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Asia update: Asia back to growth, driven by a strong month for Japan

Despite continued constraints from Asia’s changing globe shopper profile, the region’s Tax Free Shopping (TFS) sales were back to growth in December 2016.

The Asian TFS market has grown for the first time since February 2016, posting a +2% sales in store increase during December. Number of transactions continues to grow across the region, up +7% month to date, as increased numbers of Chinese shoppers from tier two cities choose to travel throughout the region. However this increase has had a relatively soft impact on total sales in store due to low average spend growth of -5%.

Softening Japanese Yen boosts TFS sales

The growth experienced across the region was driven by a strong month for Japanese TFS sales. During December, total sales increased by +8% month to date as Chinese shoppers returned to Japan in large numbers, driven by increased domestic consumer confidence and the softening of the Japanese Yen.

Total transactions were up by +23% month to date during December, driving significant growth in Japan despite challenging average spend growth of -12%, highlighting the trend of increasing numbers of lower value Chinese globe shoppers choosing to visit Japan.

While Japan was the main driver of growth, December saw other Asian markets stabilise, with

Singapore posting improved sales in store performance of -2%, against -5% in November. South Korean performance remained flat at -11% for December (vs -11% for November).

Chinese luxury appetite returns?

December’s positive growth can be attributed to a boost to Chinese traveller numbers across the region, which saw transactions up +8% month to date (vs +4% during November). More significantly, an improving average spend trend from this group has also boosted total sales in store progression, with Chinese sales up by +4% across Asia in December (vs -4% in November).

This improvement in average spend could point to an increased emphasis on luxury spend from Chinese Shoppers. During December Japan experienced a +36% year on year (YoY) increase in transactions between 400k and 600k JPY (approx. 3300-5000 EUR) from Chinese shoppers. Singapore’s figures tell a similar story, with Chinese transactions between 3000 and 5000 SGD (approx. 2000-3300 EUR) increasing by +7% YoY.

Across other globe shopper origin markets, Global Blue has seen the strong month to date sales performance from Korea in December (up +11%), while other Asian nationalities posted single-digit negative growth for the month including Hong Kong (-9%) Taiwan (-9%) and Malaysia (-7%).


Global Blue takeouts:

• The Asian TFS market grew for the first time since February 2016, posting a +2% sales in store increase during December.

• Strong Japanese performance was the main driver of Asian TFS growth and can be attributed to Chinese shoppers returning to the country to take advantage of the softening Yen.

• Increased average spend from Chinese globe shoppers in December paints an encouraging picture for Asia’s luxury industry in 2017.