‘Trade war is travel retail’s golden ticket’

As global trade tensions intensify, retailers and brands are bracing for disruption. Yet, amid the uncertainty, the travel retail sector is emerging as a strategic bright spot. Earlier this month, President Trump declared “Liberation Day,” unveiling sweeping tariffs — a 10% baseline on all imports and sharply higher rates on key categories such as electronics, automobiles, and luxury goods. After sharp market backlash and pressure from U.S. business leaders, the administration paused the most aggressive measures for 90 days, with the exception of China, which continues to face a 145% tariff. Negotiations are now underway with over 75 countries, including Japan, the U.K., and South Korea, as they seek exemptions or revised terms. President Trump is personally involved in the talks, with a high-stakes meeting expected soon with Chinese President Xi Jinping. Still, the consensus is that many tariffs — or their negotiated variants — will remain in place beyond the negotiation window. Travel retail’s tariff advantage This creates a pivotal moment for travel retail. The U.S. luxury market — estimated at $113.9 and representing nearly a third of global high-end sales — is especially vulnerable. European brands dominate this segment, accounting for over 70% of global luxury goods. The initial round of tariffs included a 20% duty on EU imports and 31% on Swiss goods, prompting swift reactions from the sector. UBS forecasts a 6% average price hike in the U.S. as brands seek to cushion margin impacts. The market reacted quickly — LVMH and Kering shares fell approximately 4%, while Burberry dropped 7% in midday London trading following the tariff announcement. In response, luxury houses including Gucci, Chanel, and Cartier have already increased prices by 5% to 6%, according to Citi, with further hikes in the high single digits expected soon. As domestic prices rise and consumer sticker shock sets in, travel retail is being repositioned from a convenience to a necessity — offering a price-advantaged, duty-free alternative. For global luxury brands, it’s fast becoming the most resilient channel in a volatile trade landscape. The duty-free advantage amid surging global travel Travel retail, and duty-free in particular, operates outside the reach of tariffs. With global passenger volumes rising, this channel is quickly becoming essential for brands eager to reach price-sensitive consumers without compromising margins or brand equity. In an environment where tariffs are reshaping supply chains and consumer expectations, duty-free represents a last frontier of value shopping. For luxury buyers and premium food and beverage consumers alike, duty-free becomes more than just a convenience — it becomes a rational economic decision. Last year marked a critical turning point in travel. The Skift Travel Health Index revealed a 10% year-over-year increase in global travel activity, with volumes up 13% compared to pre-pandemic levels. Entering 2025, travel confidence remains high across key emerging markets: China leads with 88% of respondents expressing strong intent to travel, followed by India at 82%. Germany (70%) and the U.K. (67%) also show robust outlooks, while U.S. travel confidence, though lower at 54%, is showing signs of stabilization. This optimism is translating into footfall and sales. According to Airports Council International, in 2024, global passenger traffic is expected to surpass pre-pandemic levels, reaching 9.5 billion passengers (104% of 2019 levels), with international travel rebounding the fastest. Dufry Group, a leading travel retailer, reported a 12% YoY increase in Q4 2024 sales, largely driven by increased spend-per-passenger, particularly in Asia and the Middle East. A repositioned channel As tariffs continue to reduce the appeal of traditional retail, travel retail is quickly emerging as a vital, value-driven channel for global brands — especially those targeting U.S. consumers seeking better pricing, and an expanding base of high-spending travelers from Asia and the Middle East. Globally, tourism remained a key engine for luxury in 2024. According to Bain & Company, tourist spending on luxury goods grew by 7% to 9%, while purchases by local customers declined by 6% to 8%. In absolute value, spending by tourists surpassed pre-pandemic levels, yet with only 35% of global luxury purchases attributed to tourists, compared to 40% in 2019, there’s still significant room for growth. According to Introspective Market Research, the global travel retail market was valued at $6.8 billion in 2023 and is on track to reach $17 billion by 2032, reflecting a robust CAGR of 10.34%. Much of this growth is fueled by international travel recovery, particularly among Chinese tourists, whose overseas luxury spending accounted for 40% of total Chinese luxury consumption in 2024 (Bain & Co). In this shifting landscape, duty-free stands out as a clear revenue and brand positioning channel, especially for categories like luxury goods, wine, cheese, and cosmetics. Elevating the travel retail experience This shift requires brands to revisit how they approach the travel retail environment. Historically treated as a lower-funnel sales channel or opportunistic outlet, travel retail now deserves the same strategic investment as domestic retail or direct-to-consumer platforms. The duty-free shelf must evolve into a brand-building opportunity. This includes developing specific travel retail SKUs, investing in merchandising, and creating consumer touchpoints that drive loyalty and trial. With more global travelers shopping at airports, travel retail is uniquely positioned to become a trial channel for new product lines. Tariff-driven price disparities will incentivize first-time purchases. More consumers will be willing to explore new fragrances, skincare lines, fashion items, or premium food products in duty-free locations — knowing they are getting value that is no longer possible in domestic retail. This behavior shift also opens doors for brands to treat the travel retail experience as a testing ground. The growing male consumer base There is also a notable shift occurring in travel retail: male consumers are emerging as a key growth demographic, particularly in categories like fragrances, skincare, accessories, and luxury tech. It’s shaping up to be a new era for “dude-ty free” — where value-driven, style-conscious male shoppers are redefining the airport retail experience. According to m1nd-set, the gender composition of duty-free shoppers has evolved significantly. While female buyers dropped from 42% pre-Covid-19 to 36% in 2021, they have steadily rebounded to 49% in 2024. Meanwhile, male shoppers — who peaked at 64% in 2021 — now represent 51% of global duty-free customers, signaling a more balanced landscape and sustained male interest. Initially driven by cruise retail, this trend has now extended into airports and international terminals, creating a compelling opportunity for brands. Male consumers tend to be more price-sensitive, making them particularly responsive to the value-driven appeal of duty-free shopping. Brands that tailor their offerings — through curated bundles, exclusive SKUs, and targeted messaging — can capture greater share among this segment. This is an opinion piece by Humphrey Ho, CEO of Helios & Partners, a capital enterprise focused on Consumer Ecosystem Investing — an approach that fuses equity, marketing, and operational transformation to accelerate brand growth. With over 20 years of global experience in equity management, entrepreneurship, and consumer marketing, Humphrey helps companies thrive at the intersection of strategy and storytelling. Born in Toronto and now based in Los Angeles, Humphrey has built businesses across New York, Hong Kong, Shanghai, and beyond. He held leadership roles at Google, Wieden+Kennedy, and Leagas Delaney before launching an award-winning agency in 2017. Under his direction, the agency scaled across LATAM, APAC, and EMEA, fueling brand expansions and unlocking new markets. The views expressed in this article are those of the author and do not necessarily reflect the editorial position of Jing Daily.

‘Trade war is travel retail’s golden ticket’

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Published April 24, 2025

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‘Trade war is travel retail’s golden ticket’