Planet: UK consumer spending in Europe falls to 12-month low as Asia-Pacific tourists return

After holding a prominent position through 2022, the UK has fallen to its lowest ranking in 12 months for consumer spending on Tax Free products in Europe, according to new findings from Planet, a global technology leader offering integrated software, payment and technology solutions.

Planet’s latest intelligence report shows that the UK has dropped to fifth place behind the US, Taiwan, the Republic of Korea and China when it comes to Tax Free shopping in Europe. Competition between American and Asian consumers is escalating as the potential for a booming Chinese tourism market in 2023 becomes increasingly apparent.

Over the past twelve months, the importance of US consumers to Europe’s retailers has been constant, but in recent months there has been a shift in the sales relationship between Asian consumers, particularly following the easing of COVID restrictions in China and the Chinese New Year.

This shift has resulted in a decline in the dominance of American tourists, who now make up just 15% of the European duty-free market, with Taiwan and China now making up 5.5% and 4.5% of the market respectively, up from 3, 4% and 4.0% in December 2022.

Elsewhere, Swiss tourists have re-entered the top 10 ranking after an absence of several months, rising due to an increase in shoppers in Germany.

The UK continues to miss out on full spending power in the US

The data also shows how fashion capitals in Europe have benefited from increased spending by American tourists. Comparing the average spend of multi-destination US tourists in 2019 across the major fashion capitals of Europe (London, Paris, Milan, Madrid and Berlin), the analysis shows that US tourists have increased their spending, with average spend per tourist increasing by 23% from €1,715 in 2019 to €2,110 in 2022/23.

This increase in average spending is accompanied by an increase in the upper whisker of the data, indicating that some tourists are spending significantly more than average compared to 2019 spending.

However, London is not reaping the full benefits of this increase in spending, as it currently lacks a tax-free shopping scheme to attract high-spending tourists. In 2019, the average spend per US tourist in London was £1,048, compared to the other European fashion capitals which had an average spend of €1,715.

It is difficult to determine the exact impact of the dismantling of the UK Tax Free trade scheme on London and the other European fashion capitals, as it is affected by various social and economic factors such as exchange rates and price promotions. However, the data highlights the potential level of spending that US tourists could unleash in the UK, as the biggest generator of Tax Free sales in Europe, should a scheme become available.

Luca Cassina, President of Retail at Planet commented:

“It is not just the full purchasing power of American visitors that UK retailers are missing out on due to a lack of a digital Tax Free shopping system, but also cash-strapped Chinese tourists.

“We know from our previous research that almost 7 in 10 Chinese consumers would be more likely to visit the UK if a tax-free shopping scheme were available, providing a much-needed boost to the economy by generating tax revenue for the UK Government on the goods and services which attracts VAT.

“European retailers continue to reap the benefits of Tax Free shopping and we call on the UK to follow suit to offer visitors to Europe more options over where they choose to shop Tax Free.”