UK. Tax free sales in the UK were down -5% year-on-year in August. But international payment provider Planet Tax Free’s figures showed that sale declines eased for the fourth consecutive month.
In July, sales were down -8% and Planet said the latest results indicated an improved outlook for international shopping spend.
Planet processes VAT refunds on purchases made by non-EU tourists in the UK. The company said sales are a key indicator of retail spend among international shoppers and demonstrate the attractiveness of the UK to global audiences.
In August, the UK witnessed a +7% rise in average transaction value made by tourists, according to the figures. It is the second highest rate of growth among major European countries, and Planet said this suggested “that the UK’s luxury shopping brands are attracting the biggest spenders among international shoppers”.
International shoppers are becoming increasingly important to the future of the retail sector, according to Planet. Across Europe, they spend on average almost four times more than domestic shoppers, with some retailers seeing up to 60% of their sales coming from non-domestic customers.
“This data should be interpreted as a vote of confidence in the UK as one of Europe’s leading shopping destinations,” said Planet CEO Patrick Waldron. “In late 2016 we witnessed a post-referendum boom in tax free sales, increased numbers of tourists visiting the country and taking advantage of currency depreciation.
“In the 12 months following the Brexit referendum, tax free sales grew +26%, due to the weakness in Sterling. But in the 12 months after that, sales declined by almost -11%. We are now finally seeing international shoppers return to our shores. They add immense value to the UK’s economy, and it is crucial that retailers are capturing international spend and converting it into growth.”
Planet noted a +29% rise in sales among Saudi Arabian tourists in August, while Kuwait and the UAE were also key source markets. This indicates that travellers from Gulf Co-operation Council (GCC) countries are choosing to visit the UK to celebrate Eid al-Adha, Planet said.
Overall tourist arrivals to the UK were up +6% in August. Forecast data from analyst ForwardKeys suggests this trend will continue, with +3.5% arrivals growth predicted up to November this year.
The nearly 40 million tourists that visited the UK in 2017 spent a record £24.5 billion (US$32 billion), according to VisitBritain figures.