Analyst: Coronavirus will hit airport retailers worldwide

Airport retail, which has been on a fast track, is likely to decline as a result of the spreading coronavirus. 

That’s according to GlobalData Retail, which said that the prevention of travel for Chinese consumers will impact the performance of airport retail worldwide. Global airport retail had been estimated to increase 6.1% in 2020, to $48.2 billion.

“Over the last few years airport retailers, especially those in Europe, have tailored their propositions, integrated Chinese payment solutions and invested in Mandarin-speaking staff to target Chinese passengers and maximize sales growth opportunities,” said Honor Strachan, principal analyst at GlobalData. “If outbound tourism from China suffers as a result of coronavirus, airport operators and retailers must adapt their strategies to target other passengers.”

The coronavirus has already dented retail and leisure spending across the Chinese New Year holiday due to consumers being encouraged, and in some cases forced, to stay in and avoid travel.

In response to the crisis, retailers such as China Duty Free Group has closed its mall in Haitang Bay – impacting the APAC duty-free market in 2020. Should foreign offices extend their advice of avoiding travel to the Hubei province to other regions, then passenger numbers and airports in tourism hubs such as Beijing, Shanghai, Chengdu and Xi’an will be negatively hit, according to GlobalData Retail.

“Asia Pacific is forecast to be the fastest performing region for airport retail spend in 2020, with sales rising 8.4% to $21.7 billion – 45.1% of the global channel,” said Strachan. “While this recent coronavirus outbreak cannot yet be compared to the impact of SARS, if the coronavirus continues to spread globally over the course of 2020 its impact on tourism and economies, particularly across APAC, could be severe.”

The 2020 Summer Olympic Games in Tokyo should provide a significant boost to airport retail in Japan and neighboring countries as visitors tour the region.

“However, controlling the spread and severity of coronavirus over the next two months is vital to ensure this event will still attract international visitors and achieve the forecasts produced pre-breakout,” added Strachan.