The UK’s retail sector continues to attract international shoppers as Tax Free sale declines eased for the fourth consecutive month. While August witnessed a 5% year-on-year decline in sales to international shoppers, this was less than the 8% fall in July, indicating an improving outlook for this important buying community.
The figures are the latest from international payment provider Planet Tax Free, who process VAT refunds on purchases made by non-EU tourists in the UK. Tax Free sales are a key indicator of retail spend among international shoppers and demonstrate the attractiveness of the UK to global audiences.
International shoppers are becoming increasingly important to the future of the retail sector. Across Europe, they spend on average almost four times more than domestic shoppers, with some retailers seeing up to 60% of their sales coming from non-domestic customers.
In August, the UK witnessed a 7% rise in average transaction value made by tourists – the second highest rate of growth among major European countries – suggesting that the UK’s luxury shopping brands are attracting the biggest spenders among international shoppers.
Patrick Waldron, CEO, Planet, said: “This data should be interpreted as a vote of confidence in the UK as one of Europe’s leading shopping destinations. In late 2016 we witnessed a post-referendum boom in Tax Free sales, increased numbers of tourists visiting the country and taking advantage of currency depreciation. In the 12 months following the Brexit referendum, Tax Free sales grew 26%, due to the weakness in Sterling. But in the 12 months after that, sales declined by almost 11%. We are now finally seeing international shoppers return to our shores. They add immense value to the UK’s economy, and it is crucial that retailers are capturing international spend and converting it into growth,” Waldron added.
Saudi Arabian tourists were among the most prolific shoppers in the UK this August, demonstrated by a 29% rise in sales compared to the same time last year. Kuwait and the UAE were also key source markets, suggesting that those from Gulf Co-operation Council (GCC) countries are choosing the UK to celebrate and spend during the Eid al-Adha period.
Overall tourist arrivals to the UK enjoyed a 6% boost in August, and forecast data from Forward Keys suggests that this trend will continue, with 3.5% arrivals growth predicted up to November this year. International shoppers represent a huge growth market for British retailers, with a record £24.5 billion spent by nearly 40 million tourists last year, according to figures from VisitBritain.
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