Last month’s dip in spend from Russian shoppers reminds us of the sometimes fragile nature of tourism and the importance of a balanced mix of global shoppers.
Not since the Tsunami in 2011 have we seen such a significant drop in international tax free spend from one of the most consistent inbound tourist markets for the UK. Last month Russian spend dropped by 17% year on year and Russia slipped down one place to be the fourth highest spending globe shopper market, behind China, Middle East and Nigeria. The figures show how the weakening rouble against the pound, coupled with ongoing political unrest, served to halt outbound travel, leaving retailers and hotels across the UK feeling the impact.
We are confident visitor numbers and tax free spend from these high net worth tourists, who spend on average £669 per transaction, will bounce back. Visit Britain expects growth in spend by Russian shoppers to grow 75% by 2020. However last month’s dip reminds us of the sometimes fragile nature of tourism and the importance of a balanced mix of global shoppers.
Russia is consistently one of the top 5 highest tax free spending nationalities, and 2013 saw strong growth with total spend up 16% year on year and average spend per transaction up 4% year on year. With their taste for luxury, the UK has an appealing offer that caters to what these discerning visitors seek out when planning their travel, particularly in the strength of the designer fashion houses and high class hospitality. London specifically has a strong pull for this market, with the London Luxury Quarter and Regent Street as a preferred destination due to the high density of international luxury power houses and sought-after British brands as well as five star hotels including The Ritz, The Connaught and Café Royal Hotel.
The risk for many businesses in setting their international marketing strategies is to focus on one market. Those businesses that tailor and pitch their offer to multiple markets were less likely to feel the hit in February as, despite the hit to Russian spend, strong growth was seen from shoppers coming from Middle Eastern nations and China, up 31% and 23% year on year respectively. South East Asian nations have also been highlighted as one to watch this year as the ripple effect from China expands, with spend from Malaysian shoppers is up 16% year on year for the year so far.
With summer approaching, the biggest period for Russian outbound travel, retailers and hotels should look now how to reappraise their marketing to welcome these tourists, but also consider the opportunity presented by Ramadan for Middle Eastern shoppers and family and friends visiting Chinese students across the UK for Graduation ceremonies. Whilst point of origin marketing will help to drive footfall into stores, retailers can look to enhance their welcome by offering tax free shopping, opportunity to pay in their own currency with dynamic currency choice, multilingual staff with cultural training and extended opening hours. These extra touches will all help to increase the appeal of travelling to and shopping in the UK and will positively contribute to overall tourism growth.
- Gordon Clark is the UK Country Manager of Global Blue