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Russian Tourist Spending Drops in U.K.

Global Blue reports that Ukraine woes and currency weakness contributed to a 17 percent decline in February.

LONDON — The long arm of Vladimir Putin is hitting cash registers across Western Europe.

This story first appeared in the March 25, 2014 issue of WWD.  Subscribe Today.

 

On Monday, Global Blue reported that tax-free spending by Russians visiting the U.K. decreased 17 percent year-on-year for the month of February. Already reeling from the weakening Russian economy, consumers were further hit by the political unrest in the region, which “exacerbated” the effects and left Russians disinclined to travel.

 

The company, which offers international tax-free shopping services for tourists, said Russia slipped down one place in February to become the U.K.’s fourth-highest-spending global market, behind China, the Middle East and Nigeria.

 

Global Blue said Russia is “consistently” one of the top international spenders in the U.K., with shoppers paying an average of 669 pounds, or $1,102 at current exchange, per transaction. So far this year, Russian spending in the U.K. has decreased 16 percent.

 

The company warned there could be more bad news on the way for British retailers and hoteliers: “As the ongoing dispute between Russia and Ukraine continues, and Russia’s relationship with the West deteriorates, the U.K. could feel a slowdown in growth from the Russian tourism market.”

 

Gordon Clark, U.K. country manager of Global Blue, said companies should continue to focus on attracting Russian business.

 

“Russia is still one of the top global shopper markets in the U.K. as high-net-worth individuals are drawn to [its] extensive offer of luxury brands, so businesses should renew their emphasis on strategies to entice these individuals and encourage high-level spend,” he said.

 

The U.K. is not the only market to suffer. According to Global Blue in Austria, the number of Russian shoppers in Vienna fell more than 42 percent year-on-year in February after having risen more than 20 percent in January.

Global Blue blamed the decrease on the Olympic Games in Sochi, noting February is usually a very popular month for travel among Russians.

 

In Paris, tax-free spending by Russians — the second-largest group of foreign consumers after the Chinese — dipped 5 percent in February, although that figure does not include department store purchases.

 

The long-term picture — for the U.K., at least — is not nearly as bleak as the February numbers. The government tourism agency Visit Britain expects growth in spending by Russian shoppers to grow 75 percent by 2020.

 

Global Blue noted that many U.K. luxury retailers are introducing services to attract and accommodate the Russian shopper, including Russian-speaking staff and marketing materials, tax-free services, private opening hours and cultural training.

 

Apart from Russia, international markets continue to shop across the U.K. In February, Global Blue said, spending by Middle Eastern shoppers was up 31 percent year-on-year, while Chinese spending was up 23 percent.

 

Southeast Asian nations also saw growth, with spending by shoppers from Hong Kong up 23 percent year-on-year, and spending by consumers from Malaysia and Singapore, which were both up 6 percent year-on-year in February.