UK's luxury tourist spending decline continues to ease
today Oct 8, 2018
The UK’s fashion retail sector may not be in a happy place at the moment but the luxury end of the market is performing better. While sales to international shoppers have been in decline after the boost that they gained from the plunging pound post-Brexit vote, that declined eased in August.
Tax-free sales had fallen 8% in July year-on-year, but only dropped by 5% in August. While this puts sales lower than they were in the immediate aftermath of 2016's Brexit vote, they’re still above where they were in 2015.
It was the fourth consecutive month in which the picture got a little rosier and average spend per transaction to tourists actually rose by 7% during the month .
VAT refunds specialist Planet Tax Free said the figures “demonstrate the continued attractiveness of the UK as a luxury shopping destination for some of the world’s biggest spenders.”
Tax Free sales are a key indicator of retail spend among international shoppers and demonstrate the attractiveness of the UK to global audiences.
Planet said that international shoppers are becoming increasingly important to the future of the retail sector and 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 them.
As mentioned, that 7% average transaction growth was very encouraging in August and was actually the second highest rate of growth among major European countries “suggesting that the UK’s luxury shopping brands are attracting the biggest spenders among international shoppers.”
Planet CEO Patrick Waldron said: “This data should be interpreted as a vote of confidence in the UK as one of Europe’s leading shopping destinations. 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.”
So who was most attracted by the lure of Harrods, Selfridges, Bond Street and Covent Garden? The company said that Saudi Arabian tourists were among the “most prolific” shoppers in the UK this August, demonstrated by a 29% rise in sales compared to the same time last year. Kuwait and the UAE were also key source markets, suggesting that those from Gulf Co-operation Council (GCC) countries are choosing the UK to celebrate and spend during the Eid al-Adha period.
Planet also cited forecast data from Forward Keys suggesting that the trend will continue, with 3.5% arrivals growth predicted up to November this year. International shoppers represent a huge growth market for British retailers, with a record £24.5 billion spent by nearly 40 million tourists last year, according to figures from VisitBritain.
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