Germany, Finland and Italy have seen the worst effects of the downturn in Russian spending, as a result of the weak rouble and continued political instability first reported by TRBusiness in early March.

 

According to the latest first-quarter numbers from tax free refund specialist Global Blue – based on tax free refund transactions only – Germany, Finland, and Italy are being hit hardest by Russian and Ukrainian spending curbs; while France has, so far, escaped lightly.

 

In Finland – where Global Blue says that tax-free refunds are almost entirely made by Russians – spending was down by -28% in the period, while in Frankfurt, Russians tax-free shopping fell by -33% in February, and was down -16% in March compared to the same months the previous year.

 

In Milan, considered Russian shoppers’ favourite European destination, tax-free sales were down by -16% during March, while spending by Ukrainians fell by -24% year-on-year that month. More resilient has been Paris where total spending by Russians was down -7% in February, but rebounded in March, growing by +11%.

 

CHINESE TO THE RESCUE

While the Russian and Ukranian political stand-off does not look to have any end in sight – and the Russian economy was continuing to struggle even before the imposition of western sanctions – travel retailers can take comfort that other high-spending nations are still shopping.

 

Of Global Blue’s top 10 outbound tourists nations in term of total tax free spending, the Chinese again showed the strongest growth in Q1, with sales up +25% globally. This has helped to counteract the Russians’ -9% overall Q1 decline.

 

Even with a reduction on high-end conspicuous consumption, due to government proscriptions, Chinese visitors accounted for 27% of all tax free shopping in 2013, and this total is set to be even higher in 2014 if current trends continue believes Global Blue.

 

Satellite Chinese strongholds have also been robust. Globe shopping by residents of Hong Kong rose by +23% in Q1 lifting them to seventh place in the league table of top tax free global spenders while the Taiwanese increased their spending by +17% over the same period year-on-year.

 

Global Blue says that much of this shopping is taking place in Europe with residents of Hong Kong being the third highest spenders in Frankfurt in February 2014 for example. In Paris residents of Hong Kong were the fifth highest spenders in both March and February 2014.