European tourist retail dented by Covid-19 says Planet
Apr 1, 2020
The massive impact of Covid-19 on tourist spending was made clear this week as international payments provide Planet issued figures showing the economic impact of the virus on European retail during February.
Given that this was before the worst of the retail shutdowns and travel curtailments hit in some countries, the extent of the problems in March can be assumed to be much more bleak.
Planet said that Europe’s retail and luxury industries experienced a big drop in sales to tourists across all major destination markets during February. The countries that were suffering the most from the coronavirus crisis at the time – Italy and Spain – suffered the biggest falls with declines of 39% and 21% respectively.
As the impact of the virus worsened during the month, sales to Chinese consumers spending in Europe fell by 53%, although US travellers actually spent 23% more year-on-year, likely due to the growing strength of the dollar.
Sales to tourists from Russia, Kuwait and South Korea also grew during February, but not by enough to counteract the decline in sales to Chinese tourists. Overall international spend in Europe was down 13%.
In the UK, retailers saw a 45% drop in sales to Chinese shoppers, but made sales gains from GCC (Gulf Cooperation Council) spenders. Sales to spenders from Kuwait and Saudi Arabia rose 47% and 29% respectively.
Planet also said that more than a quarter (26%) of tourist spend in the UK in February was done by ‘hyper spenders’ – who make up 1% of international spenders and typically spend €30,000 per visit.
March… and beyond
As mentioned earlier, it's easy to draw conclusions about the figures that will eventually come out for March spending – and those conclusions look grim. Now that the coronavirus has hit big in the US, it's likely that Americans will have been spending much less in Europe. And widespread cancellations of flights, plus shop and hotel closures, will also have dented any shopping enthusiasm on the part of those from other big-spending regions.
David Perrotta, UK Country Manager at Planet, said: “We are facing a time of significant upheaval, with billions of people across the world now affected by the coronavirus. Last month was a turning point in European retail and luxury industries, who have felt the decline in sales from international audiences as travel restrictions started to come into force, and this will only continue in March. This pandemic has highlighted how connected we all are, and how reliant our systems are on our global community.”
He added that last year alone, travel and tourism was worth 10.4% of global GDP. But he feels there’s some hope.
“At the moment it is unclear on just how long this will last, or the short-term impact this will have,” he said. “What we do know is that the retail, travel and tourism industry has survived setbacks in the past. Typically, any sales decreases experienced as a result of events like outbreaks have historically been followed by significant recoveries. For example after the SARS outbreak of 2003, Chinese overseas visit grew by 43% in 2004 — as trips that are cancelled as a result of emergencies are typically re-booked at a later date.”
Regardless of how quickly and deeply any recovery happens, he believes that there will be changes seen as a result of the pandemic.
“We are confident in the resilience of the retail and luxury industries to withstand the impact of the coronavirus in the long term,” he explained. “But there are still many questions to be asked on what this ‘new normal’ will look like in the short-term. Pre-Covid-19, brands were asking themselves questions on how to adhere to their heritage while engaging with an increasingly international audience. Post-Covid-19, brands will have to navigate how to adapt the physical retail experience, with physical restrictions around hygiene and social distancing causing brands to consider how to preserve their image while making the necessary changes to protect the health and safety of their staff and international customers.”
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