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Europe update: European Tax Free Shopping stabilisation continues


Global Blue’s Tax Free Shopping (TFS) sales performance remains stable in Europe for a second consecutive month, at 0% for November year-on-year (YoY). This represents a marked improvement on the region’s performance throughout the rest of 2016.

Against the TFS sales decline seen across Europe since January, this continued stabilisation of performance can be explained by an easing of the macroeconomic conditions impacting the luxury industry. These included the softening of the Chinese economy and the lingering impact of European terror attacks earlier this year. This stabilisation is particularly encouraging in light of the strong base of comparison from November 2015.

Improvement for key nationalities

November saw European transaction trends continue to improve across most nationalities, with Russian and US sales increased by +3% and +2% respectively MTD. Improvement in the number of Tax Free Shopping transactions continued this month (-2% vs -5% in October), while the average spend per transaction remained in positive growth for the third consecutive month.

Across most origin nationalities, macro factors meant transaction trends continued to improve last month. The strengthening of the US dollar, an increase of Brent oil prices during November and improving consumer confidence in China meant Europe shows improvement across its three largest origin nationalities.

With the stabilisation of the Russian economy and strengthening of the country’s position on the word stage the revival of the ruble continues, meaning November also saw Russian TFS spend remain in positive growth.

Britain continues to perform

The UK saw strong growth in November, with MTD sales up by +43% as the softening of the pound continues post-Brexit. This growth is driven by both increased transactions (+16%) and a significant rise in average spend (+24%) MTD as globe shoppers cement London’s status as Europe’s most affordable luxury shopping destination.

The UK’s performance is largely attributed to consistent spend from Asian nations where demand is returning following a tumultuous 2015 in domestic markets, impacted by the economic slowdown in China. Chinese visitors continued to dominate the total monthly share of UK international shopping spend, accounting for 25% of the market, up +63% on the same period last year.

Volume of transactions continued to improve across all other major TFS destinations, with the exception of Italy, where a decline in Russian and Chinese visitors has slightly decreased the number of transactions (-11% YoY vs. -9% YoY for November).

 

Global Blue takeouts:

• November’s flat tax free sales performance in Europe marks a continued stabilisation in for the luxury sector across the region

• Easing of several FX and political headwinds signal more favorable macroeconomic conditions for the region

• The UK’s continues to perform strongly and has helped to bolster Europe’s overall improvement over the last few months, with London cementing its place as Europe’s most affordable luxury shopping market


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