Solid increases in tax free shopping in both Europe and Asia in May

EUROPE/ASIA. Tax free shopping specialist Global Blue has reported a solid increase in May sales in both Europe (+20% year-on-year) and Asia (+11%).

Growth in Europe was supported by an increase in traffic, despite lower average spend across the region driven by a seasonal change in traveller profile, it said.

In Asia, growth was also driven by an increase in traffic, with large numbers of Chinese tourists travelling to Japan over Labour Day and the Dragon Boat Festival.

Europe

Global Blue reported that consistent growth across the first five months of the year meant that Chinese calendar year-to-date sales in Europe were up +26% on the previous year.

“May is historically a busy month for Chinese travel to Europe,” Global Blue noted. “While this trend typically leads to an increase in transactions during May, the share of traffic from ‘Tier 1’ Chinese cities tends to drop, as competitive pricing from tour operators encourages large numbers of less affluent travellers visit Europe. This in turn impacts average transaction size, due to the lower spending power of non-Tier 1 city residents.”

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While Chinese travellers contributed the “lion’s share” of European growth, most key nationalities delivered positive performance during May. Russians continued to enjoy favourable exchange rates thanks to improved domestic conditions, with sales-in-store up +35%.

While the US dollar continues to weaken, Global Blue said there had been no noticeable impact, with sales from American shoppers in-store up +31%.

Sales from Gulf nations were up +7%, despite a-10% drop in transactions caused largely by economic instability in Saudi Arabia and Kuwait.

Asia

Japan’s “consistently strong” 2017 sales performance continued in May (+43%), according to Global Blue, thanks to seasonal travel patterns from China, a weakening Yen and cannibalised tourist traffic from South Korea.

While growth was largely driven by an increase in transactions during May (+28%), average spend also rose (+12%).

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Most growth across Asia was driven by a significant increase in Chinese visits to Japan, as travellers booked trips across Labour Day and the Dragon Boat Festival holidays. May is historically a busy period for inter-Asian travel, with low cost, short break packages popular with Chinese tourists, Global Blue said.

The affordability of these packages altered the profile of Chinese tax free shopping customers during May, with an increase in visitors from ‘Tier 2’ Chinese cities reducing the average spend across most markets.

Across the region, sales from Chinese shoppers increased a +18% year-to-date.

Chinese curbs on travel to South Korea continue to “dramatically reduce” traveller numbers, with year-on-year sales declining by -44% during May. “Korea has historically been the destination of choice for Chinese holiday travellers during May,” Global Blue said. “With political tension and travel volatility showing no signs of abating, Korean tax free shopping performance will continue to be negatively impacted for the foreseeable future.”

Year-to-date transactions from Japanese and Taiwanese shoppers increased +55% and +37% respectively across the region. With a volatile environment at home, South Korean shoppers continued to spend abroad, with year-to-date sales up by +36% and transactions up by +64%, Global Blue said.

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