Deloitte China in collaboration with China Duty Free Group (CDFG) jointly released the "2023 CDFG Membership Whitepaper"

Deloitte China in collaboration with China Duty Free Group (CDFG) jointly released the "2023 CDFG Membership Whitepaper" (hereinafter referred to as the "Whitepaper"). The Whitepaper, integrating the current duty-free policies, global and China's economic development situations, and consumer trends, offers an in-depth analysis of the development pattern and future trends of the duty-free industry. Based on the actual duty-free consumption data of CDFG from 2022 to 2023, it insights into the development trends of China's duty-free consumers and duty-free product categories, as well as forecasts the future development prospects of China's duty-free market.

Insights of Each Part

First: Analysis of the Development Landscape in the Global Duty-Free Market

The Whitepaper shows that the global duty-free market size and growth rate continue to rise, with a compound annual growth rate of 8% expected from 2022 to 2027. CDFG ranked first in the world among duty-free and travel retailers for three consecutive years from 2020 to 2022.

Currently, the most active duty-free and travel retail markets are in Europe, North America, and the Asia-Pacific region. Key players include CDFG from China, Lotte Duty Free, The Shilla Duty Free, and Shinsegae Duty Free from South Korea, Avolta (formerly Dufry) from Switzerland, Lagardère from France, DFS from Hong Kong, Heinemann from Germany, and Duty Free Americas from the United States.

In terms of market size, China surpassed South Korea in 2023 to become the largest duty-free market globally. From the perspective of consumer demand, Chinese consumers have consistently been the primary drivers of global duty-free store sales. Current national policies further attract the high-end consumption to return to China, which may influence the landscape of global duty-free industry.

Second: Insights into Consumers of CDFG

The Whitepaper shows benefiting from the loose duty-free policies and the recovery of outbound tourism, the number of users and members of CDFG, as well as their activity rate, have maintained a growth trend in the past two years. Among them, members from economically developed cities account for a high proportion, while the growth rate of members in Tier-3 and below cities is fast, with a significant downturn in duty-free consumption. New CDFG members show a younger trend and tend to consume a diverse range of duty-free products. There is a clear differentiation in consumption across different channels: online members tend to make entry-level purchases, while offline members are inclined towards high-quality, high-value consumption to satisfy their self-gratification needs.

Third: Analysis of the Trend of Duty-Free Product Categories in China

The Whitepaper shows, from the perspective of the development trends of duty-free consumption categories in China, the current duty-free products of China Duty Free Group are divided into five major categories: perfume and cosmetics, luxury goods and accessories, watches and jewelry, wine and food, and department store goods. It has successfully gathered more than 1,400 well-known domestic and international brands, covering almost all mainstream international beauty and high-end fashion products in the market. In recent years, to better meet consumer demands, China Duty Free Group has also actively sought cooperation opportunities with emerging brands. Data shows that in 2023, the sales of perfume and cosmetics category accounted for more than half of the total duty-free sales of China Duty Free Group. The sales amount and the number of consumers for luxury goods and accessories, as well as watches and jewelry categories, have significantly increased compared to 2022, and the average transaction price is much higher than other categories. Market trends indicate that consumers tend to choose brands known for their value retention capabilities, making the market potential for luxury goods and accessories, as well as watches and jewelry, relatively high, with the expectation of becoming the main force in the future development of the duty-free market.

Fourth: Outlook for the Duty-Free Market Trends

Last, the year of 2024, as the year of consumption promotion, continues to release incentives for consumption policies, boosting consumption growth. The duty-free market is closely related to the overall consumer environment. Although there is a structural change in residents' consumption, guided by a series of national policies and the increasing willingness of residents to travel, as well as the accelerated influence of consumption concepts such as "self-pleasure consumption" on people's willingness to consume, the duty-free market, as a collection of various consumer goods, has a greater clustering effect and better prices. The opportunities in the duty-free market still lie within it. Practitioners in the duty-free market need to deeply understand different crowd portraits, actively embrace the consumption habits of the new generation of customers, and develop differentiated communication strategies. By embracing new media and new retail, fully realizing the integration of online and offline channels, and through multiple touchpoints and all-time periods, they can accurately reach the target audience with personalized content and services, continuously improving the sense of experience and value for consumers, thereby increasing market share and enhancing tourism retail performance.

For more, refer to《2023 CDFG Membership Whitepaper》.