International shopper activity in Europe slows in Q1, but Russians are back
International shopper activity across Europe slowed slightly in Q1, compared to last year’s Q4, with the strengthening of the British pound in the first three months of the year depressing the buying power of visiting nations’ shoppers and “causing a ripple effect across Europe’s retail sector.”
The short burst of gains for the pound “weakened the international purchasing power of more than half of Europe’s top 25 non-EU visitor nations,” we’re told.
That’s according to tax-free payments specialist Planet’s quarterly Shopper Index, which looks at the spend of visitors from outside of the EU who qualify for sales tax refunds on their purchases.
It’s a big deal for the fashion and luxury sectors as their sales really are fuelled by affluent international visitors.
But why should issues like the British pound have such a big effect continent-wide?
“With the UK being one of Europe’s premier retail destinations, currency fluctuations [there] often affect international shoppers’ willingness to spend, and can be impactful enough to reduce arrivals,” a Planet spokesperson said. “The reverse was true two years ago when the UK experienced a boom in international shopper spend following the post-Brexit-vote depreciation of the pound.”
But it’s interesting that this hasn’t affected all international visitors and Russian shopper presence in Europe has grown after a challenging year. Their European visitor spend has “leapfrogged the traditionally strong US to [take] second place in the index of most prolific international shopping nations for European retailers.”
Russia really is back in the game, having traditionally been one of Europe’s most enthusiastic luxury shopping nations before “a torrid 2018” dented its status. It was helped by falling inflation and a stronger ruble against the euro.
Russian shoppers in Europe spent an average of €526 per purchase in Q1 – up from €519 in Q4 last year.
However, Saudi Arabia slipped out of Europe’s top 10 visitor nations by retail activity as “economic contraction and currency depreciation affected shoppers’ willingness to spend abroad.”
The median score of the latest Plant Shopper Index – which combines retail sales and economic indicators to illustrate the strength of international shopper activity in Europe – fell from 97 in the final quarter of 2018 to 95 in the first quarter of this year.
As well as indicating the health of Europe’s retail sector, the Index serves as a global league table of top source markets for European retailers. Data from Q1 saw global luxury shopping powerhouse China retain its position at the top of the table – but the gap between it and other nations narrowed.
David Perrotta, UK Country Manager of Planet said: “The first quarter of the year is often a quiet period, as shoppers and their wallets recover after a particularly expensive final quarter of the year, a period punctuated by winter festivities and associated spending. Things are set to pick up in the second quarter, particularly with shoppers from GCC nations who will have just celebrated Eid al-Fitr – an event often marked by holidays and spending abroad.”
He added that the firm’s latest monthly data points to strong gains for the European retail sector in Q2 – with tax-free sales expected to see double-digit growth. Europe-wide sales to international shoppers grew by 11% in April year-on-year, the highest figure in 22 months. The situation in the UK was even more positive, with April growth of 15%.
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