Amid declining Chinese globe shopper spending in Q1, Americans are emerging as a growth prospect for the luxury industry.
In contrast to the Chinese this month, Americans offer a positive growth story for March with this globe shopper nationality retaining fourth biggest global share of Tax Free Shopping (TFS) spend and posting +10% global sales year-on-year (YoY). In Q1 American spending on TFS was up +33% YoY.
Asia focus for Americans
Asia is a focus for Americans this month, where the number of transactions grew +48% YoY across the region. In particular they shopped tax free in Singapore, where sales were up +24% and average spend increased + 25% YoY, reaching 1,524 euro. For Q1, Americans increased their transactions in the region by +43% YoY.
Americans are also starting to favour Japan again as a tourism destination. After a stellar year in 2015 when their TFS spend in Japan grew +159% YoY, Q1 sales have dipped, registering +17% YoY growth here.
According to the Japan National Tourism Organisation, in 2015 US visitors were the biggest traveller group to Japan outside Asia-Pacific origin markets, numbering more than a million tourists. They were encouraged by the attractive dollar-yen exchange rate and an increasing trend for ‘industrial tourism’ in destinations such Hashima, off Nagasaki, otherwise known as ‘Battleship Island’, which featured in the James Bond movie Skyfall and was listed as a Unesco World Heritage site last year, according to newspaper Nikkei. The high numbers of American tourists visiting Japan is particularly noteworthy because they have been achieved so soon after the March 2011 earthquake and Fukushima incident, which caused a huge decrease in American travellers, says the research blog Asia Matters for America.
Rethinking summer trips to Europe?
Europe is still great value for Americans, who have been seeing strong foreign exchange (FX) rates since February and rates this month that are close to matching last year’s high peaks in May and August. However, their TFS spending behaviour in France (-21% YoY) and Italy (-7% YoY) for March reflects the negative sentiment Americans have about travelling to Europe this spring and summer, according to a recent survey by travel industry magazine Skift, which highlights how 20% of 1100 polled travellers have already cancelled trips to Europe over the next few months and almost 28% are currently rethinking their vacation plans, after the recent terrorist attacks in Paris and Brussels.
Americans push UK Q1 performance up
While the UK currently offers less attractive FX rates for the British pound against the dollar, American globe shoppers have preferred to shop tax free in the UK. Here, they registered a +2% sales increase in March YoY vs +18% in February and -3% in January, giving a Q1 performance of +6% growth YoY.
American globe shoppers are a luxury growth prospect in 2016
In the face of a global luxury slowdown, powered by softer demand from the Chinese, America is being tipped by luxury analysts as this year’s big growth promise. Both Business of Fashion and Euromonitor have commented on its economic strength and return to form for tourism spending. ‘While Americans are shopping again, they prefer to shop abroad, where they can find better deals,’ reports Business of Fashion for a recent Growth Conundrum article, citing 2015’s overall TFS growth as +67% YoY for American globe shoppers. ‘This is not likely to change as market analysts expect the dollar to further appreciate in 2016,’ the report claims.
Euromonitor predicts the US will again be in top position among the developed countries comprising the top five growth markets for the luxury industry (in absolute terms), followed by Japan, South Korea, France and the UK. ‘China will be conspicuous by its absence from the top five growth markets, underscoring a shift in revenue power from emerging to developed economies,’ writes Rob Walker, luxury analyst for the firm.
In its latest Travel Megatrends report, Skift predicts that 2016 will be the year of the American traveller. ‘Despite geopolitics and the coming divisive election, US travellers are still in an excellent position to travel, with fatter wallets and broader horizons than they have had in a decade,’ writes co-founder Jason Clampet.
Global Blue takeouts:
• TFS spending for Americans is up globally and in Asia.
• The UK is faring better than Europe for American tax-free spending this month.
• Americans are a growth prospect for the luxury industry.
• Americans have more money and a willingness to travel thanks to a stable economy and ‘broader horizons than they have had in a decade’.
Global Blue corporate data reporting includes Tax Free Shopping (TFS) transactions from our key TFS destination markets across EMEA, Asia and Americas, where more than 24 months of back data is available. Global Blue data points referenced within our corporate content may vary from other third party reports that publish our data, due to different parameters set by these third parties.