7 Key Success Factors for Excellence in Tourist Retail

Affluent tourists belong to the retail market’s most attractive points. We highlight 7 key success factors to grow tourist retail sales.

Those of you working in travel retail know Global Blue. The company services tourist retail around the globe with VAT refund services. In this way they collect valuable information about a very precious consumer group. With more than 30 years in that business, they collected a lot consumer intimacy. Global Blue shared some of their insights together with the Economist Intelligence Unit (EIU) and an example of their insights is below. This infographic outlines habits of Brazilian consumers and their luxury spendings.

Infographic – Brazilian Dossier

80% of luxury goods purchased are bought abroad. Global Blue’s Infographic shows some core shopping patterns.

When reading the infographic, one question arises immediately: what does all that mean for the targeting of affluent Brazilian households? Is worth it to expand to Brazil, or is it smarter to reach Brazilians abroad when travelling? We can’t answer it with one answer for all brands. But Brazil is without doubt an attractive and challenging brand market. If you subscribe to our blog, we promise to share more on the market in October. But the more interesting question now is…

Do You Have a Tourist Strategy?

‘Expanding into BRIC’ (Brazil, Russia, India, China) was a strategic growth priority for many brands long before BRIC became a growth buzz word. In the early 2010s, many studies praised the opportunities of the ‘new’ consumer markets, but the hype is gone. Russia and India continue to be tough local markets and the economic future of Brazil was questioned long before the Olympics. It is left therefore to China to deliver some of the BRIC promises. So far China is on track and Chinese middle class consumers have become a large and attractive market for international brands, both at home in China and abroad.

Be it high streets in Vancouver, New York, or Hong Kong, tourists from mainland China have become an essential part of local retail. We are all aware of the growing number of airports and duty free shops and tourist retail, but the far bigger portion of tourist retail sales is spent outside of the airports.  Tourist Strategy, Tourist Sales, Brand RetailDuty free shopping at Charles De Gaulle airport in Paris (Photo: Brand Pilots)

For example in China, many Chinese travel abroad on dedicated shopping trips. They travel purely to fill their suitcases with Western brands, which are 30-50% cheaper abroad than in China. And not only in airports or downtown: Bicester Outlet Village, Outletcity Metzingen or Lavallée have become key Chinese travel destinations for Chinese tour operators. Some say they are more popular as Neuschwanstein Castle or the Eiffel Tower.

Europe’s Tourism Market

To cite from Global Blue’s data mining: “Shopping tourism is a multibillion dollar global industry, although its exact size is hard to pin down. In 2010 receipts from all forms of international tourism reached US$919bn, according to the World Tourism Organisation (WTO), but it does not specify what percentage came from crossborder shoppers. There is considerable evidence, however, that shopping plays a big role in determining where tourists go and how they spend their money. A 2005 book, “Shopping Tourism, Retailing and Leisure”, cites several studies showing that roughly one half of tourists say shopping is the first or second most important priority when choosing a destination. Visa, the credit card company, monitors tourist spending on debit and credit cards for a handful of countries. In the first four months of 2010, retail spending by travellers to France, Portugal, Spain, Italy, Greece and Turkey reached €2.2bn (around US$3bn). Retail spending amounted to almost one-third of their total outlay and was the single biggest spending category. Europe is a particular beneficiary of the shopping tourism market. Nearly one half (44%) of global receipts from international tourism are spent in Europe, according to the WTO. Meanwhile, a small 2010 study of tourists’ shopping habits in the International Journal of Tourism Research found that Europe is seen as the world’s leading destination for luxury shopping, especially among those who are most interested in shopping while on holiday.” (Source: Global Blue European Paper)
So the tourist retail question left is: are your shops & stores in tourists’ most attractive retail locations? Which retail locations do you miss? To help with that, take a look at the Globe Shopper Index, describing the most important tourist retail cities; cities scored by quality and quantity of brands, affordability and consumer convenience. Many tourists in Asia or elsewhere use this site to prioritise their shopping travel. We use this platform to score brands’ tourist retail penetration and plan priorities for future expansion.

How is Your ‘Tourist Readiness’?

You may not have a strong brand position in BRIC, but you may want to reach out to their consumers, when they visit High Streets. Many of today’s global brands benefited in their early days from affluent travelling shoppers. Abercrombie & Fitch in NY was for Europeans, what Gucci in Paris is for Chinese today, long before A&F opened its first store in Europe. But luxury shopping is only a small portion of tourists’ buy. If you watch tourists on High Streets, their mid-market consumption is at least as large as luxury retail.

So are you ready for those tourists? Not much is needed, often just a little add-on to your marketing, social media or customer service. But to provide excellent tourist services makes a significant difference in consumers instore spending. Allow us to share our top 7 levers that improve tourist sales:

7 Key Success Factors in Retail Tourist Sales

Social Media: Is your communication and its languages geared towards the core tourist markets, even though you may not have stores there?
Tour Operator:How is your networking towards foreign tour operators to get on their travel agenda?
Location Strategy:What's the most attractive tourist locations for your brand?
Tourist Merchandise:What is the depth and quality of tourist customisation in your offerings, to secure tourist purchases?
Customer Service:What are the language capabilities of your top tourist destination?
After Sales Service:Do you ship abroad, and actively promote the service?
Loyalty Programs:Do you offer special loyalty programs to tourists, that they promote the brand at home and prepare for your market entry?

Our top 7 list shows that much can be done to improve tourist retail sales? You will have addressed some of the things on that list, but some may not be enough. Remember this: you have only one chance for a first impression – if you fail to deliver to Brazilian, Chinese or American tourists today, you may have to go a long way to win that consumer over when you open shops in their home market.

About the Author:

Guido is a global traveller in brand growth missions and a tourist shopper on many days throughout the year. It was 1995 in Singapore when Guido developed the first brand growth strategy, including tourist locations. 20+ years and 30+ brands later his excitement for brand growth strategies in Asia, Europe & the Middle East has not diminished. If you want to collaborate with Guido on your opportunities in tourist retail, or share some thoughts, you can reach him best by email or see more about him here.

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