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Shop till you drop

From positive exchange rates and tax refund allowances to alternative activities for non-shoppers, here’s a guide on how to attract shopping tourists and keeping them loyal

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It’s hard to say what is more iconic – the yellow cabs of New York City or Bloomingdale’s flagship store in Manhattan

Shopping motivates travel. Shopping while travelling may include duty free shopping in airports; purchasing luxury goods; visiting shopping malls, department stores and outlets; discovering local brands; and supporting local artisan business and locally sourced items. Shopping tourism for some may be a trip to Europe’s Christmas markets; competing for Black Friday sales in the United States; or annual January sales in the UK.

In 2014, the World Tourism Organisation’s (UNWTO) first ‘Global Report on Shopping Tourism’ identified shopping as a major influence on tourism trends globally. Shopping has converted into a determinant factor affecting destination choice, an important component of the overall travel experience and, in some cases the prime travel motivation.

Shopping tourism steers tourists to their destinations, says Pata’s "The Future Of Shopping Tourism" report released in January this year.

 

KNOW YOUR CUSTOMER

According to the report, there are three types of shopping tourists:

The souvenir shopper: This individual shops for mementos of their trip and/or gifts to take back to family and friends. They are looking for local items directly related to their destination.

The journey shopper: Some tourists shop as a primary activity during their trip and will purchase through their entire customer journey.

The list shopper: Finally, you have a small but important group of travellers who not only purchase for themselves but also for family and friends when travelling that arrive with a shopping list of goods to purchase.

Strong growth in retail relies on several trends. The first and most important is tourist arrivals from key source markets coupled with positive exchange rates and tax refund allowances. With more countries offering the service, tax refunds for tourists have become extremely important.

 

TAX REFUNDS

Countries offering a sales tax refund service are more attractive tourist destinations. To boost tax refundable spending for tourists, governments and NTO’s could promote these services to potential visitors and streamline the processes to ease the experience.

Tax refunds for tourists are commonly managed through government programmes or outsourced to major tax refund companies. These companies work with governments to process the tax refund back to the customer. They also coordinate closely with department stores and brands to streamline the process for customers at the point of sale.

Australia, South Korea, Singapore and Thailand are good examples of tax refund systems that work. Some major shopping destinations such as Guam and Hong Kong have no sales tax offering great customer value and no need to offer refunds.

 

SHOP WITH CONFIDENCE

Destinations seeking to develop shopping tourism should also consider ensuring availability of authentic products, as this is one major consideration for consumers making purchases.

A number of destinations have implemented certification systems to give tourists confidence they are shopping at approved retailers. In South Korea, first class retailers are certified and provide support programmes such as souvenir contests and FESTA. FESTA offers visitors discounts to promote shopping tourism and boost the economy. In Hong Kong, the Quality Tourism Scheme has implemented a retail section to ensure that consumers are offered clear and transparent pricing, product information and superb customer service.

Accepting as many forms of payment as possible, particularly from the Chinese market, Union Pay, Quick Pay, WeChat Pay and AliPay should all be standard operating procedure for retailers wishing to maximise spending by Chinese tourists.

The retail sector is particularly important to credit card companies as it provides incremental transactions, many of which are in foreign currency. Union Pay International recognised this and became an accepted payment mode globally.

Additional services including high-quality food and beverage options, personal shoppers, home delivery, transportation, VIP rooms and concierge services should also be a prime consideration when attracting the affluent consumer. For shopping destinations, it is also important to offer alternative sources of entertainment for members of the family or party who might not be directly interested in shopping. By offering something for everyone, primary shoppers will extend their time and leave with an improved experience.

Many destinations have worked extremely hard to ensure that shopping tourism is integrated fully into destination marketing campaigns, highlighting the importance they place on the sector and how shopping is essential to the destination mix.   



 

Chinese tourists lead the way

Over the past 10 to 15 years, China has laid the road for tourist spending. There is a correlation between Chinese tourism arrivals and an increase in retail revenue. As a result, many shopping destinations focus on this market, accepting Chinese payment methods, offering Asian cuisine, employing Chinese speaking staff and ensuring their product mix is attractive to the Chinese consumer. At peak travel times, such as Chinese New Year and Mid-Autumn Festival, many destinations and retailers market specifically for this audience.

Destinations such as Europe, Hong Kong, Japan, South Korea, Thailand and USA among others reported year-on-year increases of 20-50 per cent in tourist retail sales during this timeframe. Additionally, shopping tourism is on the rise among emerging and growing regional markets including Indonesia, India, the Philippines and Vietnam.

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