Chinese tax free spending has continued to fall in 2016 as retailers prepare for an increase in visiting shoppers in May and October. Chinese Tax Free Spending dropped into negative growth last month, while 2015 saw an overall increase of 58%.
The UK was hit in the first quarter largely due to a 30% drop in Chinese tax free shopping in March which resulted in an overall 21% decline. While Chinese shoppers account for a fifth of UK tax free shopping, it appears that this market now prefers to indulge in French, German and Italian retail. The average shopping budget per trip to Europe is expected to be €3,544 (25,902CYN) this year.
The fall in sales from visiting shoppers was found to be due to more stringent Schengen Visa demands, an increase in European terror attacks and threats and the later Chinese New Year last year which saw a stellar increase of 122% year-on-year.
May is expected to be the busiest month for travel to Europe, Japan and South Korea, while October will see the highest increase in visits to some Asia-Pacific destinations including Singapore and Australia. These two periods correspond with China’s two major holidays, Labour Day and Golden Week.
In preparation for these key periods, Global Blue has published its “Globe Shopper Report: China Edition”. The report reveals information from 5,000 regular Chinese travellers about their spending plans for 2016 and an excess of 27m tax free retail transactions.
The report found that Chinese travellers are enticed by convenience and famous brands. 35% of regular shoppers said they preferred shopping malls or retail parks and 33% look for destinations with a selection of international brands. 31% also noted that value for money, whether it is a better price than their Chinese counterparts, plays a significant part in shoppers’ decisions.
Global Blue’s report also revealed that the top five services that would attract Chinese shoppers are tax free shopping (65%), opportunity to pay with China Union Pay (55%) or home currency (46%), employees who speak their language (39%) and Wifi in store (26%).
“We are experiencing a decline in Chinese spend this year, with the UK being particularly hit following the introduction of Schengen biometric visa requirements for Chinese travellers in October 2015 and in the associations with the terrorist attacks on Europe” said Gordon Clark, MD UK and Ireland at Global Blue .
“However, this is the first decline we are seeing following years of continual growth and China still drives the highest number of Tax Free Sales in our stores. In a difficult climate, it is imperative to optimise the opportunity and experience for these shoppers to spend, and brands need to take action now ahead of the key May holiday period to market their brands correctly in China and to also make sure the guess experience for a Chinese traveler is the best possible when shopping within their stores.”