International shoppers boost UK luxury retail, Vietnam is 'sleeping giant'
today Apr 25, 2019
We’ve already heard how US shoppers are helping to support the UK luxury retail sector at a time when British retail in general is under pressure and now it seems that the wider international shopping community sees Britain as a strong place to shop with Asia’s powerhouse countries, and also Vietnam, set to be key.
VAT refunds specialist Planet said this week that UK retailers have registered consecutive months of sales growth to international shoppers for the first time since July 2017 “as tourists display confidence in steadier prices.”
The rebound follows a “torrid year of sales fuelled by [the] post-referendum fall in sterling [and means the] UK is set to be third most attractive country for international visitors over the next three months.”
March saw a steadier pound and that meant a 1% year-on-year tax-free shopping sales rise after a 10% leap during February (helped by the timing of Chinese New Year).
After the Brexit referendum in June 2016, the pound plunged and the UK saw a tourist boom with frequent double-digit sales rises. But brand pricing soon caught up with this and led to a slower period. With prices now on a more even keel, but still attractive compared to other locations, it bodes well for UK luxury stores.
Planet said retailers have recorded tax-free sales increases in three of the last four months of activity, “suggesting that a full-blown recovery may be under way.”
That said, recent increases were aided somewhat by the yellow vest protests in France, “which may well have convinced Francophile tourists to trade in the Champs-Élysées for Bond Street and Regent Street while Paris’ retail hotspots were disrupted.”
However, it seems the rebound looks set to continue, with data from ForwardKeys forecasting a 5% increase in international visitors from April to June this year. That would be a four-percentage-point improvement on the same period a year ago and puts the UK behind only Austria and Portugal as the most attractive European country for tourists over the next three months.
David Perrotta, UK country manager at Planet, said that the steadying of the pound “appears to have elicited a sense of confidence among international shoppers, who are incredibly savvy when it comes to finding a good deal on luxury goods. The consecutive months of growth are a promising sign for retailers who understand the huge commercial opportunity that international shoppers represent.”
So what does the next quarter hold? UK retailers can expect to see more Asian shoppers with visitor numbers from Japan, Taiwan and China expected to increase by 23%, 17% and 16% respectively, boosted by public holidays such as Labour Day, the Dragon Boat Festival, and Golden Week.
But Planet said retailers shouldn’t ignore the “sleeping giant” - Vietnam. The average spend (ATV) for Vietnamese tourists in March reached a Europe-wide all-time high of €1,036, a dramatic difference compared with the traditional big-spending nations of the United Arab Emirates and China, who registered UK ATVs of €732 and €443 in March, respectively.
The ATV for Vietnamese shoppers has grown by 14% year on year for the past two years.
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