom in serene landscapes rather than spend time shopping when travel bans are eventually lifted. Tourists radiating away from urban centers could dampen the much-hoped-for revival of travel retail spending.

Yet, predicting future trends in Asian travel is risky. Having been unable to fly beyond borders for 15 months and counting may mean that caution and safety remain paramount, at least initially. Alternatively, grounded travelers may take to the skies in large numbers as soon as the airport gates are opened.

But when travel does resume, will “revenge spend” travelers stimulate visitor economies once more? And how should businesses prepare? At the same time, has skyrocketing pandemic-era growth in eCommerce altered travel retail forever? If so, what new spending patterns could emerge?

Amid the current uncertainty, here are five factors to consider:

There will be a temptation to compare reopening travel retail activity with 2019, the last year for which measurable data is available. A more effective way to benchmark spending patterns soon will be to analyze domestic Asian markets in 2020 and 2021.


Scrutinizing vacation expenditure flows in markets that enjoyed strong domestic travel during the pandemic such as China, Vietnam, South Korea and Taiwan will help gauge the degree to which consumer sentiment is shifting either temporarily or long term.


Although, shopping priorities for domestic tourists tend to differ from when they travel overseas, analyzing local consumer markets can provide buying insights that are otherwise missing.



  • Unlocking travel spend will require retailers to scrutinize realigned consumer attitudes and purchasing triggers during the pandemic
  • Pre-COVID-19, domestic tourism was frequently overlooked as a guide to how travelers might behave and purchase when they take an overseas vacation
  • eCommerce demand has grown and diversified and may continue while on vacation. Travelers may, for instance, use local shopping sites to buy daily use items

China has proved to be a rare holiday retail hotspot in Asia during COVID-19. Hainan Island, which is China’s offshore duty-free shopping destination, has delivered impressive results since domestic travel reopened last summer.


Although visitors to Hainan from China fell 22 percent in 2020, there were still nearly 65 million visitors and sales of duty-free items increased by 127 percent from 2019. With COVID-19 under control, Chinese travelers are displaying more confidence to travel and shop using e-payment apps such as AliPay and WeChat Pay.


In the first quarter of 2021, Hainan recorded duty-free sales of RMB 13.6 billion, a spectacular 356 percent increase in the same 2020 period.



  • To boost travel retail during the pandemic, China increased the annual tax-free shopping limit for its travelers visiting Hainan Island on vacation
  • The enhanced sales cap helped expand the volume of duty-free sales and encouraged brands and retailers to unveil new products and promotions in Hainan
  • Monitoring domestic trends are important as the proven spending power of Chinese travelers will likely drive retail competition once international tourism restarts

While international travel has been on pause in most of Asia since March 2020, imaginative solutions have been tested to promote travel shopping. In South Korea, “flights to nowhere” by seven local airlines take off and return to the same Korean airport without landing elsewhere. However, each flight route crosses into Japanese airspace enabling passengers to purchase tax-free items at the airport as if taking an international flight.


We are also starting to see an acceleration of duty-free shopping beyond airport outlets. South Korea’s Lotte plans to open a duty-free store in downtown Hanoi in 2021, followed by Da Nang. This follows the opening of Lotte city outlets in Melbourne and Tokyo. Meanwhile, Da Nang plans to build an international duty-free zone to attract luxury shoppers and tourists, and bolster the visitor economies of nearby destinations like Hue and Hoi An.



  • Introducing new duty-free formats will help cosmetics, fragrance, jewelry and drinks brands to tap pent-up “revenge spend” and breathe new life into travel retail
  • Pre- and post-flight stores will likely diversify and regularly refresh their product ranges to tempt travelers to make in-the-moment purchases
  • Offering duty-free shopping in downtown locations could generate more foot traffic and benefit existing retailers in the initial post-pandemic period

During COVID-19, Asian consumers have relied on smartphone shopping and payment apps. The frictionless safety of cashless transactions is here to stay. Ongoing development of digital currencies should also make it smoother and more secure for travelers to make touchless purchases while overseas.


As mentioned in our previous article five reasons why digital currencies will influence consumer behaviors, Cambodia, Thailand and Malaysia plan to standardize cross-border payments, and Thailand and Vietnam may introduce a QR code payment app for tourists from each country. Meanwhile, JPMorgan is trialing an international payments tool using Blockchain in Indonesia and Taiwan, and Vietnam’s e-wallet apps Sacombank Pay and Liên Việt 24h signed with Lotte Duty-free to help tourists shop without cash and enjoy customized promotions.



  • Offering digital payment options that are safe, secure and seamless are important for enticing Asian consumers to spend while traveling

  • Creative promotions incorporating elements of personal participation and gamification may help retailers and brands unlock latent travel spend

  • Asia’s digital wallet and e-currency landscape is changing fast, and retailers will need to adapt quickly to a dynamic and unpredictable cashless future

Despite widespread social restrictions, brand innovation has gained a new impetus during the pandemic with a focus on local consumers. The Made in Vietnam campaign has inspired young creatives from Hanoi to Ho Chi Minh City to launch stylish lifestyle accessories and organic products reflecting both local culture and people’s pandemic-era experiences.


In Indonesia, the Philippines and Malaysia, artistically branded product lines reflect the shifting zeitgeist. Meanwhile, international clothing and footwear brands are commissioning local artists to create uplifting designs for limited-edition releases. Social media advocacy may result in some of these innovations becoming coveted in the future by inbound visitors seeking “sense of place” shopping experiences.



  • Travel consumers will be on the lookout for unique, locally produced mementos that combine the culture and creative renaissance of their chosen destination

  • Gift giving is popular with Asian tourists and post-pandemic travelers will desire locally branded items launched during a time when travel overseas was not possible

  • Destinations boasting clearly defined brand appeal, such as whisky in Japan, cosmetics in South Korea and organic products in Australia and New Zealand, may experience strong travel shopping demand