With its population expected to more than double to 2.4 billion by 2050 according to a UN report, and with consumer spending set to increase to an anticipated $1 trillion by 2020, Africa is set to become one of the world’s biggest consumer retail markets.

Although the continent is the smallest regional market for travel retail sales globally, it is among the fastest growing. Duty-free and travel retail sales were up 10.9% to $846.6 million in 2013 compared to 2012. Perfume and cosmetics travel-retail sales in the region grew by 12.3% to $263.3 million, according to figures from market research company Generation Research, Sweden. While some areas of the travel retail industry are well developed, particularly in North and South Africa, it is the East and West locations that have progressed more recently in the past few years. According to Euromonitor International, strong economic growth, particularly in East Africa, is helping to drive business tourism throughout the region, while rising incomes and urbanization are fueling domestic travel. Source markets are changing and moving away from the traditional Europe and US focus, with visitors from the BRICs and the Middle East becoming more important.

Sub-Saharan Africa’s tourism industry is set to spur more economic growth for the continent and directly employ 6.7 million people by 2021, according to a new World Bank report. The report cites countries including Cape Verde, Kenya, Mauritius, Namibia, Rwanda, South Africa and Tanzania, which have simplified visitor policies, liberalized air transport and diversified tourism. This has created a positive investment climate for the development of tourism.

Despite all this, the travel retail business in the region is still in its infancy. Grant Hatch, a Partner at Griffin Advisors South Africa, explained, “[Travel retail] is very underdeveloped in Africa at the moment,” he notes. “It is fairly well developed in South Africa, where the economy is well established, but if you look at other key transit airports such as Nairobi and Lagos, they have a very limited travel-retail business and development—there is some duty free but it’s largely locally owned curio type businesses, and products tend to be expensive, even in Johannesburg.”

Travel retailer Flemingo International is working on establishing master concession agreements at several airports across Africa to provide duty-free stores, convenience stores and food and beverage outlets. The company has a 17,000 square foot store in Pretoria and four diplomatic duty-free outlets in Kinshasa, Burundi, Ghana and Pretoria. Its flagship project is in Tangier, Morocco seaport covering 14,865 square feet across two levels, where the duty-free outlet is spread over an area of 5,716 square feet, with beauty among the product mix. The perfume and cosmetics, luxury and fashion accessories category has seen its sales grow strongly in the past four years for Flemingo in Africa.

Flemingo has observed a substantial increase in tourists from Europe and Asia, which has seen it fine tune its assortment accordingly. Flemingo’s business serves 70% tourists and 30% business travelers.

Flemingo International CEO Africa, Sundeep Sharma, said, “We anticipate a substantial increase in passengers based on the predictions from the World Bank report, as well as due to planned renovations in East/West African airports.”

To read BW Confidential’s full report on Travel Retail in Africa go to: www.bwconfidential.com.