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Swine flu threat to UK’s overseas visitor sales

The boost in retail sales from the influx of international shoppers taking advantage of the weak pound could be curbed by the threat of swine flu.

Global Refund, which operates tax-free shopping schemes for non-European shoppers, this week forecast an increase in international visitors to the UK this year, with shoppers from the United Arab Emirates set to rise by between 5% and 8%, and Chinese shoppers by 15% (see box).

However, vice president of sales Nigel Dasler said he would have to review predictions for international visitors this year following the spread of swine flu from Mexico to the UK, US, Canada and Spain. The outbreak could discourage people from travelling.

This will come as a blow to many central London retailers, as foreign visitors to the capital have provided one of the few bright spots in the recession. Central London sales in March were up 5.1% year on year, far outstripping the overall 1.2% across the UK as a whole.

Dasler said: “It’s too early to say exactly what the impact [of swine flu] will be. The SARS outbreak in February 2003 had such a negative impact on business. It could be the same, or people might have a different attitude this time around.”

Luca Sola, analyst at broker Bernstein, estimated that about 20% of luxury goods sales come from travellers, and noted that some luxury groups’ sales were hit by the SARS outbreak in 2003. He said swine flu could lead to similar trading patterns in 2009 if it turns into an epidemic.

Separately, Global Refund said that aside from the swine flu crisis, fewer visitors were expected to arrive from Russia, where the currency has devalued more than the pound. The number of US visitors will also fall, as airlines continue to cut the number of flights.

Several organisations this week launched initiatives, which had been planned before the threat of swine flu, aimed at attracting more visitors to the capital. London mayor Boris Johnson launched a marketing campaign aimed at attracting more shoppers to the UK. Global Refund’s new magazine, Shop London, which promotes London’s luxury retail offer, also went into circulation.

The New West End Company (NEWEC), which represents retailers in London’s West End, also published a report detailing key dates and spending habits of international shoppers (see box). However, NEWEC spokesman Jace Tyrrell acknowledged that swine flu could be bad news for retailers: “If travel is impacted, that affects the number of visitors,” he said.

Before the outbreak

Forecasts for international visitors (before the swine flu outbreak):

  • China up 15%
  • Nigeria up 8% to 10%
  • Kuwait up 3% to 5%
  • Saudi Arabia up 3% to 5%
  • UAE up 5% to 8%
  • Russia flat to 5% down
  • Japan flat to 3% down
  • US between 3% and 5% down
  • Egypt between 5% and 10% down

Source: Global Refund

Key 2009 dates for international UK visitors

  • May 1 International Workers’ Day in Spain.
  • May to June School holidays in South Africa and India.
  • June to August School holidays in Germany, France and Italy. Expected increase in visitors from the Middle East buying luxury goods as shopper numbers increase before Ramadan on August 22.
  • June to Sept Busiest period for US shoppers buying for Thanskgiving and Christmas.
  • June 27 to July 12 School holidays in Australia.
  • July to Sept School holidays in Brazil and Russia. Visitors from Singapore and Hong Kong also increase.
  • Sept to Oct More Indian visitors due to off-peak budget travel packages.
  • October 1 Start of seven-day holiday in China.
  • November Number of US visitors shopping for Christmas increases.
  • December Spanish visitors increase over Christmas and New Year. School holidays in South Africa and Brazil.

Source: New West End Company

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