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INTERNATIONAL. Low single-digit monthly growth in global tax free shopping spend is the “new normal” for the luxury industry because of weakening demand in Asia, according to Global Blue.
The retail intelligence company’s latest statistics show growth of just +2% year-on-year in February. This performance follows a +3% increase in January.
The low growth rate harks back to levels last seen in the fourth quarter of 2014, after significantly higher levels of between +30% and +45% in 2015.
In February, Asia sales growth was +10%, down from +37% in January. Japan saw the biggest increase, of +30%, compared to +42% in January. The country was boosted by high levels of Chinese tourists, according to Global Blue. Singapore also saw continued growth, with sales up +4%, compared to +3% for January. Indonesians were the fifth largest globe shopping nationality during the month, partly thanks to a stronger currency at home.
Tax free shopping sales growth remained negative (-2%) in Europe, although it was -3% in January. “Key markets in Europe are witnessing continued decline due to a powerful mix of debilitating factors; foreign exchange rates dominate travel decisions, and the ongoing concern of terrorist threats further to the Paris and Brussels attacks is affecting inbound European tourist numbers. Barclays and Swatch agree the more complex biometric visa requirements are another negative factor,” stated Global Blue.
Within Europe, France (-10%) and Germany (-15%) were the hardest hit, although these results were slightly up on January’s performance of -21% and -17% respectively.
Global Blue also noted “a trend for schizophrenia” among Chinese travellers. It said they were choosing to travel within Asia for more ‘experiential’ leisure pursuits, but were still spending more on shopping, especially in Europe.
“Our February data shows that regionally, Chinese globe shoppers accounted for +27% tax free shopping sales growth across Europe, while in Asia their sales declined -10% year-on-year. This indicates that while travel reports in the region show Chinese to be increasing their trips locally, the majority of their luxury spending still happens in Europe,” commented Global Blue.
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Spending patterns
Chinese globe shoppers remained the number one nationality by share of global spend for tax free shopping in February, registering 42% of Global Blue’s total transactions. Their destination preferences are shifting from Europe to Asia, the analyst said, highlighted by the growth in Chinese spend in Japan, which was up +33% in February with a +51% increase in transactions.
Europe remained in negative territory for the second month in a row, with -1% in February compared to -3% in January. Positive sales growth of +1% in non-Eurozone countries countered a slight decline of -2% in Eurozone countries.
After edging above France to become the number one tax free shopping destination in terms of market share for January, the UK dropped down to third in February. However, sales were back up again, with +3% growth in February compared to -11% in January. Middle East nationalities had the greatest share of spend in the UK, with +10% increased sales in the UK for February.
Italy was the second biggest tax free shopping destination globally in February (after France), and with +12% increase in sales for February year-on-year “it remains a consistent pocket of healthy growth in the Eurozone”, Global Blue said.
Japan and Singapore tied for fourth largest global market share, with both destinations buoying the overall growth of +10% in Asia.
