UK still in hot demand despite Chinese slowdown
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Fears of an economic slowdown in China, the devaluation of the Yuan, and stock market turmoil have grabbed headlines throughout January, raising questions about the demand for luxury goods among Chinese consumers in 2016.
Despite concerns, intelligence from retail tourism specialist Global Blue indicates demand for UK travel is still high, and Chinese New Year (8-14 February) is set to kick-off 2016 on a positive note for international spend, boosting optimism amongst retailers who are anticipating a slower February. However, with the strength of the Pound, UK brands must market more aggressively to capture demand over European neighbours.
Although economic growth in China may have been the slowest in a decade, people continue to travel and spend in the UK. Market research firm GfK revealed 109 million Chinese travelled abroad in 2015 – 9 million more than 2014 and forecast this number will only grow, bringing more shoppers to high streets in 2016; by 2020 this figure is set to rise to more than 200 million.
Global Blue Tax Free Spend Index 2015 revealed spend by Chinese shoppers in the UK slowed to just +1% YOY in 2015. Despite this, China maintained its position as the top international tax-free spending nation for the UK overall representing 24% of total spend and with individuals spending £742 per transaction, indicating their continued desire for British brands.
Consequently, travel bookings for Chinese New Year indicate strong demand for UK experiences. Online travel service, Ctrip reports more than 60% of Chinese travel overseas for the cultural celebration while UK tour operators forecast that bookings will continue to grow throughout the first half of 2016 as the shift to summer travel becomes a trend for these visitors.
Gordon Clark, managing director UK and Ireland at Global Blue said: “Chinese New Year is still a key period for UK retail, proven by the rise of +72% YOY for the Chinese New Year period in 2015. The new two-year visa for Chinese visitors to the UK, which launched in January following a campaign by the UK China Visa Alliance, an initiative Global Blue joint-founded, offers a boosted incentive for shoppers to visit the UK this Lunar New Year over Paris or Milan.
However, UK brands must not be complacent and should focus on strategies and marketing campaigns executed in China that talk about their brand heritage, location of their stores, quality of their produce range and any special services they can offer these customers. By doing so they will be able to entice this integral market to the UK to shop and stay, despite the strength of the Pound and China’s faltering consumer confidence to travel and spend abroad.”
The hotspot for Chinese consumers in London is Mayfair, Piccadilly and St James’s, an area home to two-thirds of the world’s top 100 luxury brands where average transaction values reach as high as £1,400 according to London Luxury Quarter, the initiative representing the businesses across the area.
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