The latest figures from tax-free payments specialist Planet reveal that retail sales growth to international shoppers in the UK has reached a six-month low. This decline is attributed to the ongoing Brexit uncertainty, which has dampened the enthusiasm of international shoppers to spend in the UK. Despite this, those tourists who continue to shop in the UK appear to be increasing their average spending.
In 2019, international shoppers contributed approximately £6.8 billion to total UK retail sales, significantly outspending domestic shoppers on a per-purchase basis. However, recent data shows that retail sales growth to international shoppers in the UK only saw a 2% increase in September, trailing behind other European countries like Italy and Spain.
Notably, Chinese shoppers, a key demographic among international customers in the UK, reduced their spending by 7% last month. Similarly, shoppers from major countries such as Saudi Arabia and the UAE also showed a decline in spending. On the contrary, visitors from the US experienced a resurgence in spending, with tax-free sales rising by 12% last month.
Despite a slight decrease of 5% in the number of UK transactions processed, the average transaction value surged by 8%. This suggests that the remaining international shoppers in the UK are dedicated and financially well-off. This is particularly beneficial for luxury fashion brands located in popular shopping areas like London’s West End and Knightsbridge, which heavily rely on international shoppers for revenue.
David Perrotta, the UK Country Manager at Planet, stressed the importance of retailers understanding the UK’s international customer base in today’s retail landscape. He pointed out the potential for retailers to connect with consumers through digital marketing techniques and by providing cultural training to retail staff.
While the uncertainty surrounding Brexit continues, there may be a short-term boost in tax-free sales to international shoppers if potential outcomes lead to currency depreciation. This was evident following the 2016 referendum, when a drop in the value of the pound resulted in increased sales. Nonetheless, luxury brands ultimately standardized their prices globally to prevent market disparities.
In conclusion, the decrease in retail sales growth to international shoppers in the UK poses a notable challenge in light of the Brexit uncertainty. Nevertheless, retailers have the opportunity to tap into the international market by effectively engaging with affluent shoppers who continue to spend in the UK.
For more information on international shopping trends in the UK, visit Visit Britain and Planet Payment.
