In what typically represents a cash windfall for UK luxury retailers, holidaymakers from majority-Muslim nations mostly overlooked the UK this year. Tax Free sales revenue in the week following Ramadan and Eid al-Fitr in June saw a 20% decline compared with the same post-Ramadan period last year,
The figures from international payment provider – Planet – cover Tax Free sales in the UK by shoppers from Gulf Co-operation Council (GCC) countries. These include Saudi Arabia, Qatar, the UAE and Kuwait, and Southeast Asian countries such as India, Indonesia and Pakistan.
The annual ‘Ramadan Rush’ is typically a major boost to UK retailers, as shoppers from these nations often take holidays in the week following Eid al-Fitr. For many, these trips are an opportunity to make large savings on luxury goods through Tax Free shopping. The disappointing sales data was in line with the overall trend for the UK in June, which suffered an 11% fall in total Tax Free sales turnover, compared with the same month last year.
Year-to-date data illustrate just how crucial GCC spend is to UK retailers. In the first six months of the year, China accounted for 24% of all Tax Free sales in the UK. However, Kuwait and the UAE together – with a combined population amounting to less than 1% of China’s – accounted for 11% of all Tax Free sales in the same period.
International spend is becoming business critical in the UK and European retail sectors. Many merchants are radically rethinking their strategy for reaching, influencing, and attracting these international shoppers into stores. On average, tourists across Europe spend almost four times more than domestic shoppers, and this is especially true of those from GCC nations. Increasingly, retailers are seeing a growing proportion of their sales coming from these shoppers. For major European retailers, international traveller spend can account for up to 60% of their total turnover.
Patrick Waldron, CEO of Planet, said: “GCC nations have been impacted by falling oil prices and increased austerity measures in recent years. With the recent uptick in oil prices, we hope to see these consumer pressures ease and spending recover to pre-crash levels. International shoppers’ significant contribution to the UK and European retail sectors represents a major opportunity for those merchants who target these markets correctly. With a clear understanding of the cultural nuances of shoppers from different parts of the world, and a focus on creating the right customer experiences, retailers will reap rewards very quickly and we are seeing this across selected retailers in the UK and Europe.