Growth in sales to American tourists hits 15-month high as UK retailers reap benefits of robust US economy

UK sales to American tourists in September grew at the highest rate in 15 months, buoyed by a strong dollar and robust US economy, suggesting that the healthy domestic situation enjoyed by Americans is trickling into other markets.

Data from international payment company Planet showed that September’s 14% growth in Tax Free sales to US shoppers was the first year-on-year increase since June 2017, following average monthly declines of 17% in the first eight months of the year.

One of the potential drivers of the uptick in sales is the enhanced US purchasing power that has been brought on by a stronger dollar. Since falling to a 2018 low of $1.43 to the pound back in April, the dollar grew by 11.5% to a September high of $1.28, meaning that US tourists’ currency could go further when abroad.

Inbound US tourism is a significant revenue generator for the UK economy, with Americans spending more than £3.6 billion in Britain in 2017 according to VisitBritain – more than double the next highest visitor nation – and also accounting for 7% of all Tax Free purchases in September.

“While the spend per person among American tourists may not be as high as some other nations, the sheer volume of US tourists shows that UK retailers should do all they can to capture a share of this vital spend,” said David Perrotta, UK Country Manager, Planet. “Clearly, US consumers are feeling more comfortable travelling abroad and spending, and the recent strength of the dollar will no doubt have been a contributing factor.

“Unlike many tourists from the APAC region, who largely travel to Europe to shop, heritage and sightseeing are often the biggest attractions for US travellers. These latest sales figures demonstrate the versatility of the UK tourism and retail sectors, as well as their continued global appeal.”

The sales gains follow a recent series of landmark moments in the US economy, which appear to have boosted consumer confidence and international spending power among the country’s citizens. The S&P 500 headline index of US stocks hit an all-time high in late August, while September’s 3.7% unemployment rate marked the country’s lowest level of joblessness in nearly 50 years.  

The boom in sales to US shoppers looks set to continue, with tourist arrival data from ForwardKeys forecasting a massive 15.1% spike in arrivals in the fourth quarter of 2018, compared with the modest 1.6% growth measured in the same period last year.

While US shoppers registered higher sales increases than any other major source market for UK retailers in September, it was shoppers from the United Arab Emirates that spent more per transaction than any other nation, parting with €604 per purchase compared with the US’s €365.

China continued to command the largest share of the UK Tax Free market in September, with its tourists accounting for 27% of all Tax Free sales in September, despite registering a 10% decline in sales compared with the same month last year.

For more insights from Planet read the full Planet Intelligence report here.