After a few difficult years for the Turkish retail and tourism industries, the TFS business is stronger than ever in the country confirms Selim Seyhun, Global Blue Turkey Managing Director.
1. In May, Turkey posted the biggest sales in store progression in Europe. What do you make of the country’s sales in store evolution since the beginning of the year?
The Turkish TFS industry is bouncing back from a bleak period after several terrorist attacks in 2016 and political unrest driving tourists away. Today, lower safety concerns and a more positive macro-economic environment strongly benefit the country. A weak Turkish Lira against the Euro for example has made shopping in the country much more affordable and impacts positively the number of tourists shopping. Indeed, for the second quarter of 2018, sales in store (SIS) progressed by +52%, with the number of Tax Free Forms issued rising by +3%.
2. Have you witnessed a difference in traveller mix and with what consequences?
Historically, tourists from Gulf Countries and Iranians always had an important share in total tourist spending in Turkey. For the second quarter of 2018, they account for a third of the country’s TFS spend. Also, we usually witness a major increase in their spending right after the Ramadan.
What is new in Turkey is the impressive awakening of Chinese tourists. In 2018, their spending is 7 times higher than in 2015. From April to June 2018, Chinese spending grew by a massive 341%. They have become the country’s best performing nationality, representing alone a 25% share of the total volume of transactions during the second quarter of 2018. As opposed to other more visited Eurozone countries, these Chinese visitors coming to Turkey are most often Free Individual Travellers (FIT) and shun away from group traveling.
This change in traveller mix impacts positively the average spending. The average spend per transaction is also showing strong growth, rising by +48% in the second quarter of the year. On one hand, the growing flux of Chinese Globe Shoppers and their famed taste for luxury shopping pulls higher the average spend. On the other hand, as in most hyperinflation countries, Turkish merchants adjust their pricing almost weekly to benefit from a weak Turkish Lira against foreign currencies.
3. When shopping in Turkey, what do Globe Shoppers spend on?
The majority of tourist spending in Turkey revolves around the Fashion and Watch & Jewelry categories. Fashion represented 62% of total share of spend from April to June 2018, with a calendar year to date growth of +44% at the end of June. As for Watches & Jewelry, the category accounts for 31% of our total share of spend, with a +76% CYTD growth in June 2018.
In terms of business sectors, luxury shopping accounts for 61% of total spending, with a +64% growth since the beginning of the year, where the rest of the business sectors such as Fast Fashion and Mainstream grew by +26% over the same period.
We operate in numerous luxury malls in Istanbul including İstinye Park, Zorlu Center and Emaar Square where most of the world’s luxury brands are represented. TFS is a clear differentiator for them and we also implemented downtown refund offices in these locations to improve customer satisfaction by allowing travellers to get their refund just when they are shopping. In parallel, we support these malls with marketing products such as Airport Billboards to communicate at origin markets like Abu Dhabi. Today, those 3 locations account for more than 50% of total tourist spend in Turkey.
4. How do you see the Turkish TFS market evolve in the coming months/years?
Unless we endure new terrorist attacks, there is no reason for tourist sales to slow down and the county’s tourism landscape is evolving positively, with many new projects in line.
Turkey’s new mega airport to open in 0ctober 2018 will be the third biggest one in the world. Ideally located at the intersection of Asia, Europe and the Middle East, this airport will become a major international travel hub, with flights to more than 300 destinations and an annual passenger capacity of up to 200 million.
In parallel, China has declared 2018 as the “Turkey Tourism Year,” in a move expected to boost ties between the two countries and to encourage more Chinese travellers to visit Turkey. We expect the number of Chinese tourists to top 400,000 this year.
Overall, it is great news for our merchants and prospects as they can only benefit from this increase of travellers flux!
5. What is Global Blue Turkey’s strategy to make the most of the current tourism revival happening in the country?
Global Blue is already leading the TFS market in Turkey. Every day, we work very closely with our partners and merchants to create a seamless TFS experience for their travellers and ensure the best customer service.
On top of our printed products like SHOP and MAPS we offer a wide range of marketing products such as mega billboards and digital screens in airports and shopping malls to drive more travellers to our merchant partners’ stores. In parallel, merchants’ feedbacks to new Global Blue services such as MCC (Mobile Customer Care), our digital traveller app are very positive and our Business Intelligence portfolio allows us to offer only the best to our partner merchants. They are also highly motivated by our digital/mobile communication tools like Ctrip virtual tour leaders (VTL) and other similar tools. It takes a close relationship with our merchants and Globe Shoppers to understand their needs and develop the best fitted solutions.
Last but not least, Turkey implemented its digital validation scheme in 2017 and became an eTFS country. Currently 97% of TFS volume is digital, improving merchants’ customer experience at the airport. Now, for the future, in order to bring customer experience to the next level and facilitate the whole refund scheme, we are working together with the authorities to introduce a green channel, where travellers can have a self-validation below a defined sales threshold on certain categories such as fashion.