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Europe update: Strong growth despite Ramadan slow down


28 July 2017 -Global Blue’s European Tax Free Shopping (TFS) sales grew for a sixth consecutive month during June. However, a two week earlier Ramadan period altered growth patterns across the region compared to 2016.

Highlights

  • 2017 TFS spend growth continues across European markets during June, up +8% year-on-year
  • Transaction growth softened year-on-year (+3%) while average spend continues to develop positively (+5%)
  • UK and French performance softened (+19% and +0%) largely due to an earlier Ramadan period

 

Early Ramadan slows regional growth

Ramadan 2017 took place between 27 May and 25 June (versus 7 June to 6 July in 2016), impacting much of last month’s TFS performance across the region (+8% year-on-year compared to +21% during May). From Global Blue’s key markets, the UK was most exposed to the softening of TFS sales, with 23% of total sales coming from Gulf Cooperation Council (GCC) countries. French growth also slowed due to 6% of sales coming from GCC nations.

Signs point towards a post-Ramadan uplift for most of the GCC countries, with Tax Free Shopping activities historically improving after the fasting season. However, with Qatar still feeling the impact of embargoes, this year could see less Qatari visits to Europe and in particular the UK, a popular destination for Qatari Globe Shoppers.

Chinese spend increases

Consistent growth across the first six months of the year means Europe has seen a strong H1 for Chinese sales-in-store. During June this growth (+13%) was driven by an increase in average spend, while number of transactions remained relatively flat (+1%). This flat performance is due to a high basis of comparison with 2016, when low cost travel to Europe encourage large numbers of travellers from Tier Two cities to visit the continent. A softening of CNY vs EUR (6% since May) has seen a reduction in visits from this group and a subsequent rise in average spend across the region.

Brexit one-year anniversary

The UK continues to perform strongly (+19%) a year after the Brexit announcement, despite the mixed effects of Ramadan and a much higher basis for comparison with 2016 figures. Growth from luxury sales remains strong, with June contributing to steep increases in high-value sales, particularly from Chinese Globe Shoppers. UK sales from Chinese visitors over 5000GBP increased by +104% (vs +27% for all other nationalities) as the profile of Chinese travellers across Europe swings back towards higher spending individuals.

Key markets performance mostly positive

Performance remains positive across most major European TFS sales markets, despite the impact of Ramadan on UK and France, which grew +19 and +0% respectively.

  • Spain was Europe’s best performing key market, with sales up +34% due the ongoing positive impact of key airline connections with Russia and China
  • Italy continues to develop well, unhampered by the effects of Ramadan posting year-on-year growth of +10%
  • Following positive May performance (+5% year-on-year), German sales-in-store fell by -10% during June (year-on-year) due to shifting travel patterns from Chinese visitors


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