Tourist tax-free spend in UK edges up in December, but 2018 stayed negative
today Jan 24, 2019
International tourist spending was one of the few bright spots in UK retail in December and despite one of the worst festive seasons on record, tourists’ average transaction value (ATV) rose in double-digits during the month.
Tax-free payments specialist Planet said ATV was up as much as 10% year-on-year last month, although total tax-free sales to international shoppers rose by only 1%.
Despite December’s 1% tax-free sales rise being unimpressive in ‘normal’ circumstances, we don’t live in normal times and it was easily ahead of the flat UK retail sales that the British Retail Consortium recorded for the festive period.
But the much lower sales rise compared to accelerating ATVs suggests lower visitor numbers overall and added weight to tax-free industry calls for the UK government to work harder to attract tourists and to make it easier for them to spend tax-free while in the country. The UK currently lags other European countries as far as digitising the process of claiming back VAT at its airports and other ports is concerned.
The need for greater government commitment to making tourist arrivals and tourist shopping much easier was also supported by the fact that while tax-free sales were up among shoppers from all major source markets last month, the big consumer group all retailers want to reach, the Chinese, proved to be the exception.
That’s perhaps a surprise coming in the same month that Paris, which is usually a magnet for Chinese shoppers, was suffering from the impact of the Yellow Vest protests that were scaring some shoppers away. London could have expected to have been the beneficiary of higher Chinese spend as a result.
But Planet was upbeat overall. “December is the biggest spending period of the year,” said David Perrotta, UK Country Manager at the company. “Figures from the British Retail Consortium certainly paint a gloomy picture of the UK’s retail sector – but our data suggest that there is a silver lining. The rise in sales to international shoppers will offer some much-needed solace to businesses.”
And while news that UAE shoppers spent a massive 47% more year-on-year in December certainly qualifies as much-needed solace, it’s hard to ignore the fact that overall tax-free sales were down 10% during 2018 compared to 2017.
Big declines were seen in the first half and while these eased after the summer, tax-free sales stayed negative and the 1% uplift in December just wasn’t enough to pull the figures into the plus column.
The overall spending falls were “felt acutely at the heart of London’s shopping district, where Regent Street, Oxford Street and New Bond Street posted declines of 13%, 11% and 8%, respectively,” Planet said. And it’s interesting that while New Bond Street’s overall fall was smaller than the UK average, the other two major shopping streets saw wider falls than across the country as a whole. But there was one plus point with Planet saying that it looks like “the country’s international shopping appeal is growing outside of the capital.”
It added that despite a disappointing 2018, H2’s slower decline and December's rise in tax-free sales “will have left many retailers viewing 2019 as full of promise.” According to data from ForwardKeys, arrivals to the UK are expected to rise by 1.3% from January to March, with an influx of Chinese and Japanese tourists expected at +22.8% and +22.4% respectively.
“UK retailers have reason to be optimistic going into the New Year. After a challenging start to 2018, retailers ended the year on a high by converting several consecutive months of easing sales declines into growth in sales to international shoppers in December,” Perrotta added. “Planet’s data confirm that international shoppers are becoming an increasingly important audience for retailers to engage with. Major global celebrations in Q1, such as Orthodox Christmas, Chinese New Year and Easter, offer ample opportunity for retailers to capture this business-critical international spend and convert it into growth.”
Copyright © 2019 FashionNetwork.com All rights reserved.