International retail tax refund expert Global Blue points to ‘strong growth’ in the UK from both the US and Middle East visitor markets last year and a nominal 1% increase from China, although the later visitors remain the top spenders in the UK.

 

However, it also points to a ‘ripple effect from China’s instability’ which caused a decline in tax free spending across its Asian neighbours last year, although Global Blue is hoping that new and extended Chinese visa rules for Lunar New Year (February 8) in the UK will provide retailers with a boost.

 

This year, VisitBritain expects total international visitor numbers to rise by 3.8%, following on from last year when total ‘tax free’ spending in the UK rose marginally by +2%, compared to 2014.

 

Commenting on the results, the company also pointed to the USA as the market enjoying strong growth of 20% YOY in 2015 thanks to the strength of the dollar. This was coupled with low oil prices and a strong labour market, with declining unemployment leading to stronger US consumer confidence. This combination and the rise in disposable income has, in turn, encouraged more shopping trips abroad.

 

 

Other nations experiencing strong economic growth in 2015 which also translated into higher consumer confidence levels included Saudi Arabia, Qatar and the United Arab Emirates generally, with each securing their position in Global Blue’s top 10 spending nations, showing 21%, 16% and 20% YOY spend growth respectively.

 

On the other side, China’s slow economic growth with its weakened manufacturing sector and August’s depreciation of the Yuan by nearly 2% against the dollar has taken its toll – together with the stock market crash in December – and Global Blue adds that this has slowed China’s economy, along with those in other Asian countries such as Malaysia and Thailand.

 

Although international tax free spend was up just 1% on 2014, China still assumed the number one spot among the top ten spending nations, while Thailand and Malaysia slipped to the ninth and tenth spots following -3% and -17% declines respectively on 2014.

 

Commenting, Global Blue’s Head of Commercial UK and Ireland Gordon Clark said: “Without a doubt, the huge loss in Chinese consumer confidence can be attributed to the 2015 spend figures.

 

 

“A weaker Yuan impacts outbound tourism as shoppers’ money has less power abroad. However, the decline for the end of the year could suggest Chinese visitors may have been holding out until the visa reform was in place to travel with more ease or, due to their current economic position, may be saving their travel until Chinese New Year in February.”

 

The year of political unrest and weakened economies in some countries has also seen a few visitor nationalities drop down the overseas spending league. For example, travellers from Nigeria and Russia – traditionally top spending nations – saw big declines in spending in the UK last year, dropping -20% and -39% YOY, respectively.

 

More positively, Global Blue says that despite a low average growth in spend overall for 2015, visitors still came to the UK through Heathrow Airport in record numbers, with the airport reporting 75m passengers last year.

 

At the same time, VisitBritain is forecasting a 3.8% YOY increase in visitors to the UK for 2016 to 36.7m who are expected to spend 4.2% more than in 2015. As a result, Global Blue says retailers should be upbeat and also because several changes, both in effect and proposed, will impact the way international visitors choose to spend their time and money in the UK.

 

 

 

The European Tour Operators Association is also looking positive across the continent. Meanwhile, Paul Rickard from Research Consultant comments: “Across Europe in 2015, visitor arrivals are expected to have risen by 5%, nearly 30m more than in the previous year.

 

“For Europe’s most valuable long-haul market, the USA, the Eurozone remains exceptional value for money as a result of euro weakness, so we can expect retailers to benefit from visitors’ higher spending power, especially in the premium retail centres of cities such as Paris, Rome and London.

 

“Chinese arrivals continue to remain buoyant across Europe and in spite of the slowdown in the Chinese economy, we don’t expect this to have a marked impact on visitor demand.

 

“The volume of Middle Eastern visitors to Europe is increasing rapidly, and they’re now beginning to discover new areas of Europe beyond their traditional haunts, such as Bosnia; and as their footprint expands, this will also help local retail economies in some of the hinterland areas of Europe.”

 

 

 

In addition, the UK China Visa Alliance, of which Global Blue is a founding member, is leading the campaign to government to make 10-year visas available to Chinese visitors and to drop the application fee. The change to the two-year visa this month is obviously very positive towards encouraging more Chinese tourist visits.

 

Meanwhile, Global Blue reports that tax free shopping by Chinese tourist visitors in ‘Golden Week’ last year was actually monitored at its highest in Europe, Japan and Korea, as Chinese shoppers took advantage of an extended 12-day holiday period at the end of September and the beginning of October.

 

It adds: “While the October Golden Week holiday is traditionally the highest TFS spending peak of the year, in 2015 the Chinese were spending more earlier on in the year – especially in March. This change in spending patterns indicates the uncertainty being felt about the Chinese economy and the current slowing of demand for luxury goods among Chinese globe shoppers, who are the most resilient of Chinese consumers.”

 

The Asia Pacific region is growing as a tax free shopping region with three Asian countries (Japan, Korea, Singapore) now in the top 10 global league of performing countries (YoY). Eighteen per cent of global Tax Free Shopping (TFS) spend and an average per visitor spend of €488 ($530) was recorded for the month of October 2015. This was driven by increased numbers of Chinese visiting Japan and Korea for Golden Week shopping trips.

 

 

 

France is still the number one TFS destination with 20% of global spend share and +5% increase in sales YoY. Purchases in France are predominantly made by Chinese visitors and last October their average per visitor spend was €1,577 ($1,712).

 

The four biggest spending Middle East globe shoppers from Saudi Arabia, the UAE, Kuwait and Qatar represented the second largest group for tax free shopping with visitors from the US ranking as Global Blue’s fourth largest spending nationality.

 

Paris remained the number one destination for global tax free shoppers last October, with spending up +7% – predominantly driven by the Chinese and Americans.