International shoppers could be the answer to UK retailers’ woes: resurgence in tourists ease decline in Tax Free sales

New data from Planet, an international payments provider, suggests that international shoppers could bring glad tidings for UK retailers in the lead up to the crucial winter trading period. The influx of tourists coming to the UK last month meant that Tax Free sales declines eased to 6%, marking a two-percentage-point improvement on September.

As well as a rise in the number of visitors, the Average Transaction Value (ATV) of purchases made by tourists increased by 6% compared with the same month last year, confirming that the UK remains a lucrative destination for international travellers ahead of the holiday period.

This will be welcome news for UK retailers, who have faced stagnation in overall sales growth in October according to the Office for National Statistics. [1]

Commenting on the uptick, David Perrotta, UK Country Manager, Planet, said: “While sales growth might be down as UK consumers keep a tight rein on spending, international shoppers offer much-needed solace for retailers. Our data shows that tourists in Europe spend on average 3.7 times more than their domestic counterparts, and that both individual and combined Tax Free sales in the UK are on the rise. This presents an unmissable opportunity for retailers looking to maximise profits in the crucial end-of-year sales rush.”

UK retailers are expected to continue to benefit from an influx in tourists in the coming months, with arrivals forecast data from Forward Keys pointing to a 2.5% rise in tourist arrivals predicted from November to January 2019 compared with the same period last year. The UK is set to be particularly popular with travellers from the Far East as arrivals data from Japan and Taiwan is expected to post double digit gains – registering growth of 19.4% and 11.4% respectively.

The US is also offering a special contribution to the UK economy, having risen up the international league table to become the UK’s second largest tourist source market, accounting for 8% of all Tax Free spending. October bore witness to continued growth in Tax Free sales to American tourists, with sales in the UK increasing by 11% year-on-year, in a month where US consumer confidence surged to an 18-year high.[2] A strong economy in the US – which has seen unemployment fall to a 49-year-low – has encouraged Americans to be more optimistic about their financial future, which is clearly reflected in their willingness to spend abroad.

Planet’s David Perrota added: “UK retailers have reason to be optimistic. But in order to fully capitalise on the opportunity, it is imperative that they understand the cultural nuances of their increasingly international customer base. Many are already aware of the importance of this – one of our clients recently undertook a specialist cultural training course that resulted in ATV and sales rising significantly. It’s about taking advantage of market potential: engaging with international shoppers could offer the UK retail sector the winter boost it needs.”

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