INTERNATIONAL. Shifting tourism trends in Europe helped push tax free shopping spend up in August, according to Global Blue. Sales performance was less in decline during the month, at -3% year-on-year, compared to the -20% recorded in July.
Global Blue said that global shoppers – and especially Chinese – were moving away from traditional itineraries including Germany, France, Italy and Switzerland towards destinations such as the Czech Republic, Spain and Nordic cruises, which are all perceived as safer.
Europe’s transactions were flat at +0%, compared to the -16% recorded in July. Average spend was down -3%, which also compared favourably to the -5% for July. Global Blue said average spend had been boosted by non-eurozone countries performing well due to favourable foreign exchange rates and limited exposure to the threat of terrorist attacks.
In Asia, tax free shopping sales were down -13% year-on-year in August – the region’s lowest negative growth since the beginning of the year. Sales were flat (+0%) in July.
The rise of less affluent middle-class Chinese travellers continues to bring down the average spend globally, with a sizeable impact in Asia according to Global Blue. Transactions were up +25% in Asia in August, but average spend was down -30%. The stronger yen affected Japan’s performance in this regard.
European countries
France continued to suffer from tourists’ perception of insecurity and risk of terror attacks, with sales down -20% in August (compared to -24% in July). The country still accounts for almost one fifth of global tax free shopping spend.
After a difficult four to six months, Italy and Germany’s tax free shopping sales performances improved, with the former posting a drop of -7% and the latter of -11% (compared to -18% and -33% for July respectively).
Tax free shopping sales in the UK were up +37% in August, compared to +7% in July. The softer pound as a result of the Brexit referendum decision continued to attract key spending nationalities, including Chinese, Middle Eastern and American globe shoppers, who comprise the UK’s top three spending nationalities.
Switzerland, the only pocket of growth in central Europe, posted +14% sales performance for August, “probably due to its robust luxury shopping destination status, and limited threat of terror”, according to Global Blue.
However, Spain was the star European performer in August with a +16% rise in sales (compared to -4% in July). Global Blue said there had been an increased number of transactions across all nationalities, driven by new flight connections and targeted local marketing activities.
Asian countries
The number of travellers continues to grow in Asia and this correlates with higher numbers of transactions in South Korea, Japan and Singapore, Global Blue said.
All Asian destinations are relying on increased arrivals and traffic, yet the common theme is lower spend potential, Global Blue said.
With -33% sales, Japan continues to be affected by the strong yen, which is negatively impacting the number of transactions. The country also recently dropped its minimum tax-refund spend threshold from JPY10,000 (US$99.61) to JPY5,000 (US$49.81), which is mechanically averaging down spend per transaction. Global Blue estimates that 23% of Japan’s negative sales performance this month is driven by the softer yen and the other 10% is due to increased numbers of less affluent Chinese globe shoppers arriving in Japan from second-tier and third-tier cities.
South Korea’s sales performance of +44% was still largely a result of the “late-summer MERS comparison period; between June and August last year tourists stayed away and as a result the TFS sales base is extremely weak”. Sales were up +215% in July.
In Singapore the recent Zika virus scare has caused tourists to skip Singapore and head for Kuala Lumpur instead, according to Global Blue, meaning the country’s sales were down -3%.
Transaction numbers are significantly up across all globe shopper nationalities in Asia, except for Hong Kong (-10%), reflecting the increase in air arrivals across Japan and South Korea. With Taiwanese globe shoppers (+43%) showing the highest transactions growth in the region, followed by Chinese (+28%), and with Thais and Indonesians up too, the decline in average spend per transaction is a long-term trend to be considered, Global Blue said.
“Year-to-date sales performance across the region is flat and average sales are down -21%,” concluded Global Blue. “Overall, due to the current less favourable economic situation in mainland China, frequent Chinese globe shoppers are reducing their average spend through reduced numbers of trips and lower spend per trip, highlighted by Japan’s current picture for the year to date: +26% increase in transactions and -25% decline in average sales.”
