London’s position as the number one shopping destination in the UK is under threat as international shoppers start to travel further afield to meet their shopping needs.
The latest figures from international payments provider Planet show that London’s share of international shopper spend in the UK fell by over 4 percentage points so far this year, declining from 68% to just under 64%. In the same period, Manchester’s share nearly tripled, from 1.6% to 4.7%, while Birmingham’s share nearly doubled, from 0.8% to 1.5%.
Despite London’s share decreasing, its sales to international shoppers grew in 2019, suggesting that every region is benefitting from these shoppers, while the distribution across the country is becoming more equitable.
Cricket World Cup driving regional sales to tourist
Total international shopper sales have increased by 14% in Manchester and 5% in Birmingham so far this year compared with 2018. This increase was driven in part by a high number of visitors travelling to watch the Cricket World Cup this summer.
Manchester and Birmingham hosted 11 World Cup games, including the two semi-finals. This tournament proved particularly attractive to Indian tourists, with over 80,000 Indian citizens visiting the UK to watch the games.
Yearly sales growth to these international customers increased by 10% in June and 19% in July nationwide, while their average transaction values (ATV) came in at £307 and £313, respectively.
Watches and jewellery are tourist’s most popular purchases
Overall, tourists have spent more per transaction up north and in the midlands compared with London. International shoppers spent an average of £679 in Manchester and £675 in Birmingham per transaction so far this year – an increase of 19% and 22% respectively compared with 2018. London’s ATV measured £417.
Manchester and Birmingham’s significantly higher ATVs were aided by the number of department stores in these locations, allowing international shoppers to purchase multiple high priced items at the same time, without having to go from store to store as they would in London’s West End.
Increased sales of watches and jewellery have also been a key contributor to driving the ATV in these two cities. With the overall sales of these items increasing by 25% in the UK in 2019 so far compared with 2018. Watches and jewellery also happen to be the preferred purchase of choice for Indian shoppers, who have spent an average of £490 on these items per transaction year to date in 2019.
International shoppers saving UK retailers
It is clear that the growing purchasing power of international shoppers is becoming increasingly important to UK retailers, as British shoppers shun the high street and shopping centres in favour of online shopping, leading to a record high vacancy rate of 10.3%.
This shift in domestic shopper trends is forcing retailers to revaluate their income streams and search for new growth channels, with many turning their focus to international shoppers. Tourists are likely to spend nearly four times more than domestic shoppers, and so far this year, sales to international shoppers have grown by 5% compared with 2018.
Last year’s sales to international shoppers were worth nearly £7 billion, and some retailers saw up to 60% of their sales going to non-domestic customers.
The tourists purchasing the most from UK retailers are from China, GCC nations and the US, accounting for 26%, 21% and 7% of the UK sales to international shoppers so far this year, respectively, and spending an average of £400, £404 and £392 per transaction.
David Perrotta, UK country manager at Planet, comments: “Aas 2019 comes to a close it is clear that the past 2 years have been extremely challenging for UK retailers. Within the retail industry, consumer needs are rapidly evolving and merchants are being tasked to innovate to deliver sustainable growth. A shining light for UK retail is the growing sales to international shoppers. Our brand partners who engage with international shoppers via our mobile marketing programmes are delighted with the results, with increased footfall of shoppers likely to spend 3.7 times more than domestic shoppers. In order to cater to the needs of these consumers, it can be as simple as additional cultural training for sales staff or accepting familiar payment methods such as WeChat Pay and Alipay. Merchants that proactively engage with this buoyant shopper base will be the retailers that exceed expectations in the 2020 retail environment.”