UK retail sales growth to international shoppers hits six-month low - Planet

By

Sandra Halliday

Published
Oct 23, 2019

Spending by international shoppers has been one of the bright spots in the increasingly troubled UK retail market of late, but it seems that this particular source of spending isn't as buoyant as it once was. A new report from tax-free payments specialist Planet on Wednesday showed that UK retail sales growth to international shoppers has hit a six-month low as the Brexit limbo continues.

That’s worrying for the big luxury fashion brands in shopping hubs like London’s West End and Knightsbridge as the percentage of affluent tourists spending in their stores is huge compared to the number of UK shoppers they attract. 

Last year, international shoppers accounted for around £6.8 billion of UK retail sales in total, spending almost four times as much as their domestic counterparts per purchase.

UK retail sales to these international shoppers grew by only 2% in September, following a period of much healthier increases,  and fell behind European counterparts.

In fact, Italy was the destination of choice for shoppers visiting Europe last month, with sales growing by 20%. Spain was a close second with a growth rate of 17%.

Back with the UK, Chinese shoppers, the top international customers in Britain, spent 7% less there in the month, alongside declines from other major spending nations Saudi Arabia (6%) and the UAE (20%).

But it wasn’t all bad news. For one, visitors from the US are “experiencing a spending renaissance due to a healthy domestic economic climate” and their tax-free sales gained 12% in the UK last month, marking the 13th consecutive month of rises.

And close analysis of Planet's data found that although growth in the number of UK transactions processed dipped by 5% last month, the average value of these transactions rose by 8%, which was the highest of any major destination market in Europe. 

It means those who do spend in Britain are committed, affluent shoppers, even if there are fewer of them. And that’s a positive sign for fashion’s luxury names.

"British businesses need to understand the retail landscape in its entirety — and that means the UK’s increasingly international customer base,” said David Perrotta, UK Country Manager at Planet. “While the political picture in the UK is uncertain, the good news is that retailers have a greater number of tools at their disposal to mitigate against volatility than ever before.

"Brands are now able to engage with consumers at every stage of their shopper journey: whether that is highly targeted, bespoke digital marketing or cultural training of retail staff on the ground, ensuring that they are equipped to translate these digitally-driven leads to actual sales. The opportunity to tap into this highly rewarding international source market is growing: providing that retailers know how to.” 

Planet also said that in the event of potential Brexit outcomes leading to currency depreciation, retailers could see a short-term gain in tax-free sales to international shoppers. This was seen immediately after the referendum in 2016, when sterling depreciation led to sales spikes as foreign currency bought more in UK stores. That said, in the year that followed, sales slumped as luxury brands standardised their international prices to avoid penalising one market compared to another, and as shoppers went elsewhere in search of more stable costs.