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Political unrest means tourists spend less

Political tensions in Russia and Thailand and unfavourable exchange rates have hit tourist retail spend in the UK in the seven months to the end of July.

According to data from tax-free shopping operator Global Blue, there was a 4% year-on-year drop in overall spend from non-EU shoppers in the UK during the first seven months of 2014 and a 5% fall in the number of transactions.

The firm would not reveal a breakdown of figures for tourist spend.

The declines follow growth of 18% in spending and 15% in transactions for the same period in 2013.

The data also shows retail spend from Russian and Thai tourists plummeted by 20% and 27% respectively for the first half of 2014.

As previously reported by Drapers(August 9), political unrest over Ukraine and economic sanctions are thought to be behind the fall in Russian visitors to the UK. Thailand has also seen unrest, with anti-government protests between November last year and May.

Global Blue UK and Ireland country manager Gordon Clark said the fall in spend from Thai shoppers could also be partly due to the country’s baht currency dropping in value against the pound, adding: “It isn’t as lucrative for them to come over.”

US shoppers are also spending less, with a 9% drop in total spend and 8% decline in transactions also attributed to weaker exchange rates. Falls were recorded for Saudi Arabian shoppers – down 12% for total spend and 5% for transactions – but Global Blue said this was because Ramadan fell earlier this year, between June 27 and July 28.

Saudis were still the third-biggest spenders in the UK among non-EU shoppers, after China and Kuwait.

The earlier Ramadan also curtailed spending from Qataris and Kuwaitis, which rose slower than in previous years, by 10% and 9% respectively.

Chinese tourists are still by far the biggest spenders in the UK, comprising 23% of the total – up 8% year on year. But Clark said this was a smaller rise than usual and is likely to grow slightly in the autumn: “The years of 40% growth couldn’t continue; we’re getting to more realistic figures now of around 10% to 13% going forward.”

Clark said while he expects sales from Middle Eastern visitors to pick up in the second half of the year, the downward trends from Russian, Thai and US shoppers are likely to continue for another six months.

Some UK retailers are starting to feel the impact of the drop in non-EU tourist spending.

Bose Giwa, manager of Absolute Vintage on Berwick Street in London’s Soho, said fewer Russians were visiting the store than last year: “The Russians are the most noticeable change, as they do seem to spend more when they come in, and the Middle East is still a bit wary of vintage, but they’re not spending as much. I’ve noticed our regular Russian customers haven’t been coming in.”

Karina Baldorf, owner of Edinburgh contemporary womenswear store Kakao by K, told Drapers: “We have quite a lot of US shoppers, but they don’t seem confident in spending. The pound is really strong against the dollar.

“Luckily we seem to have gained lots from other places where they are more confident. We have a new [flight] route from Kuwait [since May].”

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