Russian tourist spend plummets 40%

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Russian tourist spend
// Russian tourist spend in the UK plunged almost 40% last month
// January seen as month when Russians typically travel abroad due to Orthodox Christmas
// Fall comes amid rising inflation within Russia and continuing economic sanctions

UK retail sales to Russian tourists fell during the Orthodox holiday period for a second year in a row, as economic sanctions continue to bite.

Tax-free sales to Russian tourists in the UK fell by almost 40 per cent during the Orthodox Christmas and New Year compared with the same period last year, as a fifth year of economic sanctions continued to squeeze the purchasing power of one of European retail’s biggest international source markets.

The figures come from international payments company Planet, which facilitates tax-free refunds for international shoppers – an indicator widely seen as a measure for the purchasing power of source markets and the retail strength of destination markets.

Tax-free sales to Russians in UK stores fell by 37.3 per cent during the biggest yearly holiday in the Russian calendar last month, while similar sales across the rest of Europe fell by over a fifth.

The decline follows a similarly grim period in 2018, when purchases by Russian shoppers fell by over 22 per cent.

In addition to reduced overall sales, the average transaction value among Russian shoppers fell by over nine per cent compared with last year’s holiday, down to €312 (£271).

Orthodox Christmas is a major event in the Russian calendar and is typically marked by travel abroad.

As well as having a traditionally strong domestic demand for fur, high fashion, watches and jewellery, Russians are regarded as one of the biggest groups of international consumers of these products abroad.

The high price points of these products lead many shoppers to claim back VAT on their international purchases.

The combination of oil prices, economic sanctions from foreign powers and steep inflation has pummelled the value of the Russian ruble in recent years.

Since sanctions were imposed in March 2014, Russia’s currency has fallen in value by 34 per cent against the euro and 30 per cent against the pound, hence diminishing international purchasing power among Russians.

“Russians have historically been one of the biggest-spending visitor nations for retailers in the UK and mainland Europe, so a reduction in purchasing activity among this key group is felt acutely by merchants,” Planet UK country manager David Perrotta said.

“These figures are illustrative of the economic pressures that Russians are facing, and for the retail sector it’s crucial that they put effort into attracting a wide mix of international shoppers to mitigate this.

“We know that the average spend of a non-EU shopper in Europe is 3.7 times that of a domestic consumer.

“This is a huge opportunity for retailers that put measures in place to capture their share of this vast international spend.”

He added: “We’ve found that providing cultural training to retail staff in store can lead to an average 10-20 per cent increase in conversion of sales leads to actual sales made to international shoppers in stores.

“At a time when domestic retail markets are slowing, it is imperative that merchants and brands focus on attracting the international shoppers who are playing an increasingly significant role in the sector’s performance.”

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