Tax free shopping returns to growth in Asia and Europe in December

Global-Blue-Lithuania-849x1024EUROPE/ASIA. Tax free shopping specialist Global Blue has reported a return to sales growth in December in both Asia and Europe.

In Asia a +2% increase during the month represented the first growth in sales since February 2016. Growth was driven by Japanese tax free shopping sales (+8%) as Chinese shoppers returned to Japan in large numbers as a result of increased domestic consumer confidence and the softening of the Japanese Yen.

Sales growth of +3% in Europe in December followed two months of stability during November and December (both +0%) and was a “marked improvement” on the region’s performance against the first three quarters of 2016, Global Blue said. Growth was largely driven by increased spend across all nationalities (+4%) as a result of the softening of the Euro and British Pound against the US Dollar, and the easing of macro headwinds in the top three globe shopper origin markets: China, the USA and Russia.

The number of transactions in Europe remained flat (0%), whereas in Asia the growth trend continued (+7%) as increased numbers of Chinese shoppers from tier two cities choose to travel throughout the region. This increase has had a relatively soft impact on total sales due to low average spend growth of -5%.

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Asian countries

While Japan was the main driver of growth in Asia, December saw other Asian markets stabilise, with Singapore posting improved sales of -2% (against -5% in November). South Korea remained flat at -11%.

Growth in Asia can be attributed to a boost to Chinese traveller numbers across the region, which saw transactions up +8% (compared to +4% during November), Global Blue said. An improving average spend trend from this group also boosted total sales progression, with Chinese sales up +4% across Asia in December (compared to -4% in November).

“This improvement in average spend could point to an increased emphasis on luxury spend from Chinese shoppers,” Global Blue noted. “During December Japan experienced a +36% year-on-year increase in transactions between JPY400,000 and 600,000 (US$3,530 and 5,2,95) from Chinese shoppers. Singapore’s figures tell a similar story, with Chinese transactions between SG$3,000 and 5,000 (US$2,115-3,524), increasing by +7%.”

Across other globe shopper origin markets, Global Blue reported strong average sales performance from South Korea in December (up +11%), while other Asian nationalities posted single-digit negative growth for the month, including Hong Kong (-9%), Taiwan (-9%), and Malaysia (-7%).

European countries

France’s tax free shopping market improved significantly in December, according to the Global Blue figures, “returning to growth after months of slow performance”. Sales were up +21% (compared to -19% in November), driven by an increase in both average spend (+3%) and transactions (+17%). This improvement is supported by a low base of comparison against the same period in 2015, Global Blue noted.

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The UK has seen strong growth since June’s decision by referendum to leave the European Union and this continued in December with sales up +25%. Growth was attributed to a +12% increase in average spend and a +11% rise in transactions. December performance “was also boosted by the large swathe of UK retailers that opted to go into sale earlier than usual, boosting sales throughout the month,” Global Blue explained.

“With the value of the Pound falling further last week over fears surrounding a ‘hard’ Brexit, the UK looks set to become an increasingly desirable shopping destination for the foreseeable future,” Global Blue said. “However, this momentum could be slowed by the potential adjustment of pricing from major UK department stores, as they raise prices to compensate for the weak Pound.”

Italy’s tax free shopping market continued to stabilise in December, with a -8% drop in sales representing a marked improvement against November (-16%). Germany suffered a double-digit decline (-13%) in sales in the wake of the Berlin terror attacks in December.

Sales among shoppers from the USA were up +20% across Europe, as domestic confidence and a strong Dollar saw US transactions up +13%.

Russian sales also increased (+2%) as the country’s recovering economy and improving international status continued to drive the value of the Ruble.

Global Blue said the performance of Chinese globe shoppers continued to improve across the region, as a result of growing domestic confidence and the impact of a softening Euro and British Pound. While Chinese sales in store were not back to growth, they continue to stabilise at -2% (compared to -5% in November). Promising travel bookings for Chinese New Year 2017 could further strengthen this stabilisation over the next couple of months, Global Blue said.

While December saw a fall in European transactions from Gulf countries continue (-12%, compared to -10% in November), total sales remained positive (+1%) thanks to increased average spend, driven largely by department store spend in the UK.

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