×

Asian emerging markets spent big in Europe’s retail cities in Q4 2018

Published
today Mar 20, 2019
Reading time
access_time 3 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Chinese consumers may be switching more of their luxury spend to the domestic market at the moment, but they and some of their fellow Asia-Pacific consumers proved key to higher-end spending in Europe’s major retail destinations in Q4 2018. That’s the big takeaway from the latest Shopper Index from tax-free payments specialist Planet.


Asia Pacific consumers are key to boosting sales in Europe's luxury fashion stores - Harrods/Camilla



The company said that Q4 saw increased travel and international spending with European retailers as consumers got more for their money due to the continuous strengthening of currencies across the APAC region.

And it highlighted the importance of Vietnam’s emerging middle class, as that country rose to second-highest on the Index’s list of international retail spenders per transaction, after Hong Kong in first place.

THE BIG PICTURE

Planet’s report came out at the same time as the latest Bain Chinese luxury report indicated that European retailers are going to have to get used to Chinese high-end consumers spending more of their money in their own country rather than abroad. But it looks like other APAC markets could increasingly help to fill any gaps.

“The international appeal of Europe’s shopper market has started to make a slow but positive recovery in the last quarter as underlying currency strength across emerging Asia-Pacific markets has boosted sales,” Planet said. “The bounce-back of APAC currencies compared with the previous quarter, combined with the ever-growing population share and income of the region’s middle class, has resulted in increased travel and retail activity among its consumers. This has coincided with an increase in spending power abroad.”

The Index combines Planet’s data on tax-free purchases across Europe for each source market, with key economic measures including inflation, GDP growth and currency movement, to produce a score for each country, illustrating its position in the global league of shopping nations.

The report highlights the correlation between income growth and international travel, evident in the performance of Vietnam which, as we said earlier, emerged with the second-highest average spend per transaction (ATV) in Q4. Vietnamese shoppers were one of the biggest climbers in the last quarter, spending an average of €902 per purchase.

And that should carry on as the country’s upper-middle class are spending 87% more on international travel annually compared with the regular middle class, and as their share of population rises (it will have doubled from 6% in 2015 to 11% by 2020.)

CHINESE STILL SPENDING

While Chinese consumers are spending more within China, they remain key for international sales and are helping to fuel strong sales for luxury fashion brands in cities such as London, Paris and Milan. In fact, they retained their position at the top of the table for overall index score, which includes tax-free sales, ATV, inflation, currency and economic growth. When shopping abroad, the ATV of Chinese shoppers was €801 “in spite of continued claims of trade war-driven shocks hampering growth.”

Planet also said that the “power of currency stability extends beyond the APAC region, with Morocco leaping six places on the Index league table as a result of the strengthening dirham and increased ATV among its international shoppers.” The dirham’s growth against the euro and pound in Q4 coincided with a 25% increase in ATV, to €475.

David Perrotta, UK Country Manager of Planet said: “International shoppers are increasingly becoming a key source of value to the volatile European retail market, with these consumers spending an average of 3.7 times that of domestic shoppers. Retailers should consciously think about the cultural nuances of their international shoppers, develop new and innovative ways to attract shoppers into physical stores and put experiential marketing at the heart of their customer offer.”

But he also called on the UK government to urgently get on with digitising VAT refunds for tourists as the country is way behind its European peers on this front and it’s deterring some shopping-focused travellers from visiting the UK.

Copyright © 2019 FashionNetwork.com All rights reserved.