Travellers from the top 10 travel shopping nations increased the amount they spent on tax free goods by +31% last year – with Thai and Malaysian travel shoppers joining the elite ranking for the first time. However, the picture in 2013 is looking very different.

 

Today, tax refund specialist Global Blue, released its annual Top Ten Globe Shopper Nations Review which shows that – based on tax free refund data from 37 markets where the company operates – these 10 nations (see chart) made more than 14m tax free shopping transactions (of 23m in total) and grew their spending by almost a third.

 

Together all 10 nations accounted for nearly two-thirds (64%) of the tax free transactions processed worldwide by Global Blue in a VAT refund market estimated to be worth £59bn ($90.55bn).  In 2011 the share was 61%.

 

While the Chinese are at the top of the tree (with a 25% market share and growth of +58% in 2012), followed by Russians with a 16% share, newcomers to watch are Thai and Malaysian travellers who now rank sixth and tenth respectively. Tax free refunds to Thai nationals grew by +52% last year while those to Malaysian travellers rose by +39%. Japan also showed a strong rise in tax free spending, up +38%.

 

‘DRAMATIC’ STORY

Arjen Kruger (right), Executive Vice President and CMO at Global Blue, says: “The rise of the globe shopper is one of the most dramatic stories of the 21st century luxury goods landscape, not just in Europe, but worldwide. Tax refunds to globe shoppers by Global Blue have more than doubled in just the last three years.

 

“For some manufacturers and retailers, globe shoppers – who on average spend four times more than local shoppers – are now considered the most important customer segment for the business.” Four years ago at Harrods department store in London, the Chinese accounted for a third of the spending of Americans, but today they are spending four times more at a time when US spending has continued to be resilient.

 

Speaking to The Business on the future strength of the emerging markets of Indonesia and Thailand, Kruger says: “From an economic point of view we can be very positive. For the past two years Thailand has had political and economic stability as tensions have been removed, and that has translated into outbound travel and spending. Indonesia has been much more stable [reflecting its number four position]. There is nothing to show, at least for now, that this will not continue.”

 

SHARP FALL IN 2013 GROWTH RATE

However, some caution should be used in assessing the data going forward because Global Blue admits that these spending patterns can change fast.

 

This year to June the global tax free growth rate has been slashed to +12% as currency, social and economic factors have come into play in some markets. The effective devaluation of the yen has meant Japanese spending has “fallen off a cliff” according to Kruger, down by -27%.

 

Meanwhile, Brazil’s faltering economy had led to spending dropping by -8%. Thailand, this year, has, however, increased its momentum, up +40%, and China is at a respectable +21%. And, just as Malaysia and Thailand have broken in to the top 10 this year, it is expected that new globe shopper nations will come to the fore in 2013.

 

The new top 10 review also analyses key differences in what kind of customer service globe shoppers appreciate. For instance, Russian and Chinese globe shoppers have distinct expectations about how store staff treat them when they shop abroad: the Chinese appreciate a warm welcome and a personal touch, while Russians prefer a low key, but high quality and respectful service.

 

Russians are also said to be driven by exclusive, expensive products that “others don’t have” while the Chinese are driven by getting a good deal. “They see Europe as one giant outlet mall,” says Manelik Sfez (left), Global Blue’s Vice President of Corporate Marketing.

 

WINNING DESTINATIONS

The top 10 globe shopper nations have some preferred destinations in common; such as France, Italy, UK, Germany and Singapore. Other favoured markets include Finland, Austria, Spain, South Korea and Switzerland.

 

It is estimated that more than 200m tourists from the 10 globe shopper nations travel overseas each year. Globe shopping is becoming a larger and more important part of these travellers’ itineraries.