In the final quarter of 2018, the influence of Asian emerging markets on Europe’s luxury retail industry was profound. While Chinese consumers were redirecting their attention to luxury goods within their own borders, Asia-Pacific consumers overall played a pivotal role in driving sales within Europe’s major retail hubs. According to a report from tax-free payments specialist Planet, the increase in international spending during Q4 was largely due to the strengthening currencies across the APAC region.
One standout trend was the rise of Vietnam’s middle class, which ranked second in terms of international retail spend per transaction, just behind Hong Kong. The data from Planet’s report aligned with findings from the latest Bain Chinese luxury report, indicating that Chinese consumers are progressively favoring domestic luxury markets. Nevertheless, other markets in the Asia-Pacific region are stepping up to offset this shift.
The report underscored the mounting significance of Europe’s shopper market, with APAC currencies rebounding in Q4, leading to a surge in travel and retail activity among consumers. The link between income growth and international travel was strikingly demonstrated in Vietnam. Vietnamese shoppers were shown to spend an average of €902 per purchase in Q4, suggesting that the upwardly mobile middle class in Vietnam is increasingly prioritizing international shopping.
Despite the trend of Chinese consumers keeping their luxury purchases local, they remain pivotal to international sales, particularly in prestigious fashion boutiques in key European cities like London, Paris, and Milan. Chinese shoppers maintained their top position in the index score, indicating robust sales performance overseas. The stable currencies also had a positive effect on countries like Morocco, where international spending escalated due to currency appreciation.
David Perrotta, the UK Country Manager of Planet, stressed the importance of international shoppers to Europe’s retail landscape, noting that they tend to spend almost four times more than their domestic counterparts. He urged retailers to cater to the unique preferences of international shoppers, create innovative strategies to draw them into physical stores, and concentrate on experiential marketing. Perrotta also called on the UK government to prioritize the digitization of VAT refunds for tourists, as this infrastructure is lagging behind that of other European countries, potentially dissuading shopping-focused tourists from visiting the UK.
For more information on the impact of Asian emerging markets on global luxury retail, visit Forbes and Vogue Business.
