Overseas shoppers are making the most of the weak pound, so how can retailers exploit this international influx? Charlotte Hardie reports
Never mind Buckingham Palace and Trafalgar Square, it’s the UK’s shops that are the top tourist attraction at the moment. There aren’t many positives to be gleaned from the weakness of sterling, but one upshot of the pitiful exchange rate is the swarms of tourists touching down in Britain with money to burn.
Retailers such as Fortnum & Mason, Hamleys, Harrods and Selfridges have always been tourist Meccas, but all are witnessing a marked increase in shoppers not only from Europe, but also further afield. Fortnum & Mason managing director Beverley Aspinall says this is reflected in sales of certain products.
Tea – a “little piece of England” – is selling very well. The retailer has also witnessed double-digit increases in sales of jams in the past year.
Hamleys head of marketing and retail Nigel Wheatley says tourist footfall is up “significantly”. The store is busier later – reflecting tourist shopping habits, and product demonstrators are far busier.
Providing it is done successfully and cost-effectively, a marketing campaign that attracts overseas visitors can be just what a retailer needs at a time when domestic shoppers are reluctant to spend. As Christopher Rodrigues, chairman of national tourist agency Visit Britain, told Reuters at the end of last year: “There has never been a better time to visit Britain. We must take advantage of the unprecedented position of the pound.”
So in practical terms, what should retailers do?
A lot of the work that Selfridges does involves creating partnerships with companies such as airlines and Eurostar. The department store has produced a magazine – Selfridges 100 – devoted to art, fashion and shopping, which is distributed in stores as well as through key partnerships such as hotels and Eurostar trains and lounges. It also advertises directly in in-flight magazines – as does Fortnum & Mason. Aspinall says placing ads in tourist guides available in hotels is particularly beneficial.
Importantly, marketing to overseas shoppers is as much about getting involved with tourism in the UK as it is with direct advertising. As Aspinall says: “It’s about working with tourist campaigns to make sure we are targeting the right people.”
Many retailers work with organisations like Visit London and London First. This may not, at first, seem to be of direct benefit to the retailer, but Aspinall stresses the importance of getting involved in the wider aspects of tourism promotion – promoting London as a destination city and making sure the Fortnum & Mason name is on leaflets or maps wherever possible.
Selfridges marketing director Sally Scott highlights the importance of maintaining relationships with London’s top concierge hotels and keeping them up to date about in-store events. “It works both ways,” Scott explains. “We want their guests to come into our store and the hotels want interesting things to tell their guests.”
Overseas customers don’t necessarily have to set foot in the country for UK retailers to take advantage of their willingness to spend. Arcadia’s Topman is just one retailer that has witnessed a surge in online spend from Europe as shoppers realise the cost benefits. As a result, the retailer is ramping up its online advertising in an attempt to drive traffic. It has launched pay-per-click campaigns in individual countries and introduced landing pages in their native languages, as well as a currency converter for shoppers to work out savings.
Arcadia might have the luxury of a sizeable marketing budget, but for those with less cash in the pot, digital marketing campaigns can be a cost-effective way to drive both traffic to their transactional websites and tourist footfall into stores. David Roth, chief executive of WPP’s The Store, suggests it could be worthwhile creating specific promotional websites aimed at the retailer’s target countries.
Ultimately, digital marketing is often a good solution for retailers that want to tap into the tourist market because it can be quick to implement and easy to change when necessary. After all, the weakness of sterling will hopefully only be temporary. Roth says: “It’s about being opportunistic. Those retailers that will do well are those that are nimble.”
Whether retailers aim to attract tourists to their stores, websites, or both, they need to consider the message they want to convey. Retail marketing expert Neil Kennedy believes there is no point skirting around the issue. “What’s the USP? At the moment, it’s the weak pound,” he says. “Marketing is predicated on having a reason why. In this case that’s the money-saving opportunities.” Kennedy sees no reason why retailers should be shy about promoting exactly why tourists should be spending their money in the UK.
But Molly Flatt, from word-of-mouth marketing agency 1000heads, adds that retailers shouldn’t make assumptions about the tourist mindset. Yes it will be about money, but it is also about the retail brands and product on offer. “There is a real opportunity for retailers to go to those countries and find out what these people are passionate about,” she says. “It’s about tapping into the conversations that are going on among these consumers.”
Above all, there is little point devoting time and energy to spreading the word about your brand without the service to match – be that in stores or online. As Scott points out, Selfridges’ shopfloor staff speak about 40 different languages between them. “We pride ourselves on communication,” she says.
Aspinall adds that meeting tourists’ needs is also about “making sure we’ve got the right products in-store when they get there”. Wheatley adds:
“We advertise with a few key tourist magazines, but we prefer to spend money on upping the retail theatre. You’ve got to deliver the customer experience you’ve promised.”
The Marketing Store business director Michele Haddon recommends identifying those stores in the portfolio that are most likely to benefit from tourism, and creating specific “tactical communications that resonate and engage with this audience”. This might include practical elements, such as highlighting language expertise of store staff through the use of badges and making sure VAT and pricing is provided in multilingual formats. Or it might involve more emotional messages that tap into the cultural experience. “Retailers might want to highlight the latest fashion item on the London scene,” Haddon explains.
The right target
While the lucrative tourist market presents a whole host of opportunities, capturing it is not straightforward.
As Scott says: “At Selfridges it’s always been a part of what we do.” At the moment, Selfridges and other famous destination stores are gladly capitalising on the fall in sterling. And while Aspinall says Fortnum & Mason’s marketing and PR drives are not “hugely expensive”, that is largely because it has always been a part of what the retailer does and it is greatly aided by the name it has built up overseas over the years.
In contrast, for those retailers starting afresh in their mission to tempt tourists to their stores, the sheer cost of acquisition can be huge. “It gets very difficult because it’s a very fragmented market. Retailers will need to look at exactly where most people come from and target them accordingly,” says Roth.
It might not be suitable for all. Those that will gain the most return on their investment are those that have a unique point of difference, or some of the large, designer brands where shoppers can make some of the biggest savings.
However, at the moment there aren’t too many UK shoppers walking around who are intent on spending. Tourists are doing exactly that. Anything retailers can do to grab a share of the cash in their bulging wallets will be time and money well spent. And those that do it well may well find that these bargain-hungry shoppers become fans for life. This could be the perfect opportunity to put UK retail firmly on the international map for good.
Why market to tourists?
- The pound was weaker in 2008 than in any year since 1971
- Over Christmas, Eurostar recorded a 15 per cent rise in passengers from Brussels and Paris
- Figures from tax-free shopping operator Global Refund showed the UK has witnessed the biggest surge in shoppers from the Middle East, Japan and the US. Sales to these shoppers rose an average 275 per cent in January compared with the same time last year