Chinese outbound travel looks set to drive global Tax Free Shopping (TFS) growth for the luxury industry as Chinese globe shoppers confirm their preference for mixing travel with shopping for key national holidays.
May and October will be the busiest months for travel among regular Chinese travellers, according to Global Blue’s newly released Globe Shopper Report: China Edition, which finds that these months are the most popular for outbound trips due to the Labour Day (30 April-2 May) and Golden Week (1-7 October) national holidays.
The survey of 5,000 regular Chinese travellers found that shopping remains a key part of their holiday experience, as 81% of those planning international travel this year intend to shop during their trip.
Asia is top travel choice
Asia is the top regional choice for Chinese travellers, with 73% of respondents planning trips there; South Korea is particularly popular, with 26% of the vote, followed by Japan with 23%. Europe remains a key destination for Chinese travellers, with 41% saying they plan to visit the region some time this year. France is still the number one preference with 16%, followed by Germany (8%) and Italy or the UK, each with 6%.
China’s currency devaluation and recent exchange rate fluctuations will only have a minimal impact on Chinese travellers’ spending plans, as long as the yuan doesn’t fall significantly. Just under half of respondents said they would reconsider their destination choices (46%) or reduce their shopping budget (47%) if the yuan dropped below 0.13 against the euro. Respondents said their average shopping budget would be 3,544 euro per trip to Europe and 2,517 euro per trip to Asia, according to the report.
However, the biggest concern of Chinese travellers is the continued threat of terrorism in Europe. A little over half (56%) of those surveyed listed safety as an important factor when choosing a travel destination. This was alongside the new Schengen biometric visa requirements, which was also cited as an important factor (22%) for destination choice.
Global sales decline
While the Chinese remain Global Blue’s largest group of globe shoppers, accounting for a third of global TFS sales, their spending has declined in March 2016 by -24% year-on-year (YoY). This follows a stellar growth rate of +58% in 2015, which makes for a tough comparison, especially considering March 2015 saw a +122% YoY growth rate, in part due to the slightly later Chinese New Year holiday last year.
Europe cools, Asia heats up
Europe has borne the brunt of the decline in Chinese spending with a -8% drop in sales for Q1 YoY. France has been the worst affected with an average -21% sales decline in Q1.
However, Asia is absorbing the Chinese appetite for TFS spending and has seen strong growth, with a +32% rise in transactions across the region for Q1 YoY. Furthermore, Japan looks set to continue as the top Chinese shopping hotspot with a spending growth rate of +50% during Q1, when Chinese shoppers accounted for 54% of the region’s TFS sales.
TFS leads services demand
Attracting Chinese globe shoppers during their peak holiday periods in May and October will be key for retailers in 2016’s economic climate of slow growth. TFS is listed by 65% of respondents as their number one service attraction, followed by the ability to pay with UnionPay (55%), payments in home currency (46%), Chinese-speaking staff (39%) and in-store Wi-Fi (26%).
Digital presence is also a major service factor for Chinese travellers, with 43% of respondents researching brands through travel, shopping and fashion websites, and slightly less (38%) using social media as a main source of travel research.
Global Blue takeouts:
• May and October will be the busiest months for travel among regular Chinese travellers, who mix shopping and outbound trips for key national holidays.
• 81% of Chinese planning international travel this year intend to shop during their trip.
• Nearly two-thirds (65%) of Chinese travellers say Tax Free Shopping is their number one service consideration when choosing a destination.
• Japan looks set to continue as the top Chinese shopping hotspot in 2016 with a spending growth rate of +50% during Q1, when Chinese globe shoppers accounted for 54% of the region’s TFS sales.
Research was conducted by Opinium Research to a sample of 5,005 Chinese travellers between 22 January 2016 and 1 February 2016.
Global Blue corporate data reporting includes Tax Free Shopping transactions from key Tax Free Shopping destination markets across EMEA and Asia, 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.
* Regular Chinese travellers are defined as survey respondents who have been on an international holiday in the last two years or plan to go on one in 2016
** The most common rate to prompt a change in shopping spend or destination was 0.130 CNY/EUR or lower (16%) – below the current rate of 0.137 CNY/EUR. All currency calculations based on Thomson Reuters FX rates. Calculated 15/04/2016. *** Of those surveyed, 4743 (95%) plan to go on holiday in 2016