Chinese tourist spend has soared in the past year, but what can retailers do to capitalise on this and is the UK doing all it can to welcome them?
Why are we talking about them now?
Luxury department store Harrods last week began to accept UnionPay, the Chinese debit and credit card. It installed 75 dedicated point-of-sale terminals at its Knightsbridge store and eight at its airport terminal branches, in time for Chinese New Year (February 3). Selfridges has accepted the card in its Oxford Street store since March 2010.
Why do retailers want to target Chinese tourists?
Chinese shoppers spent more than £350m in the UK last year, according to VAT refund company Global Blue. According to Visit Britain the number of Chinese visitors to the UK is expected to increase 89% by 2014.
Sales in stores across the UK from Chinese visitors soared 103% year-on-year in December. Average Chinese shopper spend in December was up 22% and Chinese shopping accounted for 15% of all foreign sales in stores in December.
Last year the average Chinese shopper spent £614 in shops in the UK, compared with an average across all nationalities of £563. In London the average Chinese spend rose to £883, compared with £633 for an average tourist.
Which retailers benefit most?
Retailers in London pull in the most sales, as tourists are drawn to the capital’s landmarks. It’s the luxury retailers whose tills ring the most. On the first day of the Harrods’ Winter Sale Chinese shoppers represented more than half of all its visitors on what was one of the busiest days of the year. Both Selfridges and Harrods have Mandarin speaking staff on hand to advise Chinese shoppers.
What are the obstacles?
Most Chinese people planning a trip to Europe apply for a Schengen visa, enabling them to travel in 24 European countries. However, if Chinese tourists want to come to the UK they must apply for a separate visa, which requires a personal visit to one of 12 application centres in China. The visa form is 10 pages long and retailers believe the lengthy process is putting Chinese tourists off visiting the UK. In 2009, 2 million Chinese people visited the European countries tied into the Schengen region, compared with just 110,000 that came to the UK.
Global Blue calculated this could cost luxury retailers £165m of sales over the next two years. A spokesman for the New West End Company, which represents retailers in the West End, said the system is “bureaucratic”, with visas taking up to three to four months to process. It, along with retailers such as Harrods, is pressing the Government on the issue.