Young Woman hold with shopping bag showing duty free

Asian duty-free sales plunge

(Source: Inside Retail Philippines | 29 September 2016)

Asian duty-free sales took a hit last monthin the worst decline this year.

Data from tax refund specialist Global Blue shows tax-free in-store sales plunged 13 per cent in value year-on-year last month after a July that maintained the status quo.

While there were 25 per cent more transactions last month, the average spend fell 30 per cent, a clear indication that individual travellers are spending less. This is probably the result of a combination of factors ranging from China’s customs clampdown, a different passenger profile, and currency influences, reports TR Business.

“The rise of less affluent middle-class Chinese travellers continues to bring down the average spend of tax-free shopping globally, with a sizeable impact in Asia,” says Global Blue. “Across the region, more ‘value seekers’ from second- and third-tier cities are growing their transactions, but with less affluent spending patterns.”

Duty-free and travel retailers can take comfort from the rising number of travellers in Asia, which correlates with higher numbers of transactions in Japan, Singapore and South Korea, but Global Blue says the overall sales performance in the region is significantly limited by the headwinds of a stronger yen in Japan and Chinese spending in the region increasingly being driven by value-seeking shoppers.

 
Not compensating

The travel boost is not compensating for the spending fall in key duty-free and travel-retail locations such as Japan and Singapore, while Hong Kong (downtown) does not even have the benefit of rising traveller numbers.

With 33 per cent fewer sales last month, Japan has been affected by its strong currency. Global Blue estimates that 23 per cent is a result of the currency strength with the other 10 per cent being the growth in low-spending Chinese tourists (Narita airport has had a 20 to 30 per cent increase in visitors from second- and third-tier mainland cities in the first half of the year).

South Korea’s 44 per cent rise in sales – compared with impressive 215 per cent growth in July – is on the back of highly beneficial comparisons to last year when the MERS virus took a big toll on traffic.

Transaction numbers are significantly up across all globe shopper nationalities in Asia, except for Hong Kong (down 10 per cent). Taiwanese shoppers showed the highest transactions growth (43 per cent) in the region last month, followed by Chinese (28 per cent), with Indonesians and Thais also up. However, the decline in average spend is a long-term trend.

Global Blue says the new Chinese value seekers are having a negative impact across Asia as their demand for regional travel increases, driven by the Chinese government’s strategy of strengthening the economy by localising discretionary spending.

Year-to-date tax-free sales performance across the region is flat with average sales down by 21 per cent.

 

Read more: https://insideretail.ph/asian-duty-free-sales-plunge/

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